Core costs

This item is by special request in answer to a reader who emailed me to say: ‘It seems that if you can think of an interesting project then you can apply to lots of people for funding, but its very thin on the ground to find places to help with core funding.’ Well, it’s all a question of mindset and if you believe my late DSC colleague Luke FitzHerbert, there’s no such thing as core costs.

If by core costs you mean overheads, you need to share them in a fair way across your projects or services rather than trying to fundraise for them separately. Most funders including the Big Lottery and local authorities will accept that these days. Of course this means you need a critical mass of projects or services in order to have enough places to spread the load. And you’ll still get some funders who give you a fixed sum that doesn’t cover all the associated overheads and then you have to decide if it’s worth taking the project on in the first place. We’ve had two of those recently, both connected with volunteering. (I wonder if it’s because people still think volunteers are free so they can’t possibly have any overheads?) And to be brutal, if you can’t cover your overhead costs through an allocation out to your different services, then you’ll probably have to cut the costs. We did that a few years ago when we decided we simply couldn’t afford a senior finance manager. We pay our auditors a bit more when we get stuck, but it’s a lot cheaper than a full-time salary.

The real flaw in my argument, before anyone else points it out, is how do you fund research and development, and the gaps between projects closing down and new ones starting up? That could be described as the real core cost of an organisation and there isn’t an easy answer, apart from trying to accumulate a sensible level of reserves.

But maybe the question had a different meaning: how do you fund good, reliable, proven services when funders all want you to innovate and pretend you're doing something new? Answers on a postcard, please.