EDITORIAL: Don't forget that outcome funds are all important


The funding of core costs has been an ongoing problem in the voluntary sector with funders unwilling to pay for the administrative costs that organisations accrue while running services.

ACEVO recently produced a guide, including a template, outlining how core costs can be accounted for in funding applications. The guide is part of a campaign by the chief executives' body to push funders to pay for the real cost of providing services.

ACEVO has also been lobbying the Government and other funders directly to force them to recognise the problems caused by inadequate financing.

The Community Fund, among others, has been singled out by ACEVO for bad practice when it comes to covering core costs.

But maybe all this talk of core costs is missing the point. Perhaps funders should be looking at funding outcomes, rather than focusing on costs.

If an organisation takes on the services of a private company a contract is entered into and the company is expected to achieve an outcome, or provide a service, for a set fee. Anyone taking on a private consultant does not expect to quibble over exactly how much of the chief executive's time is being spent on the project.

The debate on whether funders should pay for core costs has clouded the fact that the voluntary sector has been undercharging for its services for years. This constant drain on the sector's finances has prevented investment in the training and leadership of staff and other resources essential to a charity operating efficiently.

This does not necessarily mean organisations should hike their fees to the level of private-sector companies, as this is highly unlikely to work in the interest of beneficiaries. But if funders and service providers started to think in terms of funding outcomes rather than core costs, this would be a great step towards establishing a more professional sector.

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