Full Cost Recovery (FCR) means making sure that the purchaser or funder of a service covers the real and full cost of delivering it. This is crucial, and funders of services should adhere to the principles of FCR. Voluntary and community groups need to make sure that they can cost services realistically – including not only the direct costs of delivering a project or service, but also a relevant share of the organisational overheads, including management and governance costs.
Voluntary and community organisations need to consider walking away or refusing contracts that are under-funded. As well as compromising the sustainability of the organisation, under-resourced services run contrary to the best interests of service users.
Using charitable resources to subsidise public services is against charity regulations.
Managing relationships between the public sector and the voluntary and community sector - the Compact
‘The Compact’ is a series of agreements, which sets out the terms of engagement between the voluntary and community sector, and the public sector. All public sector bodies should be working to the principles and practices enshrined in the Compact and its codes of practice. There are national and local versions, and most of Scotland’s local authority areas are now covered by a local Compact.