Helping NGOs do more with their money

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Overhead costs

'Overhead costs' or 'core costs’ are the central administrative costs that NGOs have to pay to run the organisation (like office rent or staff training).

NGOs often find it hard to raise funds to pay for their core costs.

Strategies for paying for core costs

There are various strategies , including:

Allocating direct costs to projects

In the example illustrated below:

The vehicle usage log book shows which journeys were made for Projects A, B and C and general purpose ('Other') journeys.

The costs of the journeys recorded for the projects are allocated as ‘direct costs’ to those projects, which leaves Mshs 4,000 in 'core costs'. 

Apportioning indirect costs to projects

It is good practice to apportion (ie share out) your core costs to each project or activity that you run. This helps you work out the total cost of running each specific activity.

Total costs equal direct costs plus a share of core costs.

Core costs may be apportioned to different projects in a number of ways. For example, split by the relative size of:

Generally, it is best to use a simple method and to be consistent.

For advice on Full cost recovery, see The Big Lottery fund.

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