September 19, 2022

Professional Associations are at a Crossroads

By Thomas Jenkins, Director, Managed Services & Consulting

Professional Associations are at a Crossroads Nonprofit & Social Sector

As the world returns to some sense of normalcy following the global pandemic, many professional associations — organizations in which member dues account for a significant source of revenue — are at a crossroads. The “old” financial model of invoicing membership dues, generating revenue from an annual conference, and financing potential operating deficits through returns on investment reserves is seemingly at risk. Members’ changing priorities, annual billing models that don’t always account for inflation or the increasing cost of providing member benefits, lack of revenue diversification, and sagging investment returns have all contributed to predictions suggesting modest revenue growth ahead for many associations.

How should professional associations respond to these headwinds, and what path should association leaders follow to stabilize and grow topline revenue?

At this critical juncture, professional associations need to consider modernizing their dues revenue model. Organizations should focus on understanding members’ needs and how they perceive the value of the benefits they receive. Then associations can address any gaps in perceived value and analyze the cost of providing those benefits.

Below are specific steps association leaders should take as they wrestle with how to grow dues revenue and create a sustainable and secure financial model in today’s world:

  • Understand trends: Focus on identifying key revenue trends for all material revenue line items for the last 3-5 years. Analyze key drivers of these trends and consider what the organization has done to combat them and whether it was aware the trends were present. Because revenue from membership dues likely accounts for a large percentage of overall revenue, it is important to pay particular attention to this revenue stream.
  • Reflect on conversations: What feedback has the association received from its members?  Which member benefits seem to be the most valued and which are discarded or not often utilized? Management should reflect on program and benefits successes and challenges. Hopefully perception of the value of the benefits by association management is aligned with the members.
  • Focus on communication: Ensure the association is effectively communicating the value of current benefits provided to its membership.
  • Conduct a survey: Gather data from members to better understand how they use current benefits, how they perceive the value of the benefits, new benefits they may want, etc. Analyze the feedback to determine if the package of benefits is in alignment with member needs.
  • Re-evaluate the dues model: Develop options for how the association could restructure its dues model to better align current member benefits with the costs of providing them and their perceived value. Also, consider modest inflationary or CPI increases in annual membership billing to help offset the rising cost of providing those benefits and operating programs.
  • Consider a new pricing model: If necessary, the association may want to consider a radical overhaul of its member benefits and dues model, particularly if there is a real or perceived value gap among members or if members indicate a desire for a different package of benefits. Consider the results of the member survey and the association’s current capacity to provide the desired benefits. The association should then design a pricing model that aligns with those benefits. For example, this may include offering members a tiered fee model with pre-defined membership benefits and a flat-fee dues structure for each tier. In this model, members requiring more benefits will pay higher dues to cover the association’s cost of providing those additional benefits.
  • Consider revenue diversification: Is the association able to provide new, fee-based programs, such as expanded/new certification programs or additional advisory services or technical assistance? These programs could be offered on a fee basis to non-members as a way of advancing the overall constituency and attracting new members. The organization must carefully assess its members’ needs, the constituents those members serve, and the organization’s current and potential capacity to expand its program service offerings.

Professional associations should proactively look at their current member dues structure, the perceived value, the cost of providing member benefits, and how those benefits are communicated to members. Any changes to the current structure should be thoughtful and driven by qualitative and quantitative data, as well as open and honest conversations with the association’s membership. Additionally, if professional associations have not yet embarked on a strategic planning process, management and the board of directors should work together to initiate that process with outside consultants or a special sub-committee of the board. Any changes to the dues revenue and benefits structure as outlined above should align with the vision and mission articulated in the strategic plan.