Full cost recovery

Learn more about the background and types of overhead costs. Discover a template to understand and calculate your full costs of projects, activities or services.

Many organisations in the voluntary and community sector struggle to make ends meet, especially in relation to funding overhead costs.

What is full cost recovery?
Why is full cost recovery key to your organisation?
Key Facts - FAQs
Publications and resources
Case Studies

What is full cost recovery?

Broadly speaking there are two types of costs within organisations: direct and indirect (or overhead) costs.

Direct costs are easily identified as part of the project as they are incurred as a direct result of delivering a project or activity. -

Overhead costs are those costs needed to support and administer projects, activities, and the organisation itself. These costs are sometimes also referred to as indirect, core, central, support, or management and administration costs and are often shared or split amongst various activities within an organisation.

Full cost recovery means recovering the total costs of your project or activity, including the relevant proportion of all overhead costs.

Why is full cost recovery key to your organisation?

Understanding the full costs of projects, or services, may not result in full cost recovery every time. However, calculating the full costs enables you to understand the exact level of funding you will require. It also provides a clear picture of how a particular project draws on the shared resources of your organisation.

Historically, overhead costs have sometimes been considered negatively and separate from project costs. The result has been the adoption of a number of detrimental funding practices such as an add-on guesstimate percentage to project costs, or marginal cost funding where only the additional costs of running a project or service are funded.