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Full Cost Recovery What is full cost recovery? Full cost recovery means recovering the total costs of a project including the relevant proportion of your organisation’s overhead costs. Every project you undertake has costs directly associated with it, such as the cost of staff or equipment. It may also draw on the rest of an organisation’s resources eg there might be an element of line manager from an existing officer or overlap with central functions such as finance, training, funding advice etc. Two types of cost can generally be associated with delivering a project: Direct costs and Overhead costs. Direct costs are those needed to produce the output of the project or service itself eg: • • • Salaries of employees or other people working directly on the project, plus pension, NI and redundancy costs Travel and subsistence costs Equipment, materials or other costs associated with the project Overhead costs are also referred to as core, indirect or ‘back office’ costs and can be split between various projects or activities with the lead organisation. Full cost recovery works on the premise that both direct costs and a relevant portion of overheads are integral to the support and delivery of a project and must, therefore, be included when calculating the overall cost of a project. Why is full cost recovery so important? If you are not calculating and therefore recovering the full costs of a project you are creating a deficit for your organisation. This deficit will then have to be met through additional fundraising or through other means. This means that by not achieving full cost recovery, you could be jeopardising the sustainability of your organisation and hence the services you provide.