The funds of the European Union, which are usually called EU funds, represent public financial resources that come from the taxpayers of the EU member states. These funds are allocated to support specific policies aimed at fulfilling the strategic objectives of the EU as a whole and individual member states. Basically, these resources come from the EU budget and are systematically distributed through dedicated funds in order to increase their practicality and safety in use. With Croatia's entry into the European Union, the country gained access to the possibilities of financing projects through the mechanisms of the Cohesion Policy. This policy is designed to alleviate economic and social disparities within the Union, facilitate the integration of under developed markets and ensure that less developed nations can participate equally in the European market. As of July 1, 2014, Croatia has been granted access to the Structural and Investment Funds (ESI Funds) that are in accordance with the goals of the Cohesion Policy. The administration of these funds is undertaken by the EU Member States, which are directed by partnership agreements developed in collaboration with the European Commission. These agreements specify how each Member State plans to utilize the funds throughout the ongoing funding period. The objective of the final paper is to examine the application of EU funds in financing public sector projects.