So why couldn't the EU fund the development of a Signal fork that doesn't need phone numbers?
Forking a piece of software whose market moat is 100% network effects is not easy.
As a citizen within EU I would rather see them donate money to the Signal Technology Foundation instead. OTOH that could be controversial, so perhaps it would be better if citizens and companies would donate directly instead.
[0] Signal conducts the hiring and interviews, EU pays the salary
The EU's structure is also a bit different than that of nation states, with cabinet members and parliament rather limited in their ability to make spending decisions. Anything serious needs approval by the council, i. e. the heads of state.
And just now is probably a bad time for new expenditures, as Brexit will severely cut into revenue.