RDFL_Cost Allocation Policy

As the organization continues to implement multiple donor-funded initiatives, the need for a systematic and transparent approach to allocating shared costs across projects has become increasingly important.

A well-defined Cost Allocation Policy will enable RDFL to:

• Distribute administrative and shared expenditures fairly across projects.
• Remain compliant with donor regulations and national laws.
• Improve accuracy in financial reporting and accountability to stakeholders.
• Strengthen institutional sustainability through consistent indirect cost recovery.

2. Purpose of the Assignment

The consultancy aims to produce a comprehensive Cost Allocation Policy and Implementation Guide that will:

• Establish principles and methods for allocating shared and indirect costs.
• Provide a framework for documenting, calculating, and justifying allocations.
• Offer standardized tools to ensure consistent application across projects and financial years.
• Support compliance with both donor regulations and organizational requirements.

3. Scope of Work

The consultant will be expected to deliver the following tasks:

Stage 1: Situation Analysis

• Review current financial management practices relating to shared costs.
• Examine donor agreements, organizational budgets, and chart of accounts to identify gaps.
• Benchmark against recognized standards and requirements of major donors (e.g., USAID, EU, UN).

Stage 2: Policy Development

• Draft a Cost Allocation Policy covering:
  • Definitions of direct, shared, and indirect costs.
  • Allocation principles (equity, transparency, consistency, compliance).
  • Types of costs subject to allocation (rent, utilities, HR/admin salaries, IT, transport, office supplies).
  • Allocation methodologies (e.g., headcount, timesheets, proportion of project budget, usage-based methods).
  • Documentation and justification requirements.
  • Periodicity of allocations (monthly, quarterly, annually).
  • Donor-specific considerations where applicable.
  • Governance mechanisms for approval, review, and periodic updates.

Stage 3: Validation and Knowledge Transfer

• Present draft policy and tools to management and finance teams for review.
• Incorporate feedback and finalize the policy and procedures.
• Deliver an orientation session to build staff capacity on the new policy.

4. Expected Outputs

The consultant will deliver:

1. Diagnostic review report of current practices and gaps.
2. Draft Cost Allocation Policy and Procedures Manual.
3. Finalized Cost Allocation Policy and Procedures Manual, incorporating feedback.
4. Templates and tools for allocation calculations and documentation.
5. Training session and induction materials for staff

5. Timeframe

The assignment will run over a period of two months, commencing on [10/10/2025] and to be finalized by [10/12/2025].

6. Reporting and Supervision

The consultant will report to the Finance Director and liaise closely with the finance and program teams throughout the assignment.

7. Required Profile of the Consultant

• Advanced qualifications in Finance, Accounting, or Business Administration.
• Minimum of 7 years relevant professional experience in NGO finance, auditing, or cost allocation systems.
• Demonstrated success in developing allocation methodologies and financial policies for non-profits.
• Strong knowledge of donor compliance frameworks (EU, USAID, UN, etc.).
• Solid communication, training, and writing skills.
• Fluency in English and Arabic as appropriate.