Cost of training programs and willngness to pay for training : an application of break-even analysis in Uganda

The organization also has developed a large number of training courses related to AIDS care and counseling that are offered to local and regional organizations. TASO is dependent on donors for 95 percent of its budget and wished to develop alternative funding sources. The training centre was seen as a potential revenue center. To explore alternatives for increasing the sustainability of the training center, a team from TASO attended a one-week workshop on financial sustainability and developed an operations research study to determine ways in which the training center could increase its revenues and reduce costs. The purpose of the OR study was to determine the break-even points for the courses offered by the training center and estimate prices and numbers of participants necessary to ensure the profitable operation of the center. The study applied the technique of break-even analysis to identify charges for the training modules and the enrollment needed to earn positive net revenues for eleven courses. Subsequently, a willingness to pay survey was conducted among TASO training clients to assess the potential for changing the course fees. The break-even analysis enabled TASO to identify three threats to the financial sustainability of their training programs: insufficient fees, excessive costs, and inefficient course size. The willingness to pay results allowed TASO to systematically update their charges for specific training modules. Recommended changes in courses would increase cost recovery in the short term from the current level of approximately 50 percent to approximately 60 percent. With updated fees as well as changes to the structure of some modules, TASO is positioned to reduce their dependency on donors and strengthen their financial base. This study also demonstrated that, with minimal technical support, an NGO was able to undertake a detailed analysis of the costs of individual programs, and use management tools like break-even analysis and willingness to pay surveys to identify programmatic changes that enhance their financial sustainability. (Author abstract)