Full cost recovery

Use this page to learn about what full cost recovery means and what the limitations are.

Full cost budgeting means including both direct and support costs in our project budget.

Full cost recovery is when we secure the full cost (including support costs) of the project from grant funding or from a contract for services. This is often easier said than done. Not all funders and contractors fund support costs.

Those who do may cap the amount as a percentage of the total project cost. This can often be lower than the actual amount of support costs used.

If you can’t get the full cost of a project from funders, you have to make a decision about whether it’s an activity you still want to do. If you do go ahead, you may need to fund the project with your own unrestricted income or reserves.

There can be very good reasons for taking on projects that aren’t fully funded but you need to be intentional about using other income or reserves in this way.

It’s important to remember even when we do recover the full costs of our projects, we’re not guaranteeing our future financial sustainability.

Full cost recovery is a fantastic step on the way to financial sustainability, but it’ll only ever recover the costs that we have had to meet, it won’t provide us with further income to use for future activity.

• For a clear and simple introduction to calculating the full costs of a project, read the National Lottery Community Fund’s full cost recovery guidance.
• For a more sophisticated approach which may suit larger or more complex organisations, read Cass Business school’s Cost Recovery Guide (PDF, 697KB).

NCVO worked with Liz Pepler at Embrace Finance to create this guidance.