Difference between revisions of "Pass-Along Funds"
| Line 1: | Line 1: | ||
| − | One of the continuing problems faced by [[Worldcons]] is that memberships are rather unpredictable, with budget decisions necessarily having to be made before accurate income projections are possible. | + | '''Pass-along funds''' is a system to help make sure that [[Worldcons]] don't lose money and are able to spend as much as possible of their income on the [[convention]] itself. |
| + | |||
| + | One of the continuing problems faced by [[Worldcons]] is that [[memberships]] are rather unpredictable, with budget decisions necessarily having to be made before accurate income projections are possible. Since each Worldcon is an independent [[organization]] starting from scratch in terms of funding, this forces a Worldcon to either gamble on its income and risk bankruptcy or to budget conservatively. The latter is obviously more prudent, but results in [[fandom]] not getting the whole Worldcon it paid for, and the organizing [[committee]] sitting on a large profit. | ||
| + | |||
| + | After the [[Constellation Bankruptcy]] of 1983-84 – which was caused in part by the committee spending anticipated income which never materialized, [[L.A.con IV]], the 1984 Worldcon, pinched pennies and wound up with a huge profit. Fandom was Not Amused, and when the LAcon committee gave some of its profit to [[LASFS]] in partial compensation for the stress it suffered by having Worldcon come to town (Worldcons are notoriously hard on the [[local]] [[club]]), the committee was on the receiving end of widespread criticism. | ||
| − | |||
This problem could be ameliorated if Worldcons that made a lot of money passed it on to Worldcons which didn't, but this idea was not adopted since whoever began it would have to give without any hope of receiving funds from a predecessor. | This problem could be ameliorated if Worldcons that made a lot of money passed it on to Worldcons which didn't, but this idea was not adopted since whoever began it would have to give without any hope of receiving funds from a predecessor. | ||
| − | + | Here's how pass-along funds works and why we need it: | |
If you say it quickly, "a-million-dollars" sounds like huge amount of money. Since a ca. 2020 AD [[Worldcon]] typically gets ''at least'' that much income, it should be swimming in cash -- right? | If you say it quickly, "a-million-dollars" sounds like huge amount of money. Since a ca. 2020 AD [[Worldcon]] typically gets ''at least'' that much income, it should be swimming in cash -- right? | ||
| − | Well, no. It doesn't turn out that way for several reasons. First, [[Worldcon]] expenses are also high. Virtually every [[Worldcon]] is forced to rent a convention center (costing maybe $150K) and fill it with tables, chairs, some bits of carpeting, a few signs, and the labor to move all of that (that stuff isn't free or even cheap: another $125K). It spends huge dollars on tech to make sure people can see and hear what's going on (perhaps $100K more) and on publications (another $100K). A hundred thousand here, a hundred thousand there and pretty soon... But even so, it ought to be possible to budget these expenses so that the convention comes out comfortably in the black -- right? | + | Well, no. It doesn't turn out that way for several reasons. First, [[Worldcon]] expenses are also high. Virtually every [[Worldcon]] is forced to rent a convention center (costing maybe $150K) and fill it with tables, chairs, some bits of carpeting, a few signs, and the labor to move all of that (that stuff isn't free or even cheap: another $125K). It spends huge dollars on tech to make sure people can see and hear what's going on (perhaps $100K more) and on publications (another $100K). A hundred thousand here, a hundred thousand there and pretty soon... But even so, it ought to be possible to budget these expenses so that the [[convention]] comes out comfortably in the black -- right? |
| − | Well, no. Nearly all of a Worldcon's income is from memberships, and half the membership money comes in during the last 75 days, because that's when large numbers of people decide if they're coming after all, and it's also when memberships cost the most. So a big chunk of the con's income comes in between | + | Well, no. Nearly all of a Worldcon's income is from memberships, and half the membership money comes in during the last 75 days, because that's when large numbers of people decide if they're coming after all, and it's also when memberships cost the most. So a big chunk of the con's income comes in between three months before and the end of the convention. But ten weeks before the con, when 1/3 of the total income is still just hopes and dreams, the expense budget must be largely set, since the convention has to have already made most of its decisions about what it will be doing and what it will be like -- and consequently what it will spend. You ''have to'' make most of your spending commitments before you know what your income will be. |
| − | To make things worse, [[Worldcon]] attendance is not very predictable. A | + | To make things worse, [[Worldcon]] attendance is not very predictable. A [[U.S.]] [[Worldcon]] in a reasonable location can count on about 4,500 people buying attending memberships, but the larger [[North American]] [[Worldcons]] will have as many as 2,000 more people attending -- that's an additional quarter million dollars -- an extra 40 percent in income. And it is very hard to tell which [[Worldcons]] will be large and which small until the last couple of months or so. So three months beforehand, the [[Worldcon]] committee knows that it has large fixed expenses and enough guaranteed income to cover its fixed expenses and not much more. It has to make a guess how much more money it will get over the next three months and base its planning on that. Since it really is mostly a guess, some years there are more members than the guess and there's lots of spare money, while other years memberships fall short and the convention must slash its budget at the last minute. Running a [[Worldcon]] is a lot like playing high stakes poker: If you're really good you can reduce the risk some, but you can never eliminate it. |
| − | If they wind up with a surplus, North American [[Worldcons]] always reimburse the memberships of program participants and volunteers who put a lot of work into the convention. (Everyone buys a membership in advance -- even the Chairman.) The membership reimbursement money also acts like an emergency fund -- if a [[Worldcon]] really runs into trouble, it pays its other bills and doesn't do reimbursements. It's happened a few times. | + | If they wind up with a surplus, North American [[Worldcons]] always [[Membership Refunds|reimburse the memberships]] of [[program participants]] and volunteers who put a lot of work into the convention. (Everyone buys a membership in advance -- even the [[Chairman]].) The membership reimbursement money also acts like an emergency fund -- if a [[Worldcon]] really runs into trouble, it pays its other bills and doesn't do reimbursements. It's happened a few times. |
| − | + | From 1995–2020, the average net surplus of all North American [[Worldcons]] was around $80,000 -- about 8% of budget, which is pretty close to break-even. (The ideal, of course, is to spend every penny taken in on the convention and to end it with nothing left over.) But the individual surpluses have run from a loss of $160,000 (mostly covered by not doing membership reimbursements) to a surplus of well over $200,000. Financial swings of that sort give committees sleepless nights. | |
| − | At the 1987 [[Smofcon]], this problem was a hot topic and the idea of Pass-Along Funds was invented to make things a little better. The idea was that each [[Worldcon]] would get money from the surpluses (if any) three previous conventions and pass part of any surplus it has on to the next three. [[Noreascon Three]] (1989) offered to jump start the process by promising that it would pass on at least half its surplus to the next three | + | At the 1987 [[Smofcon]], this problem was a hot topic and the idea of Pass-Along Funds was invented to make things a little better. The idea was that each [[Worldcon]] would get money from the surpluses (if any) three previous conventions and pass part of any surplus it has on to the next three. [[Noreascon Three]] (1989) offered to jump start the process by promising that it would pass on at least half its surplus to the next three Worldcons who promised to do the same. Noreascon 3 asked subsequent Worldcons to join the Pass-Along Funds (PAF) agreement while they were still bidding. Nearly every [[bidder]] and every winning Worldcon (except [[Chicon V]] in 1991) has joined PAF. |
| − | The value of PAF is clear. After [[Noreascon Four]], the [[con]] reported: | + | The value of PAF is clear. After [[Noreascon Four]], the [[con]] reported:<blockquote>"Does PAF really make a difference to [[Worldcon]]? Definitely! At the entrance to the [[Concourse]] at Noreascon 4, there was a large sign which read ’This Concourse is brought to you by Noreascon Four through the kind assistance of from the following [[Worldcons]]: [[Torcon 3]], [[ConJosé]], [[Millennium Philcon]], [[Chicon 2000]].’ Noreascon 4 will be passing on surplus funds about equal to what it received, but the PAF funds it received it had available in June when it was deciding how nice a Concourse it could afford. Having PAF made Noreascon 4 a better convention."</blockquote> |
| − | + | [[ConJose]] (2002) received $21,800 total in PAF from [[Aussiecon 3]], [[Chicon 2000]], and [[MilPhil]], and passed on $39,500 total to [[Torcon 3]], [[Noreascon 4]], and [[Interaction]]. Noreascon 4 received $54,500 in PAF from Chicon 2000, MilPhil, ConJose and Torcon 3, and passed on roughly $60,000 to Interaction, [[LAcon 4]], and [[Nippon 2007]]. | |
| − | [[ | + | Pass-Along Funds is not a rule of [[WSFS]] or under the jurisdiction of the [[WSFS Business meeting]], but is managed entirely as a gentlefan's agreement enforced by [[fannish]] opinion. |
| − | |||
| − | {{conrunning}} | + | {{conrunning|start=1989}} |
[[Category:worldcon]] | [[Category:worldcon]] | ||
Latest revision as of 10:19, 7 March 2023
Pass-along funds is a system to help make sure that Worldcons don't lose money and are able to spend as much as possible of their income on the convention itself.
One of the continuing problems faced by Worldcons is that memberships are rather unpredictable, with budget decisions necessarily having to be made before accurate income projections are possible. Since each Worldcon is an independent organization starting from scratch in terms of funding, this forces a Worldcon to either gamble on its income and risk bankruptcy or to budget conservatively. The latter is obviously more prudent, but results in fandom not getting the whole Worldcon it paid for, and the organizing committee sitting on a large profit.
After the Constellation Bankruptcy of 1983-84 – which was caused in part by the committee spending anticipated income which never materialized, L.A.con IV, the 1984 Worldcon, pinched pennies and wound up with a huge profit. Fandom was Not Amused, and when the LAcon committee gave some of its profit to LASFS in partial compensation for the stress it suffered by having Worldcon come to town (Worldcons are notoriously hard on the local club), the committee was on the receiving end of widespread criticism.
This problem could be ameliorated if Worldcons that made a lot of money passed it on to Worldcons which didn't, but this idea was not adopted since whoever began it would have to give without any hope of receiving funds from a predecessor.
Here's how pass-along funds works and why we need it:
If you say it quickly, "a-million-dollars" sounds like huge amount of money. Since a ca. 2020 AD Worldcon typically gets at least that much income, it should be swimming in cash -- right? Well, no. It doesn't turn out that way for several reasons. First, Worldcon expenses are also high. Virtually every Worldcon is forced to rent a convention center (costing maybe $150K) and fill it with tables, chairs, some bits of carpeting, a few signs, and the labor to move all of that (that stuff isn't free or even cheap: another $125K). It spends huge dollars on tech to make sure people can see and hear what's going on (perhaps $100K more) and on publications (another $100K). A hundred thousand here, a hundred thousand there and pretty soon... But even so, it ought to be possible to budget these expenses so that the convention comes out comfortably in the black -- right?
Well, no. Nearly all of a Worldcon's income is from memberships, and half the membership money comes in during the last 75 days, because that's when large numbers of people decide if they're coming after all, and it's also when memberships cost the most. So a big chunk of the con's income comes in between three months before and the end of the convention. But ten weeks before the con, when 1/3 of the total income is still just hopes and dreams, the expense budget must be largely set, since the convention has to have already made most of its decisions about what it will be doing and what it will be like -- and consequently what it will spend. You have to make most of your spending commitments before you know what your income will be.
To make things worse, Worldcon attendance is not very predictable. A U.S. Worldcon in a reasonable location can count on about 4,500 people buying attending memberships, but the larger North American Worldcons will have as many as 2,000 more people attending -- that's an additional quarter million dollars -- an extra 40 percent in income. And it is very hard to tell which Worldcons will be large and which small until the last couple of months or so. So three months beforehand, the Worldcon committee knows that it has large fixed expenses and enough guaranteed income to cover its fixed expenses and not much more. It has to make a guess how much more money it will get over the next three months and base its planning on that. Since it really is mostly a guess, some years there are more members than the guess and there's lots of spare money, while other years memberships fall short and the convention must slash its budget at the last minute. Running a Worldcon is a lot like playing high stakes poker: If you're really good you can reduce the risk some, but you can never eliminate it.
If they wind up with a surplus, North American Worldcons always reimburse the memberships of program participants and volunteers who put a lot of work into the convention. (Everyone buys a membership in advance -- even the Chairman.) The membership reimbursement money also acts like an emergency fund -- if a Worldcon really runs into trouble, it pays its other bills and doesn't do reimbursements. It's happened a few times.
From 1995–2020, the average net surplus of all North American Worldcons was around $80,000 -- about 8% of budget, which is pretty close to break-even. (The ideal, of course, is to spend every penny taken in on the convention and to end it with nothing left over.) But the individual surpluses have run from a loss of $160,000 (mostly covered by not doing membership reimbursements) to a surplus of well over $200,000. Financial swings of that sort give committees sleepless nights.
At the 1987 Smofcon, this problem was a hot topic and the idea of Pass-Along Funds was invented to make things a little better. The idea was that each Worldcon would get money from the surpluses (if any) three previous conventions and pass part of any surplus it has on to the next three. Noreascon Three (1989) offered to jump start the process by promising that it would pass on at least half its surplus to the next three Worldcons who promised to do the same. Noreascon 3 asked subsequent Worldcons to join the Pass-Along Funds (PAF) agreement while they were still bidding. Nearly every bidder and every winning Worldcon (except Chicon V in 1991) has joined PAF.
The value of PAF is clear. After Noreascon Four, the con reported:
"Does PAF really make a difference to Worldcon? Definitely! At the entrance to the Concourse at Noreascon 4, there was a large sign which read ’This Concourse is brought to you by Noreascon Four through the kind assistance of from the following Worldcons: Torcon 3, ConJosé, Millennium Philcon, Chicon 2000.’ Noreascon 4 will be passing on surplus funds about equal to what it received, but the PAF funds it received it had available in June when it was deciding how nice a Concourse it could afford. Having PAF made Noreascon 4 a better convention."
ConJosé (2002) received $21,800 total in PAF from Aussiecon 3, Chicon 2000, and MilPhil, and passed on $39,500 total to Torcon 3, Noreascon 4, and Interaction. Noreascon 4 received $54,500 in PAF from Chicon 2000, MilPhil, ConJose and Torcon 3, and passed on roughly $60,000 to Interaction, LAcon 4, and Nippon 2007.
Pass-Along Funds is not a rule of WSFS or under the jurisdiction of the WSFS Business meeting, but is managed entirely as a gentlefan's agreement enforced by fannish opinion.
| Conrunning | 1989— |
| This is a conrunning page. |
