Allocation of shared costs between grants and projection of the funding gap

FTE: 6 + 9 + 5 = 20. Keys: A 30%, B 45%, C 25%.

The ineligible share of C (USD 2,400 per month) remains on own funds: it cannot be allocated to A and B.

November and December (A, B, C; 20 FTE): A 2 × 4,140 = 8,280; B 2 × 6,210 = 12,420; C eligible 2 × 1,050 = 2,100; C own funds 2 × 2,400 = 4,800.

January to March (A and C; 11 FTE): A 13,800 × 6 / 11 = 7,527.27 per month, i.e. 22,581.82; C eligible 4,200 × 5 / 11 = 1,909.09 per month, i.e. 5,727.27; C own funds 9,600 × 5 / 11 = 4,363.64 per month, i.e. 13,090.91.

April to June (C only): C eligible 4,200 × 3 = 12,600; own funds 9,600 × 3 = 28,800.

Total need outside the grants: 6,861.82 + 5,427.27 + 46,690.91 = USD 58,980. Check: 8 months × 13,800 = 110,400 of costs; covered by A 24,000 + B 12,420 + C 15,000 = 51,420; 110,400 - 51,420 = 58,980. B's surplus (3,580) cannot fill these deficits.

The deficit comes mainly from the end of B, then of A: the office structure (13,800 per month) is sized for three grants.

• Reduce costs from January: smaller office or one shared with another NGO, renegotiation of the rent, vehicle rented on demand; check the notice periods of the lease and the contracts (a decision in November is needed for an effect in January or April).
• Budget revision of A: ask the donor to reallocate savings from A to shared costs (USD 6,861.82), with a justification of the FTE method.
• Negotiate with C's donor the eligibility of a share of the rent, utilities, guarding and vehicle, on a pro rata basis, during a revision or an extension: this is the main lever (USD 46,690.91).
• New funding: speed up the proposals in progress, including a shared costs line calculated using the FTE method, and an indirect cost rate if the donor accepts it.
• B's surplus: use it only for B's expenditure (activities or needs specific to the health project) through a budget revision, or return it; never by over-charging shared costs.
• Own funds: inform senior management immediately of the residual need so that a decision can be made on it in the organisation's budget.

Next proposal: shared costs budget detailed by line, explicit allocation key, realistic share requested over the whole project duration, including if other grants end; prior check of the donor's rules on shared costs and indirect costs.

Sample answer: "I understand the objective, but charging 60% to B would mean billing it USD 8,280 per month instead of the 6,210 that corresponds to its real share (45% of FTE), i.e. USD 4,140 too much over two months. These costs would be ineligible at audit, would have to be refunded and would cast doubt on our whole allocation method with all three donors. B still has a surplus of USD 3,580: I suggest requesting a budget revision to allocate it to real needs of the health project before December. For the deficit of A and own funds (USD 58,980 until June), I will send you an options note tomorrow: reduction of office costs, revision of A, negotiation with C's donor."