In principle, we know that ‘core’ costs can very often mean ‘essential’ costs – whether they are essential to a particular project (‘hidden’ overheads such as a portion of the Outreach Co-coordinator’s time) or whether they are essential to the running of a charity (obvious overheads like our building and utilities).
In practice of course, we know that securing funds for these essential costs is easier said than done, not always common practice among funders and requires a range of approaches.
Fortunately, more funders are seeing the world as we see it. Increasingly, grant-makers recognise the benefit of investing in the organisation, not just the project. They know that investment:
- Provides stability, allowing for longer-term planning and step-by-step organisation change.
- Promotes innovation and creativity in designing and delivering services and projects.
- Supports flexibility: organisations can adjust allocated resources based on emerging needs. (Covid-19 made a good case for the necessity of this – and as we all know in our sector, everything is changing, so it’s business as usual!)
Let’s take heart from this change in approach, after all, these things usually move forwards, not backwards. Let’s wish for a groundswell of positive change in this regard. In the meantime … what can we do as fundraisers to secure some or all of the essential costs needed to do the great work we do?
Three Possible Approaches
- Request
As a fundraiser, your job is to make the ask! This might mean asking those who already fund you to fund some essential costs. It might mean seeking out those (increasing) number of funders who will cover organisation and infrastructure development. Here are some examples of how a few funders phrase these things – so you know what you’re looking for and how and where the ask might be most successful. Look carefully at a range of funders’ criteria – and still ask!
- BBC Children In Need – Will only fund direct project costs (not full cost recovery), but can include salaries, volunteer expenses, building hire costs and travel costs.
- Tudor Trust– Smaller community-led groups that support people at the margins of society in the UK. Normally £10k plus, for up to 3 years. Will consider grants to help strengthen your organisation and may consider making short-term loans and multi-year grants.
- Virgin Community Anchors Fund– Organisations that support their local community in the North East of England; grants of between £10,000 and £30,000. The funds can be used for core costs, to continue to pay for existing work or to design and launch a new activity. The award can be spread over 1, 2 or 3 years.
- Recover
Basic Budgeting Approach: Always include at least a % contribution to essential costs on top of the project costs – typically between 10-20%. Some funders allow these costs as specific budget lines; E.g. Portion of rent – £1,500; Portion of Outreach Coordinator time – £7,500. It won’t be the perfect solution and you may need to do this across a range of projects. This recovers some of the essential expense but not always all of it.
Full Cost Recovery Approach: This is about ensuring all costs – direct and indirect – are recovered for all delivery, as part of your accounting led approach; i.e. all essential costs are allocated across projects, depending on the real, calculated portion of resource involved in delivery. It is a fair contribution to essential costs, based on the project’s size compared to other projects and services in the organisation. Look at all your major projects and attribute core costs fairly between them.
- Reframe
When is a core cost not a core cost? When it is repackaged. In some charities it is entirely possible to reframe resource as essential (core) because it’s entirely beneficial to your users. Ok – I know, we know light and heat are necessary/beneficial – but also a bit tenuous (less sexy?!) to funders.
Let’s use the example of a nurse in a hospice. They are absolutely essential to the delivery of service and their immediate and direct impact on beneficiaries can be measured. These things aren’t always easy to make a case for – sometimes we are caught up in our own position of viewing it as a core cost. To begin reframing it for ourselves, in order to express it to funders, start by looking at your whole organisation budget headings and apply a bit of creative thinking. What can be repackaged?
Two More Considerations
- Review your fundraising strategy and give it a health check. Are you using Sustainable Funding Models that incorporate both short-term project funding and long-term core funding? Do you have income from a diverse range of sources as single source income comes with high risk?
- Mission Alignment: Seek out donors whose values and missions align closely with the charity’s. Donors passionate about the cause are more likely to provide ongoing support, including essential costs.
One Call to Action
In all your conversations, internally and with funders, use ‘essential costs’. You can try it out in any questions you’d like to raise in our forthcoming webinar “Core Costs: In principle and In Practice”
Funding core costs: In principle and in practice – 22 May 2024 (10:30 – 11:30am)
Register now
George Knight, Training Consultant, Director of Social Change (DSC)
George is one of DSC’s established Consultant Trainers delivering courses, workshops and webinars on fundraising, management and leadership and personal development topics. He delivers the DSC course “Why Core Costs are not ‘Costs’ as well as a range of Fundraising topics for DSC In House clients: Writing Funding Applications, Introduction to Trust Fundraising and Using Social Media to Fundraise. In order to provide the best support for individuals and organisations, George adapts his style between trainer, coach, mentor and facilitator.
As the originator and host of DSC’s popular Charity Questions podcasts, where he interviews a range of influential individuals from across the sector, George has a good understanding of the challenges individuals and organisations face in their charity work.
George is a published author having written Managing your Inbox for DSC and also Beyond Domestication for Hatherleigh Press in the US.