Survey shows sketchy progress on full cost recovery

More than a quarter of charities are making a loss of at least 3.3 per cent of their income on public service delivery contracts, according to research.

However, the survey also found that only 25 per cent of charities are making a surplus of 1.5 per cent or more of their income from government contracts.

Finance Count 2007, which is run jointly by the Charity Finance Directors’ Group and benchmarking company Agenda Consulting, analysed the performance of 184 medium and large UK charities, which together represent almost 15 per cent of the voluntary sector workforce with total net assets worth over £3.8bn.

“We know that progress on full cost recovery has been sketchy,” said Ernese Skinner, policy and campaigns officer at CFDG.

However, Skinner warned that these results may not be representative of the whole sector. “The charities involved in this technical benchmarking project are self-selecting and are very committed and efficient already in this area and therefore the underlying picture of full cost recovery across the sector is likely to be more negative,” she said.

Roger Parry, director of Agenda Consulting, said that individual charities needed to work out what their cost recovery targets are. “While charities with large unrestricted fundraising projects can absorb losses from public service delivery, other organisations which do not have other income streams may not be able to cover these losses,” he said.

“Charities can use these results to compare themselves against how other organisations are performing and engage with the relevant issues,” Parry added.

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