Why organisations leave money on the table: explaining non-demand for EU funds

Only if EU funds are fully and properly absorbed can they unfold positive effects. While previous studies have shown the importance of administrative capacities for successfully implementing funds, even high-performing regions face difficulties in the use of funds. This calls for more attention to a puzzling aspect: a significant share of potentially eligible organisations does not apply for EU funds. Hence, this paper explores the yet neglected application phase to delineate and understand non-demand for EU funds. In a departure from most previous studies on administrative performance, the empirical analysis focuses on a region with a high administrative capacity. The first empirically tested framework of non-demand for EU funds is developed based on in-depth interviews with actual and potential beneficiaries and experts. It shows that the main drivers for non-demand are unawareness about the offer, high administrative burden, and low perceived need for additional funding. Moreover, organisation type and size are important moderators. The findings demonstrate that non-demand for EU cohesion funds is more multi-faceted than suggested by previous analyses. The developed explanatory framework can be applied to the universe of EU distributive policies and member states. The study improves the understanding of the absorption of EU funds and strengthens the link to research on the implementation of domestic spending.