Wednesday, January 19, 2011

Financial Goals and Funding Categories for Events

Generally speaking, there are three types of meetings when viewed from a fiscal standpoint: Revenue Generator, Break-Even, and Underwritten.

  • A Revenue Generator is a meeting in which the primary goal is to make money and to have your income for the event exceed its expenses – the more you exceed expenses, the better. While other goals may also be pursued for the event, the main focus is on ending the event with significantly more money than it cost to put it on. 
  • A Break-Even event is often confused with a Revenue Generator but they are not really the same thing; the main difference is in scale. Yes, income is still important for a Break-Even event but, once expenses are covered, more income is not necessarily desired or desirable. The basic goal here (and what sets it apart from a Revenue Generator) is to have income match expenses, with perhaps a little extra left over to use as seed money for the next event. The event should pay for itself.
  • An Underwritten event is one in which there is no expectation of turning a profit. The agency or organization hosting the event is not concerned with showing a profit or even necessarily recouping costs. You simply have a budget for the event and, so long as you don’t exceed budget, you’re in good shape.

Funding for any of these types can come from one or more of three categories of sources: internal, external, and self-supporting.

  • Internal funding is also known as organizational funding and is most common with Underwritten events such as trainings or business retreats.
  • External funding is derived primarily from sponsorships. The group hosting the event looks outside their own organization for the money to put on the event.
  • A Self-Supporting event is one in which the money to cover costs is raised from sales of registrations, exhibit space, etc.

While it is nice to be able to say a particular meeting is funded a certain way, most events use a combination of funding streams to reach their fiscal goals. And, as a planner, I find this to be both useful and interesting information to know about a client and their event: what are their financial goals for their event and where is the money coming from to pay for it? Each approach has its own strengths and weaknesses – knowing the group’s goals and funding allows me to better focus my efforts to effectively aid them in creating a successful conference.

~ Karl Baur, CMP • Project Director, RDL enterprises

Ed. Note: For more information about calculating break-even points, check out these posts: Calculating Break-Even and An Example of Break-Even Calculation