What is full cost recovery?

In simple terms it means recovering the total costs of a project, service or activity, including a relevant part of overhead costs.

Every project, service or activity has costs directly associated with it, for example staff time, vehicles or equipment (direct costs). It will also require resources from the rest of the organisation. For instance, it might include some of a manager or trustee’s time and also impact on support functions such as finance or personnel (overhead costs).

Organisations must seek to secure funding or income to ‘recover’ a proportion (or part) of overhead costs, as well as the direct costs of a project. Every organisation needs to recover its full costs, or it cannot pay staff, rent office space, offer new activities or plan for future development and delivery of its services.