According to a report by the Charities Commission in 2007 – Stand and Deliver: the Future of Charities Delivering Public Services – both funders and charities in the sector are failing to adhere to FCR principals.

The report centres on a survey of 3,800 charities, which revealed that only 12% of those that responded said they had FCR, 37% said they obtain FCR in some or most contracts, while 43% said they do not obtain FCR for any of the services they deliver.

The problem was featured on the weekly magazine, Third Sector’s, front page in 2006, when Praxis Care Group sued its local NHS trust for failing to cover the full cost of a residential care contract.

But the sector is increasingly adopting FCR. The latest survey from the State of the Sector Panel – which is a body made up of 5,600 voluntary organisations – found that the proportion of contracts containing a commitment to FCR rose from 49 per cent in 2002/03 to 57 per cent in 2004/05.

A leading promoter of FCR is ACEVO, which provides a guide to FCR, available as a publication and CD-ROM called Full Cost Recovery. The template should help inform funding negotiations – all government funders, including local authorities and primary care trusts, should recognise the template.

The Big Lottery Fund also produces guides and cost spreadsheets for voluntary and community organisations.

Conducting the above FCR exercises and using the templates will bolster an organisation’s understanding of funding and service delivery costs.