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Pass-Along Funds

Pass-Along Funds is a plan to help make sure that Worldcons don't lose money and do spend as much as possible of their income on the convention itself.  Here's how it works and why we need it:

If you say it quickly, "three-quarters-of-a-million-dollars" sounds like huge amount of money.  Since a 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 of all, Worldcon expenses are also high.  Virtually every Worldcon is forced to rent a convention center (costing maybe $100K) 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 the end of June 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 is 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 domestic Worldcon can count on about 4500 people buying attending memberships, but the larger domestic Worldcons will have as many as 2000 more people attending -- that's an additional quarter million dollars -- an extra forty 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 at the end of May, 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.

Over the past twenty-five years the average net surplus of all North American Worldcons has been around $60,000 -- about 7% 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 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.  We asked 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.

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 it had the PAF funds available in June when it was deciding how nice a Concourse it could afford.  Having PAF made Noreascon 4 a better convention.

ConJose (2002) received $21,800 total in PAF from Aussiecon, Chicon 2000, and MilPhil, and passed on $39,500 total to Torcon 3, Noreascon 4, and Interthingy.  Noreascon 4 received $54,500 in PAF from Chicon 2000, MilPhil, ConJose and Torcon 3, and will probably pass on roughly $60,000 to Interthingy, LAcon 4, and Nippon 2007.

('Pass Along Funds' from an article by Mark Olson)

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