Regulation with Rosie: full cost recovery

The Charity Commission's Rosie Chapman on how to achieve full cost recovery.

The diversity of responses from the sector to our Stand and Deliver report into charities and the delivery of public services has proved an excellent analogy for the diversity of the sector itself. Some felt the report over-egged the pudding, but others said it had hit the nail right on the head.

What I have been pleased about is that few charities see commissioning authorities as unequivocal bad guys opposing a naive and exploited sector. Charities recognise that they need to get better at setting the terms of engagement when delivering services.

One charity I visited recently epitomised this realism and proactivity. Its view was that charities that received the bulk of their money through a single grant from central government did feel there was a danger of their independence being compromised. It said it believed that charities with multiple funders were much less vulnerable to external pressure.

This charity had taken the initiative with regards to full cost recovery. It asked local authorities to assess the needs of its beneficiary group, then costed them before presenting the local authorities with a full bill.

It has also minimised the vagaries that can be part of waiting for authorities to set their yearly budgets. It goes to them before budgets are set and tells them what the uplift will be - fully costed, of course.

This approach has paid off, but commissioning authorities haven't always played ball and the charity has pulled out of service provision in the past rather than accept year-on-year losses.

The key to this charity's success in achieving full cost recovery was strong willpower at the board level and a hard-headed, rational approach to contracts.

- Rosie Chapman is executive director of policy and effectiveness at the commission.

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