There are two primary association operation models used today. The newer model, association management is generally more flexible and effective for associations of any size, but particularly those that are small to medium-size. This includes associations as large as those with $6 million in annual turnover.
What does it mean when an association is managed and what are the advantages?
We live in an age of specialization. Generalists are less common in all professional fields. Law, medicine, engineering, marketing and advertising, and in many other areas, specialization results in greater technical proficiency and effectiveness; management of associations and other non-profit organizations, charities and professional societies is no different. These groups are increasingly supported by professional managers.
“AMCs apply successes and lessons learned across client organizations to develop standardized processes that benefit all clients, like the rising tide that lifts all boats.” Stephanie Czuhajewski, CAE, Agentis Management Inc., from Associations Now Supplement – July 2012
At Verto Solutions we work primarily with trade associations, but these management approaches work for all non-profit organizations. Throughout this article when I say “association” I’m referring to any kind of non-profit corporation.
The economic recession gives us a great reason to consider the financial risks associated with association operations and to weigh the pros and cons of organizations managed by association management companies vs. organizations employing their own staff and shouldering the full costs of occupancy and capital requirements.
All non-profit corporations have a governing body, usually a board of directors. The governing body manages the operation of the organization, usually by hiring a senior staff person that has the title of “president” or “executive director.” This person in turn manages a larger staff that executes the plan created by the board of directors.
Here is where the difference between the two models is most apparent. An association with their own staff “owns the staff,” meaning they have employees with all the costs and benefits that come with them. A managed association on the other hand has a contract with an association management company guaranteeing that the company will provide professional services to that association. The scope of these contracts varies and the management of the staff can vary as well, but in the most basic form, this is the difference between an association with a staff and a managed association.
The association management model provides more options when it comes to matching available resources to the association or non-profit program needs. Organizations employing their own staff have greater capacity from the start, but there is a challenge managing or supervising this capacity and these positions add fixed costs that will only go away if someone is terminated.
The advantages to association management are many but the big ones are:
- Controlling Costs
- Eliminating Employee-Related Risks
- Access to More Skilled and Experienced Professionals
Executing a management contract with an association management company is a great cost control tool for associations. An organization immediately eliminates many of the risk that associations employing their own staff and shouldering the full costs of occupancy and capital requirements face. The scope of the work, the extent of the charges, and general liability of the organization are all limited by a properly drafted association management contract.
The advantages of costs control and elimination of employment related risks are closely linked. That’s because it’s employment issues that frequently drive up costs for associations. Employee rights have greatly expanded in recent years. Hiring, managing, and firing employees consumes enormous resources. When an association signs a contract with an association management company its responsibilities are clearly laid out in the contract. There are no open ended obligations to employees or their families.
Another advantage of association management is access to talent. Associations employing their own staff sometimes end up with amazing people; but amazing people are usually expensive employees. Association management gives organizations limited access to highly trained and experienced professionals that come with the advantage of having helped other organization solve many of the same challenges. Imagine being a small or mid-sized association but having access to the most talented association professionals available; this is association management.
Association management contracts are structured in several different ways. Some associations are charged hourly rates, based on budgets and projects that are approved by the board annually or quarterly. Other associations pay a monthly amount for an agreed upon scope or level of service. The level of service can be as specific as the association wants. At Verto Solutions we use both models depending on what the client association wants.
Whatever the type or size of your association, charity or professional society, association management is good way to control costs and reduce employee-related risks while giving your organization access to the best and the brightest.
Which model do you think is best for operating your association?
Contact me if you would like a free evaluation of your association’s needs.