The UNDP’s Executive Board taken on June 2007 on cost recovery directs UNDP to adopt a rate of 7% for the recovery of indirect general management support (GMS) costs for new third party contributions and trust funds.

This constitutes a change from previous guidelines in that the 5% to 7% GMS ‘range’ practiced thus far is now eliminated. This change took effect immediately for all new third party contribution agreements. It should be clarified, however, that the 7% does not necessarily apply to contributions that are yet to be received under the terms of previously concluded agreements.

The 7 % will be the general standard applicable to all third party cost sharing and trust fund contributions. The Executive Board expects UNDP to adhere fully to this standard with the objective of reaching proportionality of support costs.

Exceptional circumstances may arise which would call for a modified GMS rate to take into account specific priorities, modalities incurring lower indirect costs, and harmonization goals. In such circumstances, the Board has indicated that UNDP will retain the authority to grant waivers to the cost recovery rate. All such exceptions must be reported to the Board in the annual financial reporting. Such authority will only be exercised through a case-by-case review of the specific circumstances that would truly warrant its use.