By definition, associations earn most of their revenues from yearly membership fees and from services sold to members, starting with congresses, seminars and other events. In other words, association’s budget depends heavily, not to say exclusively, on members. So meeting members’ needs and their organization’s financial stability is what association leaders are always working on, especially at times when the world is turned upside down, as it is now.
Today might be the best time to look at how you can diversify your revenue streams: an organization that identifies creative ways to change its business model will often be rewarded with a significant impact on their bottom line. In this context, one strategy currently being used by an increasing number of associations is non-dues revenue. Non-dues revenue, or NDR, is any revenue generated by an association from a source other than membership fees, starting with sponsorship.
In light of the current pandemic, does any of our Advisory Board Members feel the pressure from their association sponsors to review the business model they have with them? After they were forced to cancel their Hawaii conference, the International Studies Association (ISA) created “virtual exhibit halls and advertising booklets which were provided to all [their] membership as opposed to just [their] registered attendees,” says Jennifer Fontanella, Director of Operations and Finance. “The response from our membership and exhibitors/sponsors has been overwhelming and we were able to cut down the amount of refunds to sponsors by 90%. Advertisers and long-time exhibitors continued to offer convention specials to our membership and we have been working with our shipping company to facilitate returns or donations of all convention materials which had already been shipped to Hawaii.”
Today’s situation is so peculiar in fact that, in general, sponsors are all going through the same issues as the association they usually help fund and finance. Besides, at UITP, the International Association of Public Transport, “Our sponsors are also our members. They are busy trying to address the challenge of the situation. We don’t bother them with sponsorship in this period but communicate with them to see how we can support them, not the other way around,”says Mohamed Mezghani, Secretary General.
Similarly, at the Association of Corporate Counsel (ACC), “we’re having dedicated calls and meetings to make sure they are on board and our choices become their choices. We rely on our sponsors and need to make sure our stakeholders, sponsors included, are part of our journey in this very moment,” explains Giuseppe Marletta, Managing Director Europe.
Obviously, events being a major source of revenues for associations, they are being redesigned and revamped, with the virtual part becoming more important than before
In a virtual world
Obviously, events being a major source of revenues for associations, they are being redesigned and revamped, with “the virtual part becoming more important than before”, notes Silke Schlinnertz, Head of Growth at Euroheat & Power.
Echoing her comment, Fontanella says: “We already do a lot of regional conferences but even those may have to be limited to virtual meetings for the foreseeable future. We have provided all of our sections, regions, caucuses and committees with Zoom accounts so they can continue presenting research and mentoring with colleagues around the globe and already just under 40 meetings have already taken place.” In that context, it’s fair to say that, what members are really looking for is the peer-to-peer network and the best practice exchange, instead of an umpteenth webinar or white paper. Schlinnertz says they had been seeing that trend emerge, and it is now being confirmed.
At UITP, events represent 40% of the association’s revenues, and are of global dimension. “This crisis is showing the vulnerability of the events business as it is now,” says Mezghani. “It will take time to have people travel again, and anyway people will certainly travel less than before. This is something to consider when re-defining our approach of events. And it will have an impact of the whole business model of the association.”
“We are trying to look at what business models we can AND should develop to respond to the “new” normal which I think could be around longer than we all would like!” exclaims Matthew R. D’Uva, CEO of the American Association for the Study of Liver Diseases (AASLD).
In addition, some members – because we live in a service-driven society – expect the same from the association they belong to. Provide them with a range of personalized and/or purchasable services they can choose from – part of them will be digital, of course – and you will be likely to generate more revenues. “If association leaders must think like businessmen, the end result of their efforts differ.” Schlinnertz adds. “Most of us work for not-for-profit organizations but they are also not-for-loss: in comparison to a company, all is fine if we make zero profit at the end of the year.Associations don’t redistribute profits to shareholders. Any financial surplus will actually benefit your members.”
In the end, one can argue it all comes down to strategic repositioning of your organization, sometimes even a refocus of its strategic mission – why are you in business originally? If you have a straight-forward answer to this question, then the purpose and vision of your association will be clearly understood by your members and wider audience.