Cost Recovery on Extra-budgetary Activities
Up one levelMany organizations are moving to greater integration of regular and extra-budgetary activities as part of their strategic programme budgeting and implementation. The steady and significant increase in the level of extra-budgetary resources may have a disproportionate effect on the overall level of administrative and support work funded by the regular or core budget, especially when the latter remains static, as has been the case in many organizations in recent years. Although it is acknowledged that organizations have made efficiency shifts lately, unless an appropriate level of funding is made available for the additional administrative and support costs required by the upwards trend in extra-budgetary financed programmes, further imbalances may become difficult to sustain.
The FB Network has been working on this subject with the objective of reaching a common agreement on a common methodology or a set of principles on support costs recovery for extra-budgetary activities, including the system of full cost recovery.
An HLCM working group was activated in October 2003 and concluded its activity in 2005. The working group compared the existing practices and agreed on a set of definitions and on basic principles for cost recovery policies.
As part of the UN Development Group’s follow-up to the Triennial Comprehensive Policy review, the UNDG Management Group, in collaboration with the HLCM, agreed to develop interim guidelines on cost recovery for multi-donor trust funds (MDTFs), joint programmes and joint offices.
More recently the FB Network held in Geneva the 20-22 June 2007 decided to reactivate a working group on cost recovery policies with the mandate to develop and further pursue the homogenization of the support cost recovery policies. The Working group met for the first time in Paris on July 26 and 27 and decided to carry out a comprehensive analysis on the current cost classification policies in oder to procede further with the cost recovery policy harmonization. Work in this area has been included in the HLCM Proposal for Business Practices Harmonizations.
Work in this area is led by Yolande Valle, Director, Bureau of the Budget, UNESCO and Mina Dowlatchahi, Programme Budget and Evaluation Division, FAO.
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