Improving Financial Relationships with the Third Sector: Guidance to Funders and Purchasers

This guidance is intended to help government departments, non-departmental public bodies and other funding bodies themselves distributing public money to the third sector. It will also be of interest to the third sector, who as recipients of funding, can be able to better understand the considerations that funding bodies need to bear in mind during the funding process. The document addresses four specific issues:

Stability in the funding relationship: moving from one year funding to longer-term funding arrangements where appropriate.
Timing of payments and the balance of risk: recognising that payment in arrears often results in the third sector bearing the upfront costs of borrowing and the risks that this entails;
Full cost recovery: ensuring that funding bodies recognise that it is legitimate for third sector organisations to recover the appropriate level of overhead costs associated with the provision of a particular service; and
Reducing the burden of bureaucracy: streamlining access and performance management requirements for multiple, and often very small, funding streams.

http://www.hm-treasury.gov.uk/spend_ccr_guidance.htm