Full cost recovery
Guidance for voluntary sector applicants
We are sympathetic to projects adopting a full cost recovery approach. Full cost recovery is the system by which organisations secure funding for the full cost of a project or service by including both the direct costs of the project and a relevant portion of overhead costs within their funding applications.
We will generally consider applications containing an element of overhead costs (sometimes referred to as indirect, core, central or support costs) if applicants have complied with the conditions outlined in the following paragraphs. However, requests are dealt with on a case by case basis, taking account of each organisation’s resources and funding, and not all requests for contributions to indirect costs will be successful. Funding decisions are entirely at the Trustees’ discretion.
We will not fund overhead costs relating to:
- straightforward, discrete capital projects, such as an extension to a village hall or the purchase of equipment
- applications from statutory organisations and schools
We do not subsidise shortfalls caused by a statutory funder failing to fund on a full cost recovery basis.
In order to be considered for full cost recovery based support, applicants must carry out a proper costing exercise and include a spreadsheet with their application which shows and explains the calculations they have used. This will help ensure that all applicants are treated fairly, and we hope it will also help funded organisations gain a clearer view of their own financial situation.
There are materials available on the internet which applicants can use to help with this exercise. They are published by ACEVO (The Association of Chief Executives of Voluntary Organisations) and the Big Lottery Fund. Community & Voluntary Service (CVS) has copies of these resources and publishes guidance on full cost recovery on its website. It sometimes runs training on this topic. Bedfordshire Rural Communities Charity keeps copies of the Big Lottery Fund’s resources.
The following items should not be included in full cost recovery calculations:
- Depreciation costs
- Items paid for by other funding sources; for example, a portion of the time of a specific staff member fully funded by another grant
- In-kind contributions such as free premises