Our sector needs better ways to talk about cost. Full cost names and claims all the financial resources it takes to run an effective organization for the long haul.
Full-cost funding is a priority for Irvine. It advances equity, one of our values, and helps us do our part to support the long-term resilience of the organizations we fund. For me, full cost includes a conversation about job quality for nonprofit staff. I want to understand if and how our funding can support staff to have sustainable wages, reasonable working hours, access to quality benefits, and visibility into, if not a say over, how organizations operate. Talking about full cost is about making sure our funding doesn't perpetuate the inequality we're looking to address in our mission.
Defining Full Cost
What All Nonprofits Need (learn more)
- Total expenses: the day-to-day direct and indirect, program and overhead, and the unfunded expenses holding us back
- Working capital: cash to keep operations going strong, even when we’re waiting to get paid
- Reserves: to navigate the unexpected, survive a crisis, or act on a new opportunity
What Some Nonprofits Need (learn more)
- Debt principal repayment: to pay back what’s been borrowed
- Fixed asset additions: new equipment, buildings, and other fixed assets
- Change capital: large, flexible dollars to reposition your business model
I'm using a full cost framework now with the board, so I explain our unfunded expenses and our capital budgets as we discuss how much we’re planning to spend this year. This has changed the language we’re speaking here, so that’s been terrific. Having that structure allows you to create a vision for the future.
Partners and Projects
Some of our most exciting full cost work has happened in partnership with Philanthropy California (an alliance of Northern California Grantmakers, Southern California Grantmakers, and San Diego Grantmakers). Learn more about the history of the Full Cost Project, which continues to build momentum in California.
- Why Funding Overhead is Not the Real Issue: The Case to Cover Full Costs
- Why Grantmakers Need to Break Their Restriction Habit – Permanently
NFF helps nonprofits, funders, networks, and communities implement full cost practices. Contact us to discuss bringing this work to your organization or region.