The first choice for
strategy and fundraising
The issue of how to cover your core costs is a thorny one that has challenged many organisations in recent years. It is hard enough to raise project costs, let alone core costs, so what are the ways in which fundraising charities can tackle this successfully?
Firstly, we need to define
There are essentially five strategies an organisation can use to cover core costs, as follows:
1. Basic Budgeting
This is the approach whereby each project you raise funds for includes in its budget an allocation to cover core costs, typically at between 10% and 20%. This can be broken down where necessary to show the specific costs that are covered. It is not a perfect solution, as it does not always cover the whole core and may need a range of projects to do so, but it is at least a partial answer for many charities.
2. Full Cost Recovery
This is an accounting led approach where all the core costs of an organisation are allocated across its projects, based for example on how many staff are involved in delivering each. The benefits are that it covers all your core costs. However, it can make some of them look expensive and also requires a solid finance and admin system to calculate, allocate and track costs.
3. Project Repackaging
When is a core cost not a core cost? Answer: When it is a project! Some core costs can be redefined as projects in their own right and funding sought for them. An example might be your rent or consumables. This will vary greatly
4. Unit Costing
Another effective approach is to identify all the costs of an operation or project and then work out some handy unit costs, such as the cost per client or per day or per month etc. A few minutes with a calculator will produce a good choice of unit costs. You then need to choose the ones that sound
5. Fundraising Techniques
A final way to cover core costs is to use fundraising techniques that raise general funds. So cash appeals to individuals, community fundraising, corporate fundraising, legacies, trading etc all bring in money that can be spent wherever needed.
In practice, most organisations use a combination of several approaches to cover their
For fundraisers, some creativity and imagination
If you are struggling with this or any other fundraising issue, feel free to call Simon George on 01785 663600 for an informal chat.
There is a further resource on this topic here.
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