Non-Dues Revenue

Will Adding New Revenue Streams Affect Your Mission?

Will Adding New Revenue Streams Affect Your Mission?

It’s probably an understatement to say associations have been “coping” with shifting revenue models during the past several years. In some cases, associations have been blindsided by changing revenue models. Event and meeting revenue took a major hit in 2020, and it convinced many association execs that relying on a single revenue stream like events or membership was unsustainable – even if that revenue had been steady for decades.

For those who were experiencing declining membership or feared that they might soon be, making significant changes to their revenue models seemed imperative. Almost everyone started scrambling to develop non-dues revenue to diversify their income against future upheavals like the pandemic.

As the focus has shifted, however, from membership dues as a primary funding option to non-dues revenue as a more diverse funding option, perhaps it’s time to explore what a changing revenue model might do to your mission and purpose. The shift raises several questions.

If you are collecting more money from education, trade shows, or other non-dues sources than from membership dues, does your membership suffer? Can you truthfully say that you’re still a membership organization? And if you’re no longer an individual membership organization, how does your new focus affect your mission?

One association we follow has slowly changed its focus from membership to education. It still operates a membership function, but resources within the organization are primarily dedicated to its educational and research programs. The association seems to be betting that education and research will continue to create the revenue it needs well into the future. As a result, the association has changed its mission from exclusively serving members to serving members and the industry to serving the profession as a whole.

If you are considering how your new revenue streams might affect your mission, here are 5 questions to ask:

  1. What does membership in your association mean?

501(c)6 associations were, by definition, founded to serve their members and support their members’ business activities. It’s one of the features that differentiate them from 501(c)3 charitable organizations. In addition, their purpose was to promote their common interests and improve business conditions, not to engage in business for profit.

These days, membership includes professional credentials, a list of benefits, discounts on programs and publications, networking opportunities, certifications, and inclusion in a professional group. Advocacy efforts can be seen to affect the entire profession, not just members, but are offered by most associations.

Associations that are increasing their membership levels serve thriving industries and offer benefits that are both valuable to their members and cannot be found anywhere else. What is the outlook for the number of potential members in your industry in the next 10 years? Even if they all join, would it be enough to keep your association financially healthy?

You have a number of pricing options available – tiered membership levels, all-access passes, free trial memberships, and subscription models – as well as several payment plans – auto-renewal, installment payments, expired payment updaters, and saved payment information. If you aren’t meeting your members’ needs, however, new pricing options and payment plans won’t help.

  1. Can you manage without membership dues?

If you serve an IMO that is considering modifying its membership structure, one of the first questions you might ask is how much revenue membership brings in each year. If it’s a substantial portion of your total revenue, there might not be a good reason to stop offering it.

The second question is how much does it cost you to offer membership? If membership is declining, project when revenue might become less than the cost of operating the membership function. Does it make sense to continue a program that doesn’t cover its own costs and what might replace the income? Or is there an intrinsic value to having members?

Some associations have chosen to maintain membership in their organizations but don’t put an emphasis on the function. Instead, they have invested in research, events, real estate, and other income-producing functions that have the potential to continue producing revenue into the future. Strong membership numbers are a “nice to have” not a “need to have,” and resources have been directed to building more-lucrative programs.

  1. Would networking be as effective without members?

Networking is one of the key benefits most IMOs offer their members. Invitations to annual meetings include all members, regardless of career level, as well as non-members. If someone is looking for a mentor or wants to meet a leader in the industry, these networking events are very helpful. Members-only functions make networking even easier.

If you no longer have members, however, the mix of professionals at your meetings would likely change. If you are an educational association, for example, your meetings might revolve around sessions that provide continuing education. All those attending would be working for the same credential and would probably be at similar stages of their careers. It’s hard to find a mentor or ask advice from someone who is at the same point in their career as you are. It’s possible to make it work, but it requires thoughtful planning and marketing.

  1. Could you endorse ethical statements & codes of conduct without members?

Many IMOs include codes of conduct or statements about ethics in their membership requirements. Members agree to uphold the tenets in these codes and can be censured for failing to keep them. The codes promise the public ethical treatment by members, and members can market their ethical stance to their customers, patients, or clients.

If you don’t have members, however, codes of conduct are not effective. To whom would they apply? Your association can’t vouch for the entire profession. You would have to develop a new way to ensure ethical behavior within your profession or industry if doing so continues to be a core goal in your association.

  1. Can you still offer publications or subscriptions?

Membership models often include publications as benefits, including peer-reviewed journals, magazines, newsletters, and podcasts. With new pricing models, members are allowed to subscribe to publications individually or as part of their membership package. Advertising and sponsorships play a role in the revenue model for most publications.

Advertisers and sponsors want to know who will see the publication because they are willing to pay for access to their target audience (your membership). If you no longer have a membership base, you might have to market your publications like consumer publications rather than as member benefits. Your advertisers and sponsors would want to know all about the audience before they commit. Planned well, you might be able to develop a program that markets your publications to a broader audience that would interest sponsors and advertisers.

Moving away from a revenue model based on individual membership may be necessary for some associations. The most successful will have a firm vision of their mission and an understanding of how their mission might change with new sources of revenue. Change is inevitable and could be a source of new energy and effectiveness for those associations. For those who keep their memberships, however, one of the requirements for developing new revenue will include a test for how well it serves members.

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