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Service delivery: Count the cost

By Trevor Hazelgrove, Third Sector, 4 April 2007

South Wiltshire Mencap's fit club for disabled adults

If you know what your strengths and limitations are, and can work out what your funders want, then full cost recovery can become a way of life, according to Trevor Hazelgrove.

The recent Charity Commission report Stand and Deliver created considerable fuss and alarm about the funding of organisations contracted to deliver public services. The percentage of charities actually achieving full cost recovery was revealed as alarmingly low, and the number that do not know if they are achieving it at all is frightening.

Our experience at Wessex Community Action has been that full cost recovery is more than getting the numbers right - it's a way of life, rooted in the development of board and senior staff, influencing strategic thinking and planning to the point where it becomes part of the accepted culture of the organisation and the way we work with our funders.

For the past 30 years, we have delivered direct services and infrastructure support to front-line organisations: among other things, we provide community transport services, including a seven-year contract recently agreed with one council; sexual health services for gay men; mental health community support; and a Big Lottery-funded healthy living programme.

So have we always got full cost recovery right? No. Have we mostly got it right? Yes. Have we had one or two unpleasant surprises? Yes. But the mix of board members and senior staff with backgrounds in commerce, finance, education, politics, community, social and welfare services and sharing mission commitment at the heart of the organisation has stood us in good stead. This is all tempered with financial prudence and a 'can do' attitude. We know what we can do and we know what we can't do.

Engaging with funders

Knowledge of the issues facing both the public sector and the third sector underpins our engagement with funders. We are currently negotiating a new contract to deliver sexual health services. We know that sexual health is only one issue for health professionals - but so is the need for men to get health services before those professionals are faced with a crisis. This is the sort of knowledge that informs our negotiations.

We see full cost recovery as a consequence of the way we work with funders, and we know what each side brings to the table. We focus on our greatest assets - flexibility and the lack of bureaucratic constraints. A key issue in the delivery of sexual health advice and support has been that we are able to work in ways that would be difficult for public agencies.

The management of risk has also been a factor in achieving full cost recovery. We are financially prudent, so the board has had to agree an acceptable level of risk when tendering for new work. But we still lost a board member who found the concept of risk very difficult to grasp. Our director of finance is, as you would expect, financially prudent. As an entrepreneur, he also understands the management of - and, most importantly, can work with - a chief executive and staff who are mission-driven.

Committed to the voluntary sector

We are, by inclination, an enterprising organisation. We welcome opportunity, we are committed to the third sector and we have few reservations about public services. However, we have had to ensure that we are doing things we have the skills, knowledge and experience to do, and do well.

Yes, we have had some difficult situations. We took on a Big Lottery Fund healthy living programme that had a long lead time and a budget that did not reflect full cost delivery. That has presented, and continues to present, its own challenges, but reasoned argument with the funders and good management by staff has won through.

Trevor Hazelgrove is chief executive of Wessex Community Action in Salisbury.