Funding Your Core Costs.

Core costs are the expenses required to operate a charity that aren't tied to delivering any single programme. They include rent, utilities, insurance, finance and HR support, leadership and management time, IT systems, fundraising, governance (trustees, audit, compliance), and the general overhead of running an organisation.

In a properly costed charity, core costs typically represent somewhere between 15% and 35% of total expenditure. They are the infrastructure your delivery work sits on top of. Without them, programmes collapse — there's no one to manage budgets, no one to recruit staff, no one to make sure salaries get paid.

Most charity funders prefer to fund visible, evaluable, named projects rather than operational overheads. This isn't malice — it reflects how easy it is to tell a story about a project ("We funded the women's refuge for two years; here's what changed") versus core costs ("We covered 8% of an existing finance officer's time"). Project funding is photogenic. Core cost funding isn't.

The result is a chronic under-funding of the very infrastructure that makes effective delivery possible. The Charity Commission, sector bodies, and increasingly funders themselves now widely acknowledge this — the "starvation cycle" of charity overhead is a recognised pathology in the sector. Charities that try to deliver excellent programmes on minimal core eventually burn out their staff and collapse.

Full cost recovery (FCR) is the practice of allocating a fair share of your core costs to every project budget. If your charity's total core cost is £100,000 and your programmes deliver £500,000 of work, your FCR rate is roughly 20%. Every project proposal should then add 20% on top of direct costs to recover that proportional overhead.

Most UK charity funders now accept FCR-built budgets as long as they're explained and reasonable. Some explicitly require it. The skill is in calculating it properly and presenting it clearly — for example: "Direct delivery costs: £40,000. Materials: £8,000. Full cost recovery (allocated overhead at 18%): £8,640. Total request: £56,640."

FCR is not a trick or a markup — it's an honest reflection of what the project actually costs the charity to deliver. Funders who understand this welcome FCR. Those who don't are usually the ones who quietly underfund the sector.

A small but growing group of UK funders offer dedicated core-cost or unrestricted multi-year grants. BBC Children in Need's Core Grants is among the most explicit. Garfield Weston Foundation, Esmée Fairbairn Foundation, Lloyds Bank Foundation, and Paul Hamlyn Foundation have all evolved towards more flexible, core-funding models.

These funders are gold. When you find one that fits your work, treat the application with extreme care — they receive enormous demand for the small number of unrestricted grants they make. Read their priorities carefully, look at recent grantees, and only apply where you're a genuine match.

Ultimately, the most resilient charities don't depend on any single approach to core funding. They combine FCR on restricted grants, applications to the unrestricted-friendly funders, individual giving, trading income where appropriate, and sensible reserves. No single income source can sustainably fund a charity's entire core. The charities that survive long term are the ones with multiple legs to their funding stool.