The concept of Full Cost Recovery
By using the principles of Full Cost Recovery when budgeting ( ie estimating ) your expenditure this will help your organisation to understand its own true costs of operation and this can then be presented to funders along with any applications or contracts you are negotiating to ensure that you obtain the full cost for a piece of work.
The concept of Full Cost Recovery is a simple one and involves you calculating 2 types of cost – direct costs and indirect costs. For example if you are costing the business of training your staff in child protection issues these 2 types of costs need to be fully calculated. Usually most organisations are familiar with calculating the direct costs of a piece of work , so in training staff in child protection the direct costs would be the cost of the trainer, the venue, any travel and food costs , childcare costs and any equipment used. Full Cost Recovery goes further to insist that you add in the indirect costs to your organisation or project from that training. These indirect costs will include the cost of the time of whoever organised the training, liaising with the trainer, booking a training venue perhaps and the time of the finance officer in paying the fees relating to this and any staff expenses. The indirect costs of training also include the cost to the organisation incurred when these staff are taking part in training and not working, eg in the childcare setting.
Organisations often have to employ temporary staff or employ other workers to cover for workers who are on training and this comes at a cost which can be calculated and added to the direct costs of the training.
By adding together all the direct and indirect costs – which are often hidden and not calculated – your organisation will have a truer picture of the real cost of a piece of work and can more accurately present the real full cost of the work to funders.
The government has endorsed this method of calculating full costs and the concept of Full Cost Recovery in its national Compact – an agreement that sets principles for the relationship between all government departments and voluntary organisations at national , regional and local levels . So in making funding bids or bidding for contracts from government sources , as well as to other funders , it is absolutely acceptable and good practice to represent the true full cost of your work .
Sources of information and advice on Full Cost Recovery
A great website produced by ACEVO specifically about Full Cost Recovery where you can download for free the Guide and Toolkit for Full Cost Recovery www.fullcostrecovery.co.uk
ACEVO are running a 3 year training and education programme with NACVS in Full Cost Recovery, initially for development workers , so look out for information about this through your local CVS ( council for voluntary service – eg South Downs CVS, EAVS, HVA )
See also material produced by the national finance hub :
www.financehub.org.uk
and in Sussex contact your local CVS for information or advice or look out for free training run by organisations such as the Working Together Project
www.workingtogetherproject.org.uk
