Most EU funding is not paid directly by the European Commission but via the national and regional authorities of the Member States. This is the case for payments under the Common Agricultural Policy and most payments under the structural policy financial instruments (European Regional Development Fund, European Social Fund, European Agricultural Guidance and Guarantee Fund and Financial Instrument for Fisheries Guidance), which make up, in money terms, the great bulk of EU funding.
The Commission pays direct grants to beneficiaries (public or private legally constituted bodies - universities, businesses, interest groups, NGOs - and, in some exceptional cases, individuals) in pursuance of other common policies in such fields as research and development, education, training, the environment, consumer protection, and information. It also pays direct grants in pursuance of EU external policies.
All EU funding is channelled towards precise objectives and priorities under the various common policies, which, in turn, are based on provisions of the Treaties. Grants are awarded on the basis of specific EU legislation, except those for pilot schemes, preparatory actions and certain tasks carried out by the Commission as an institution.
Source: http://ec.europa.eu