Full Cost Recovery (FCR) means your organisation recoups the total costs of delivering a service, including a share of the organisation’s overheads. Working out the full cost of delivering a service is essential. Voluntary and community organisations, both big and small, are increasingly providing services on behalf of central government, primary care trusts and local councils. FCR is crucial if these services, and the organisations delivering them, are to be sustainable.

Working out the cost of providing one service is relatively easy. But when your organisation starts providing several different services, calculating the costs for each one becomes more complex, and it is likely that core costs can’t easily be allocated to any one activity.

These costs – which are sometimes referred to as core costs, sometimes as central costs and sometimes as overheads – include things like heat and light, office rent, phone bills and stationery as well as management and staff time. They all need to be fully costed, and a fair proportion added to the direct costs of running the service. This represents the total cost of delivery.

To help achieve FCR, a standardised cost allocation method that converts the costs of overheads transparently into a full cost projection is essential.
A number of agencies have developed templates to help, and some of these are listed at the end of this overview. Some are more suited to larger organisations, while others are better for smaller groups. If you don’t find a particular template helpful, try a different one, or do it yourselves using the basic principles.

Your organisation must:

• make sure that you understand all the overhead costs your organisation has; and
• develop systems that are transparent and logical to allocate these costs to particular work you undertake