Pass-Along Funds

Following a discussion at the 1987 Smofcon, Noreascon 3 began the Worldcon Pass-Along Funds (PAF) scheme in 1989. With the exception of Chicon V, every Worldcon since then has participated.

The problem

Since Worldcons are each stand-alone entities, they must budget very conservatively in order to avoid any substantial likelihood of losing money.  Inevitably, this means that most Worldcons wind up with a substantial surplus, and that surplus represents money paid by the members of that Worldcon which is not being spent on it.  The WSFS Constitution requires that "2.9.3: Each Worldcon or NASFiC Committee should dispose of surplus funds remaining after accounts are settled for its convention for the benefit of WSFS as a whole."

The purpose of PAF is to return most of the profit made by one Worldcon directly to the WSFS by giving it to future Worldcons early enough before the convention that it can be effectively used. This not only guarantees that a majority of each Worldcon's profit is automatically disposed of in compliance with Section 2.9.3, but it also takes a small step towards smoothing the budget fluctuations from one Worldcon to the next.

The Agreement

The Pass-Along Funds agreement is simple: Each Worldcon which agrees to participate agrees to pass along at least half of its profit to the next three Worldcons which agree to participate.  The basic deal is straight-forward, but there are subtleties which are discussed below.  None of them are particularly outré, however: They are all straight-forward applications of the basic notion that the purpose of PAF is to pass along most of a Worldcon's profit so that it is used in running future Worldcons.

Subtleties

• When should Worldcons sign on to PAF?
  Worldcons are required to sign on before they know what their profit is. The whole point of PAF is to return Worldcon profits to WSFS, so there is no point at all in a Worldcon joining PAF after the convention -- the PAF money would then just go into its surplus which is not the point of PAF and which would not be what  section 2.9.3 is asking for. In every case the Worldcons to date have signed on to PAF while they were still bidding.
• When should Worldcons pay PAF?
  As soon as possible! The purpose of PAF is to take one Worldcon's surplus money and pass it on to Worldcons which can actually use it to make a better Worldcon, so it's essential that PAF happen as early as possible. If a Worldcon is sure that it made a profit, but not sure how big it is, it's better to pay partial PAF now and the balance (if any) later than to wait for precise numbers and not provide the funds in time to be of value.
• Must the money be split evenly between the three Worldcons?
  It's not required by the agreement, but it is highly desirable, and Worldcons should make a good-faith effort to split PAF evenly. A case where that would not be possible might be if a Worldcon received a significant refund more than a year after the convention so that the immediately succeeding convention had already occurred (and was in the black) and had no use for PAF. The Worldcon would still have an obligation to pass along at least 50% of that profit, but there would be no way this could be done evenly.
• How is profit determined?
  PAF is not interested in setting up accounting rules for WSFS, and expects profit to be determined in the ordinary and fannish way. Roughly: profit is what is left after a Worldcon pays its bills, including customary reimbursements (memberships for program participants and staff, and extraordinary committee expenses but not including bidding expenses), but before any grants are made.
• How is PAF enforced?
  There is no enforcement mechanism and PAF is not part of the WSFS rules.  It is an agreement freely entered into by Worldcons and is enforced solely by fannish public opinion.
• What if one Worldcon opts out?
  The obligation is to pass-along funds to the next three Worldcons that participate in the scheme. So when Chicon V in 1991 opted out, Noreascon 3 did PAF to the 1990, 1992, and 1993 Worldcons, which all had joined.
• Can a Worldcon pass along more than 50%?
  Of course!
• What about NASFiC?
  The NASFiC, while a WSFS-sponsored convention, is not a Worldcon and is not covered by the PAF agreement. Even if a NASFiC wanted to participate, the terms of the PAF would not permit it. A Worldcon which accepts PAF money must pass on to the next three participating Worldcons.
• What if the convention doesn't do reimbursements?
  The issue of membership reimbursements is separate. If the convention doesn't do them (it's not customary for overseas Worldcons) then the profit which it must pass on is still what's left over.