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2020 Report –The Initiative and Networking Fund of the Helmholtz Association was used to pass on funding to the Little Scientists’ House

Mar 09, 2020

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0 Executive Summary

The Little Scientists’ House is a foundation that gives children the opportunity to explore technology and natural sciences. The purpose is to build up the next generation of young researchers. The Little Scientists’ House also offers special qualifications in early years science education to nursery school teachers. The Helmholtz Association of German Research Centres supports the Little Scientists’ House from its Initiative and Networking Fund. This Fund is fed by allocations from the research centres. These are funded mainly from the Federal Ministry of Education and Research. The Helmholtz Association is the major donor to the Little Scientists’ House and has committed to supporting the Little Scientists’ House for an initial period ending in the year 2020.

We reviewed the Initiative and Networking Fund and found considerable shortcomings. Support given to the Little Scientists’ House was neither in line with the Fund’s earmarked purposes nor with its applicable procedural principles. We recommended to the Ministry and the Helmholtz Association discontinuing undue reliance on the Initiative and Networking Fund. The Ministry reserved the right to make a final decision as it deemed fit.

We pursued our audit work and developed audit conclusions that are set out below. Our conclusions duly reflect the Ministry’s comments and include the reform proposals on the Initiative and Networking Fund that the Ministry outlined in a report addressed to the parliamentary Budget Committee.

Since 2006, the Ministry has given a total of €87.5 million to the Little Scientists’ House by way of direct and indirect funding via the Initiative and Networking Fund. In the year 2019 alone, the grants amounted to €11 million. The Ministry failed to disclose any of these expenses in its departmental budget. The fact that the Ministry channelled budget allocations via the Initiative and Networking Fund to the Little Scientists’ House means nothing less than quasi-institutional funding. In doing so, the Ministry has committed to long-term federal budget support.

The Ministry's constitutional mandate does not encompass capacity building for nursery school teachers and primary school teachers. Also, we could not identify any authorisation for funding such programmes in the shared research support scheme for the Helmholtz Centres agreed by the federal government and the federal states.

The Ministry comments that the support to the Little Scientists’ House is driven by the Ministry’s mandate for research and vocational training. The Ministry states that funding is aimed at opening up career paths in science. As from 2022, the Ministry intends to provide baseline funding to the Little Scientists’ House from other sources than the Initiative and Networking Fund.

We urge the Ministry to reveal the full scope of funding channelled to the Little Scientists’ House. We stress the fact that the Constitution assigns specific functions to the federal government and to the federal states. We hold that the child day-care centres’ role is neither strengthening research nor building up the next generation of researchers. Therefore, the Ministry must develop a strategy for scaling down to zero its permanent grant-funding of the Little Scientists’ House. If the Ministry intends to pursue funding early education in science, technology, information technology and mathematics, the Ministry will have to proceed in line with applicable constitutional law.

The Helmholtz Association did not at all verify as to whether the level of funding the Little Scientists’ House requested was needed and appropriate. The Helmholtz Association sought and gained the approval of the Ministry to increase the scope of funding, although the original target set had already been achieved. The Ministry and the Helmholtz Association failed to use their donor position to make funding of the Little Scientists’ House contingent upon meeting targets set or upon putting into place effective cost controls. In this respect, the Helmholtz Association neglected its oversight function as a member of the foundation council. Neither the Ministry nor the Helmholtz Association conducted proper and fully-fledged programme evaluation exercises of the use the Little Scientists’ House made of the funds given.

The Ministry and Helmholtz Association need to ensure that their funding is appropriate and serves to accomplish the targets set. The Ministry must no longer let third parties decide what use they make of federal budget funding.

The Ministry announced its intent to strengthen its role in cost controls, for example by means of membership in the foundation council. The Ministry also intends to define more specified and measurable targets to guide future funding of the Little Scientists’ House.

We strongly advise the Ministry to ensure that its role in the foundation council will also be commensurate with the scope of federal funding and that any conflicts of interest are ruled out. We acknowledge the analytical review of the performance of the Little Scientists’ House Foundation. However, so far, federal funding has not been subject to a comprehensive programme evaluation.

The Ministry’s approval led to a situation where the Helmholtz Association used federal budget funds for the Little Scientists’ House in a flawed manner providing no value for money. In this way, the Little Scientists’ House was freed from the tasks of acquiring third party sponsors. The high cash liquidity buffer of the Little Scientists’ House illustrates that the Helmholtz Association’s funding policy was not designed to satisfy stated needs. The Ministry did nothing to stop the Helmholtz Association from partially non-conforming and inconsistent grant practices. As a result, the Helmholtz Association also failed to carefully verify the use made of the funds allocated and to ensure compliance with the equality of treatment clause that prohibits inconsistent application of grant provisions to rule out any preferential treatment among federal grantees.

The Ministry has stated its intent to embed our audit recommendations in the grant procedure.
We reiterate our recommendation for taking prompt action in the transitional stage to commission an appropriate management agency to assist in the funding procedure. The Ministry must make sure that federal grant provisions are fully and properly complied with.

The Ministry has ever more frequently used the high federal support given to the Little Scientists’ House as a pretext for pursuing its own goals. As a result, the Ministry tolerated that the private-sector commitment has increasingly lost in importance. The Ministry did not explore whether it could achieve its own purposes more efficiently in a different way and with a different organisational structure. The Ministry has made its funds available for permanently defined purposes and is now facing the risk that, in case the Little Scientists’ House will ever be dissolved, any residual funds left will be transferred to private-sector assets.

The Ministry and the Helmholtz Association did at no point of time second-guess their role and any possible impact on the promotion of technical and scientific education in day-care centres. They did not even realise that this task has meanwhile been incorporated into the educational programmes developed by the federal states. In contrast to the federal government, the federal states and local governments have a direct say on matters regarding day-care centres and primary schools and may actually ensure high-quality implementation. We doubt that federal funding makes any sense at all and can ever become an effective approach. The Ministry and the Helmholtz Association should withdraw from the baseline funding of the Little Scientists' House and call for more private-sector sponsoring. In case this effort would fail, the rationale for the existence of Little Scientists' House and the foundation would also wane.

The Ministry announced to review the pros and cons of operating the foundation in its current regulatory form in the future. The Ministry sees no merit in seeking a higher level of long-term support from the private sector. The Ministry acknowledges the responsibilities of the federal states. However, the Ministry also highlights the federal government interest in securing the next generation of researchers. The federal states would not be able to provide a similar level of support to the Little Scientists' House.

As a rule, federal funding is of a complementary nature and does not serve as a substitute for any private-sector funding. We see no reason to believe that private sector and the federal states do not comply with their funding obligations. The Ministry should better abstain from funding other and new projects because this would make the Little Scientists’ House even more dependent on federal funding.

Our work on the Initiative and Networking Fund highlights that indirect funding makes effective control by the budget legislator more difficult and poses the risk of a shadow budget. Our current audit work has confirmed this risk.

The purpose of the indirect funding mechanism was to help the Helmholtz Association become less exposed to direct intervention by the grantor and help the Association retain leeway and more academic freedom to pursue long-term research goals. Our audit findings have shown that the Helmholtz Association was not able to actually work at arm’s length of the Ministry. We doubt that an indirect funding scheme is still a reasonable solution for the Initiative and Networking Fund.

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© 2020 Bundesrechnungshof