IRS inquiry puts events back into the spotlight

When producing a business conference, would you pay a speaker $17,000 to create paintings of celebrities on stage? How about bump up your budget for unique extras such as a clown, mind reader and bicycle-building workshop? This might sound like an absurd use of an event budget, but recent inquiries into government conference spending have found these lavish instances — giving some events a bad rep.

On Tuesday, an audit of a 2010 conference produced by the IRS was released. Among the extravagances reported were:
– $17,000 fee for the painting speaker, with one painting reported lost
– $35,800 for three pre-conference planning trips
– $30,000 for employee per diems and hotel stays despite living locally
– $50,000 for the production of parody/comedic videos that aired during the event
– $71 daily per diem per attendee, in addition to free drinks, breakfasts and snacks

The report, coupled with last year’s GSA scandal, in which the government agency spent $823,000 of tax-payers’ money on an exuberant 2010 conference, is forcing the federal government to crack down on their own conference spending as well as budgets for travel and training at all other trade shows.

In a rebuttal after the release of the audit, IRS spokeswoman Michelle Eldridge said since 2010, spending on large agency conferences has fallen nearly $33 million, from $37.6 million in 2010 to $4.9 million in 2012. This large decline, and still falling, can become a significant blow to the vitality of the events industry.

“Our face-to-face industry members have two areas they are concerned about,” said Tom Carpenter, ABM’s Washington rep. “One is attendance of federal government employees at their conferences, and the second is conferences that the federal government puts on themselves and the economic impact of losing those.”

In another IRS response, CFO Pamela LaRue noted that large meetings produced by the agency have decreased 84 percent since 2010, and costs have been cut 87 percent. Travel and training expenses, which includes travel to/from and registration fees for other trade shows, have declined 87 percent and 83 percent, respectively.

The dramatic figures are despite a March defeat of an amendment sponsored by Sen. Tom Coburn (R-OK) that aimed to prohibit any federal agency from sending more than 25 employees to any meeting or conference in the U.S. The event industry largely opposed the amendment, with The Center for Association Leadership calling it “a very legitimate threat to face-to-face collaboration between government and the private sector.”

“It really has nothing to do with larger contexts of ‘is the events, travel and tourism industry a bad thing?,’ but rather it’s solely from a spending side,” said Carpenter. “Anything where you have a federal employee out and about at a nice locale in a nice hotel is definitely ripe for spending debates.”

One interesting thing to note: In a released memo, the IRS said it has expanded its use of alternative training methods in substitution for face-to-face meetings and conferences. Among these alternative methods is video and online training, which can be a big opportunity for b-to-b media. The agency says 90 percent of its current training hours are done online — which is double the amount reported in 2010.

While expectations for online events taking the place of live events have come back to earth, but they can present a promising future for a media company covering the government sector or other industries that are cutting back in training and education dollars.

Last fall, ABM member Praetorian Group launched an online training tool for police officers, PoliceOne Academy, after seeing many police departments were cutting back in their education budgets. The b-to-b media company expanded its online training portfolio last week with the acquisition of LocalGovU.

Other ABM members, such as Government Executive and 1105 Government Media Group, also offer frequent webcasts that serve as training tools.

It’s becoming easy for the public to condemn events after reading reports on lavish conference spending. In light of that, Carpenter believes b-to-b media and the events industry need to continually advocate for shows and conferences.

“This is not just limiting glitz and glamour for federal employees,” said Carpenter, “but this is limiting opportunities for them to be educated on the industries they regulate.”

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