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Charities are failing to obtain full costs from statutory health and social care funders, a survey claims.

The shortfall means that a government target for charities to recover full costs by this month will be missed.

More than half of charities made losses of 15 per cent or more, including overheads, in delivering public services, said the initial findings of the survey by the Charity Finance Directors’ Group.

The survey, carried out with the Chartered Institute of Public Finance and Accountancy (Cipfa), found that statutory funders were reluctant to cover full costs because of financial pressures or a “lack of understanding”.

Charities also said the length of contracts were often too short for the type of service they provided.

Chris Harris, chair of Cipfa’s charities panel, said: “Public sector procurement performance is poor with ill-fitting contracts being imposed without much thought.”

A Treasury spokesperson said: “The government is committed to the principle of full cost recovery, which all departments and agencies have signed up to.

“But we accept that we are not yet in a position where all act in line with agreed principles.”

The survey is open until the end of next month and full results are due to be published in June.

● From www.cfdg.org.uk