Published: 23 October 2006
Third Sector Cost Recovery Guide
A guide to help third sector funders implement full cost recovery was launched recently by the Big Lottery Fund and the Association of Chief Executives of Voluntary Organisations (ACEVO).
The report, Mind the Gap: A funders’ guide to full cost recovery, provides an eight-step guide to help the organisations understand & implement the principle.
Meanwhile, over 330 development workers and staff from local infrastructure organisations have booked places on the BIG funded ACEVO/National Association for Voluntary and Community Action (NAVCA) full cost recovery training course.
All courses for the first year of the project are now fully booked.
Acevo and NAVCA are now considering bringing forward the courses scheduled for next Autumn, in order to meet demand.
Nick Aldridge, Director of Strategy at acevo and one of the report’s authors, said:
"While third sector organisations are benefiting from a template for achieving full cost recovery and affordable training for development workers, there is little practical support for funders.
Many have not yet made much progress. We hope this guide will encourage them to confront the issue head on."
Vanessa Potter, Director of Policy and External Relations at the Big Lottery Fund, said:
“Full cost recovery is integral to achieving our aims. Without fair contributions to overheads, organisations face a never-ending scramble to find the money to oversee and administer projects.
The Mind the Gap report sets out how we and other funders have implemented full cost recovery, so that others can develop their own strategies.”
The report found that funders benefited from making a public commitment to the principle of full cost recovery and understanding the wider issues involved in funding voluntary organisations:
· Funders needed to understand whether their relationship with voluntary organisations was one of ‘buying, shopping or giving’ and must be clear about the main types of service they were funding
· They should know the particular rules their funding is tied to and their role in the funding mix overall, devising proportionate processes with a clear approach to managing the change
The report includes four detailed case studies of funders which have implemented full cost recovery:
· the Big Lottery Fund (a non-departmental public body, issuing Lottery grants worth £600 million a year)
· Hampshire County Council (a local authority serving 1.25 million people and providing £36 million annually in funding to the third sector)
· Future builders England (a government-backed £125m investment fund to build third sector capacity for service delivery)
· Bridge House Trust (an independent grant making foundation with an annual grants budget of £18 million)
HM Treasury's 2002 Cross Cutting Review had imposed a deadline of April 2006 on Government funders to implement full cost recovery, reinforced by the Gershon Efficiency Review in 2004.
This has now passed, and most commentators agree that a large gap remains between national policy and practice on the ground.
Further Information:
Mind the Gap: A funders’ guide to full cost recovery
BIG Lottery Fund
ACEVO
National Association for Voluntary and Community Action (NAVCA)
Bridge House Trust
Future Builders UK
HM Treasury's 2002 Cross Cutting Review
Related articles:
Big Lottery Fund supports BASIS of Voluntary and Community Sector Infrastructure
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