Funding jargon busting
We use a lot of words when we talk about funding, and some of them may be confusing when you’re starting out. See below for brief explanations for some of these terms:
(To) break even = (to) generate enough funds from a show to cover your costs (i.e. to start making profit)
Break-even Percentage = the percentage of your total capacity you need to sell in order to break even
Break-even Sales = the number of tickets you need to sell to break even
Cash flow = a record of the movement of money in and out of your company’s bank account
Deficit = the unfunded part of your budget (e.g. if your budget is £1000 and you have secured £500 of funding, your deficit is -£500)
Overage = the opposite of deficit; funding secured on top of what your budget requires (e.g. if your budget is £1000 and you have secured £1100 of funding, your overage is £100)
Funding bid = document outlining your plans for a production, submitted as part of a funding application. For advice on how to write one, click here
Funding body = a society or company which offers funding
Grant = funding that you do not need to return to the funder
Pro rata loan = loan funding in which the return sum depends on the financial outcome of your show (i.e. the return sum is equal to the initial funds you were given, plus a percentage of your profit, or minus a percentage of your loss, whichever applies).
Sometimes, funding offers are made in two parts: Upfront funding and GAL (Guarantee Against Loss):
Upfront funding = Funding which gets transferred to you immediately following a successful application
Guarantee Against Loss (sometimes known as Underwriting)
= (in the context of pro rata loans) this is a sum of money which does not get transferred to you, but which allows a larger percentage of your budget to be funded.
This means that if you make a loss, the funding body will cover more of the loss. In return, if you make a profit, you return more of that profit to the funding body.
= (in the context of grants) this is an extra sum of money which the funding body releases if you make a loss; you do not need to return anything to the funding body.
Projected expenditure = the sum of money you budget to spend on your production
Actual expenditure = the sum of money you actually spend on your production (should be equal to or less than the projected expenditure)
Projected income = the sum of money you expect to gain from your production
Actual income = the sum of money you actually gain from your production (should be equal to or greater than the projected income)