Operion Journal
A board member asks what the food basket programme cost this year, and gets only the purchase total. What about coordinators, transport, warehouse rent and a share of finance and management? The real number can be much higher and can change decisions. Knowing the true cost of each programme underpins board decisions, grant proposals and disclosure.
Cost components
Direct costs belong to the programme alone; shared costs serve several programmes (a warehouse, a vehicle, a field coordinator); administrative costs run the organisation as a whole but are a real part of delivering each programme.
Step 1: record direct costs correctly
A cost centre per programme, mandatory on every expense document, plus a grant dimension for restricted funds; see linking expenses to activity and donor.
Step 2: choose fair allocation bases
| Cost | Suggested basis | Example |
|---|---|---|
| Warehouse rent | Space or stock volume | 60% food, 40% clothing |
| Distribution vehicles | Trips or kilometres | From trip logs |
| Shared coordinator | Time recorded | From timesheets |
| Management and finance | Share of direct cost | Larger programmes carry more |
| IT | Users or transactions | By usage |
The basis must be reasonable, consistent, approved and compatible with donor rules.
Step 3: allocate periodically
Record shared and admin costs on their own cost centres, then post a monthly or quarterly allocation entry; ERPNext supports recurring entry templates and reports, and parts can be automated.
Step 4: cost per unit and beneficiary
Link programme cost to beneficiaries or units recorded in the same system to compare branches or years.
What true cost reveals
- Programmes that look cheap but consume admin time.
- Branches with higher cost per beneficiary.
- Grants that do not cover indirect costs, silently funded by general donations.
- Evidence for fair indirect-cost rates in future proposals.
Board reports
- Direct, shared and admin cost per programme.
- Cost per beneficiary by programme and branch.
- Admin share of total spending.
- Funding vs cost per programme.
- Budget variance.
Common mistakes
- Reporting direct cost only.
- Changing bases every period.
- Loading all admin cost on one programme.
- Beneficiary counts kept outside the system.
See ERP for charities, non-profit solutions, or request a demo.
Frequently asked questions
Direct vs indirect programme cost?
Direct belongs to the programme alone; indirect is shared or administrative and allocated on an approved basis.
How do I choose a basis?
One that reflects consumption, applied consistently.
Can ERPNext calculate cost per beneficiary?
Yes, by linking programme cost centres to recorded beneficiaries or units.
Do donors allow admin cost?
It varies; check each grant's terms.
