Market Development Funds (MDF) are funds a supplier commits to a buyer or channel partner to support marketing, promotional, or joint go-to-market activity. MDF typically accrues with volume and gets drawn against qualifying activities.
How MDF works
A supplier commits, say, 2% of qualifying purchases as MDF. As the buyer purchases through the year, an MDF balance accrues. The buyer submits qualifying marketing activities (campaigns, trade shows, digital investment) for reimbursement against the balance, subject to agreed guidelines.
Where MDF value leaks
Un-drawn MDF balances are one of the most under-utilized categories of committed contract value. Balances expire silently at period-end when the activities were never submitted. Tracking accrued balance and burn rate in real time changes the recovery rate significantly.
