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Audit of the EIT reveals major weaknesses

The European Institute of Innovation and Technology (EIT) was set up in 2009, in Budapest, Hungary with an ambitious goal in mind – that of becoming EU’s MIT (see ACA Newsletter – Education Europe, September 2009). Equipped with a budget of € 2.7 billion for the period 2008-2020, the EIT aimed to bring together creative and innovative partners from academia, research and industry, and to strengthen the “knowledge triangle”, by them working jointly in autonomous partnerships called Knowledge and Innovation Communities (KICs). The KICs function based on generous grants from the EIT, and are tasked with finding innovative solutions to tackle big societal challenges. The three KICs launched in 2010 bring together more than 500 partners from a variety of disciplines, countries and sectors, to work on climate change, energy and information technology.

A newly-released Special Report by the European Court of Auditors casts doubts, however, on EIT’s ability to reach its core aim – that of boosting innovation in Europe – because of its too “complex framework and management problems”. While the report concludes that the main reasons for setting up the institute were well-grounded, it also finds that a number of important changes are necessary.

Some of the key weaknesses highlighted by the auditors are that:
  • “the funding model includes KIC activities, not funded by the EIT. This is unnecessarily complicated and brings little to no added value;
  • the practical arrangements between the EIT and the KICs are poorly suited to innovation, in particular the way grants are paid;
  • the financial sustainability of the KICs is doubtful. Businesses are not involved enough and KICs' declared income not coming from the EIT has not been substantial;
  • the performance indicators and the monitoring and reporting do not provide an informative picture of results and impacts;?
  • the performance of the KICs is not sufficiently taken into account when the final payment of the grant is processed. The EIT has rarely rejected costs based on the lack of performance prior to 2015; and
  • the high staff turnover, including at senior management level, has limited the development of strategies and the efficiency of the EIT.

Very interestingly, although the institute was created already seven years ago, in operational terms it is still not fully independent from the European Commission. Based of these findings, the auditors put forward a number of recommendations both to the European institutions and to the EIT itself.

They recommended to the European Commission for it to propose legislation to the European Parliament and Council to amend the EIT's funding model, stressing that certain funding conditions should be removed, and that steps should be taken to lower the operational and financial reporting burden of the KIC partners.

They further recommended to the EIT to:
  • “extend its grant agreement to cover more than a single calendar year, and ensure that grant agreements are concluded before activity begins;
  • focus once more on delivering impact by seeking greater autonomy and using the flexibility in the Horizon 2020 legislation, adopting specific rules tailored to the needs of the KIC partners and resolving its staffing issues to enable continuous monitoring of KICs' performance; and
  • develop impact-based analysis and streamline its monitoring and reporting”.?


Clearly, these findings have major implications and would require substantial changes in the current functioning and management of EIT.

Special Report European Court of Auditors