Traditionally, professional societies have relied heavily on large conferences as a primary source of revenue, allowing them to keep membership fees relatively low. Trade associations, by contrast, have tended to depend more on membership fees, with events serving primarily advocacy purposes. Today, however, both models are beginning to converge. As margins tighten and membership growth stagnates, each is increasingly moving into the other’s territory in search of new revenue opportunities.
At the European Association Summit in March, it also became clear that risk is on the rise. Associations today are forced to diversify their sources of revenue to ensure financial stability. However, no matter how many new initiatives an association launches, they will all fail if they don’t add value to the association’s ultimate beneficiaries: the members.
Either through European funding, licensing and accreditation, consulting services, foundation grants, or investments and other non-dues revenues, associations have a wealth of options for revenue diversification. The mix does, of course, need to be tailored to each Aasociation, depending on its structure, culture, scope of activity, and evolving members’ needs.
Sponsorships to the rescue – or not?
Long-standing relationships with sponsors remain critical for associations that depend on them. Yet as traditional sponsorship come under pressure, attracting new partners is also proving more difficult. At the same time, the rise of digital solutions is creating new opportunities, with tech-driven companies increasingly funding in-person interactions to connect with potential clients and demonstrate their offerings.
Technology is redefining how associations create and deliver value. As operations expand into the digital space, associations are developing more sophisticated ways to provide sponsor visibility, reducing their reliance on traditional on-site branding such as booths and lanyards.
Associations need to start thinking outside the box, as the old models may not be working anymore. Instead of collaborating around a single annual activity, they can build a year-round engagement with multiple touch points, maximizing their output. Instead of separating delegates from sponsors, associations can design matchmaking opportunities, and leave room for networking where it matters.
Instead of looking at collaboration with sponsors as purely transactional, sponsors can become partners and contribute with valuable content, synergies, and advice on how the associations can better serve their purpose and mission.
Reviewing membership models
Sectors and professions are in constant evolution. As technology advances, trends shift and end-user needs change, very little remains static. This is not usually the case for associations though, whose members are notoriously averted to change.
Expanding the definition of who can be a member, so as to include new players in a market, introducing new membership categories, with additional benefits and access, or even reducing the scope of a membership, to make the association more niche, allowing it to charge more than it did before, can all result in increased dues.
Altering the scope can be a fundamental, complicated change for an association, but oftentimes an unavoidable one, if an they wish to remain relevant.
Associations had several opportunities to prove their resilience in the past. Now is the time to demonstrate their capacity for ingenuity.
To go big, you may need to go global
Staying in a limited region for too long can cause stagnation.
US-based associations tend to be less risk-averse and more business savvy compared to their European counterparts. However, at this geopolitical juncture, US-based associations seem to be focusing their attention on internal developments, leaving space for expansion to others.
Combined with a digitalised environment that reduces distances, and a growing need for professionalisation in many parts of the world (especially some emerging countries), European associations find themselves in a unique position.
Either through congresses, certification, licensing, or even through the expansion into new membership segments, associations can amplify their market access, and gain new, valuable knowledge which, in return, will benefit their existing members.
Global strategies must not be expected to quickly bring a return on investment. Loyalty relies on consistency as much as it does on operational excellence, and an association’s board needs to be ready for a long-term investment.
ESAE’s recent roadshow across several European capitals, including Paris, Geneva and Amsterdam, exploring the theme of associations going global, offered a number of valuable insights. Associations need to carefully map the competition, legal framework, and demographic trends in the parts of the world where they wish to expand. An audit of their own structures is also necessary to ensure that all important members give their buy-in, and that the appropriate resources and governance frameworks are in place.
Today is the rainy day to use your reserves
Associations are great at building reserves. They are equally good at preserving them, to absolutely no benefit to anyone involved.
Rising inflation means that the reserves gradually lose their value and become less relevant over time. Which calls for even more reserves!
Although a certain percentage of the budget legally needs to be saved, there are amounts that can be used more strategically: for instance to help an association overcome a crisis, and come back stronger. Either through medium or long-term investment schemes, or by using the reserves to launch a new activity, by purchasing a new time-saving tool or service, or even by hiring high-level staff, reserves can be used to increase an association’s output, if handled correctly, ultimately boosting its revenues.
In closing
Board members’ pet projects, heavy governance structures, outdated and underused technology, and resistance to change within teams can all weigh an association down. Introducing new funding models is not the silver bullet and can only work when a consensus in favor of change has been reached.
A lot of work, and the establishment of trust are needed to achieve this, but it beats staying stagnant.
Associations had several opportunities to prove their resilience in the past. Now is the time to demonstrate their capacity for ingenuity. To make this happen, they need to rely on engaged members, volunteer leaders who respect the division of responsibilities, up-skilled teams, and most importantly, empowered CEOs who are fit for the job and able to lead their respective communities forward.
This article is part of the exclusive partnership between ESAE and Boardroom. For more information about ESAE, visit www.esae.eu