In March, WCVA published something most people in the sector already knew in their bones, but had never seen written down as a number.
Only 30% of organisations say funders cover their full costs.
That is from Baromedr Cymru, WCVA’s own survey of the Welsh voluntary sector. The rest of it is no cheerier: 45 to 48% are depleting their reserves. 37% cannot meet the demand already coming through the door. 63% saw demand rise over three months and 68% expect it to keep rising. Only 9% say public funding is multi-year most or all of the time.
Dr Lindsay Cordery-Bruce, WCVA’s chief executive, called it “a perfect storm.”
Here is the part that ought to sting. It is not that organisations are not asking. Most of them do put their full costs in the bid. They are just not getting them.
The gap between what the rules say and what happens
The Welsh Government’s own Third Sector Scheme code of practice is not vague about this:
“Recognising the full costs of the delivery of services is vital (Full Cost Recovery). Third sector organisations need to be open and transparent about these costs, and funders need to be clear and consistent as to which costs can be included.”
And it spells out what happens when that fails:
“Not recovering the full costs of a project creates a deficit which has to be met through additional fundraising or through subsidy from an organisation’s unrestricted funds.”
Read that again slowly, because it describes something specific. A project that does not recover its full costs is not breaking even. It is being subsidised by your reserves — the money you were keeping for the month a grant runs late, or the year a funder changes its mind. Every under-costed project quietly moves a bit of your safety net onto a funder’s balance sheet.
Which is exactly what 45 to 48% of the sector is now watching happen.
The line that gets left out most often
In our experience the single most commonly omitted cost is monitoring and evaluation.
Not because people do not value it. Because it is the hardest bit of the form to word, and it usually gets attempted last, at half nine at night, when the budget table has already been filled in and balanced. So it becomes a sentence in the narrative — “we will monitor outcomes throughout” — rather than a line in the budget with a number next to it.
And a cost described but not costed gets stripped out. Not maliciously. It just is not there to fund.
There is a second reason, and it is more awkward: a lot of organisations are not sure they are allowed to ask. There is a persistent sense that evaluation is overhead, that overhead is somehow grubby, and that a lean-looking bid wins. It does not. An assessor who sees no evaluation cost does not think “efficient.” They think “how will they know if this worked?”
What the code actually gives you
Two things in that code of practice are worth having at your elbow when you write the next bid.
The first is the full cost recovery language above. It is Welsh Government policy that your full costs — direct and overhead — should be recoverable. You are not chancing your arm by including them.
The second is quieter and more useful:
“it is important that funding applications, tender processes and monitoring activities are proportionate to the value of the grant or contract.”
Proportionate. That cuts both ways, and the second way is the one nobody mentions. A funder should not demand a £3,000 evaluation on a £2,000 grant — but equally, you should not feel obliged to promise one. A modest, honest, proportionate evaluation cost is exactly what the code envisages. You are allowed to say “this is a small grant, so here is a small, sensible way of knowing whether it worked, and here is what it costs.”
What good looks like in a bid
Four things, none of them complicated.
Put it in the budget, not just the narrative. A line, a number, a heading. Monitoring and evaluation, project management, or central costs — whichever heading the funder uses.
Name the system. “We will collect feedback” reads as an intention. “We use [system] to record delivery as it happens, and produce quarterly and annual reports” reads as a plan. Funders respond to an established method over a good intention, every time.
Say what will land on their desk, and when. Quarterly and annual is usually plenty. They want to know the reporting exists and roughly what shape it is.
Be honest about the method. If you are costing volunteer time, say what rate you used and where it came from. If you are describing outcomes, say how you will know. A smaller figure you can explain beats a bigger one you cannot — and an assessor who can follow your arithmetic is an assessor who trusts the rest of the bid.
If more than one funder is paying
Where a cost is shared across programmes with different funders, apportion it on a stated basis and show that the shares total 100%.
This matters more than people realise. Double funding — the same cost charged to two grants — is one of the first things a finance-literate assessor checks for. Getting ahead of it removes a question before it is asked.
NCVO’s guidance on cost allocation and apportionment names four accepted bases — headcount, time, floor space, expenditure — and advises picking one and using it consistently. Their own advice for smaller organisations is to keep it simple: “it’s often easier to choose one method, such as people, and use it for all types of support costs.”
So: “Shared across two programmes, apportioned on headcount — six of our eight delivery staff work on Programme A, two on Programme B. Shares total 100%; no element of this cost is claimed against more than one funder.” One paragraph. Question closed.
The wording, if it helps
We have put the actual wording on a page you can copy from — the budget line, a short and a long answer to the monitoring and evaluation question, a justification for it being an eligible cost, and an apportionment note for multi-funder bids. Pick your size and the figures fill themselves in.
owlimpact.wales/bid-wording — no sign-up, nothing to buy.
Being straight about why it exists: we make Owl Impact, which is paid software for recording delivery and evidencing outcomes. The wording page works perfectly well for an organisation that never buys anything from us, and we would rather it got used than gated. And where it does lead somewhere, the licence goes into the bid as the monitoring and evaluation line — which is the whole point of this post. It is covered by the funding rather than your own budget.
One last thing
That 30% figure is not a reason to despair. It is a reason to look at the last bid you submitted and ask a blunt question: did we ask for what it actually costs us to do this, including knowing whether it worked?
If the answer is no, that is not a funder problem. That is a fixable one, and the fix takes about twenty minutes on the next application.
Sources: Baromedr Cymru, WCVA, reported March 2026 — covered by Nation.Cymru and Business News Wales. Welsh Government Third Sector Scheme: code of practice for funding the third sector. NCVO cost allocation and apportionment.