2016 Benchmark Survey for Membership Organizations

This is the fifth annual Benchmark Survey of Membership Organizations. This survey focuses on the business and sustainability of the Canadian membership organization with a particular focus on the eight elements of the High Performance Membership OrganizationTM. It is the only one of its kind in Canada. The survey was conducted in 2016 using a combination of telephone interviews and online responses. The respondents were either Canadian organizations or the Canadian arms of international organizations. Results are based on 98 respondents.

Membership Organization Defined

By membership organizations we mean non-profit entities who have dues-paying members and whose primary activity is providing services to those members.

This is a specialized niche within the non-profit sector with its own unique characteristics. Membership organizations are typically self-sustaining and cannot rely on government assistance or donations.

Just like service companies in the for-profit sector, they need to provide value to the people that they serve or they will not survive.

A membership organization is a business and must be run as one to be sustainable.

There is very little data available for the membership organization niche. The purpose of this survey is to help fill that void and to provide organizations in the sector with critical information about their peers and to give them the information they need to thrive.

The Respondents

The membership organizations surveyed include entities of all sizes. Respondents’ annual revenue ranges from $80 thousand to $40 million.

Respondents include organizations that represent an industry, a trade, a profession or a special interest. This includes organizations whose members are primarily individuals, and those whose members are primarily corporate. In the past 3 years, industry and trade associations have become a more significant percentage of the survey respondents. In 2013, this group represented 30% of the survey respondents; now they represent 48% of the respondents.

Respondents by Revenue and Type: 2013 to 2016

Survey Highlights

Industry/Trade Associations versus Professional Associations

The 2016 survey shows that industry and trade associations are more likely to be struggling in the current environment than are professional associations. The reasons for this may be related to the following facts:

  1. Corporate Membership. Industry and trade organizations are much more likely to have corporate rather than individual members. The employees who are the direct users of member services are often not the decision-makers who approve the member dues payment. If the decision-maker is not aware of the member value, and/or if cost reduction is on the agenda, then memberships are vulnerable.
  2. Amalgamations/Takeovers. Canada has seen considerable consolidation in its corporate landscape over the past few years. When 2 companies combine, one membership is lost to the association. Also, when a Canadian company is taken over by a foreign firm, the head office decision-making is no longer in Canada and Canadian memberships are vulnerable.

Finances

TREND IN MEMBERSHIP NUMBERS, REVENUE

Each year, respondents are asked for the 3-year trend in their membership numbers and gross revenue. Last year we saw a sharp spike upward in the respondents who were reporting a downward membership trend and a more muted but still meaningful increase in the respondents reporting a downward revenue trend.

This appears to have stabilized in 2016. In 2016 we saw a sharp increase in the number of respondents showing a flat trend in both membership and revenue. Although the percentage of respondents showing an upward trend has been steadily declining since 2013, the rate of increase in the downward trend has substantially abated.

Current survey results in the U.S. are showing an uptrend for associations. If Canada follows the U.S. as we often do, this trend may be reflected in Canada in the not too distant future.

3-YEAR TREND IN MEMBERSHIP NUMBERS, GROSS REVENUE 2013 TO 2016

EVENTS

The net surplus from events is down from 2015.

RESERVES

Financial reserves have increased substantially from 2015. The percentage of respondents with a surplus that would cover more than 1 year of operating expenses has increased from 36% to 56%.

SPONSORSHIP

This source of revenue is declining and interestingly, respondents are putting less effort into their sponsorship activities. This seems counterproductive.

Governance

Governance continues to be an area of focus. This has taken on a more prominent role in the past 3-5 years. Governance was cited by respondents as an area of structural change in 2016 and it was also cited as an area of desired change (i.e. "Get the board out of operations").

Strategic planning is a key component of governance and this is also an area of challenge. The percentage of respondents that have a strategic plan has increased significantly over the past 3 years but the percentage of respondents who rated the results of the strategic plan as "Excellent" dropped significantly in 2016.

Director training is also linked to revenue growth. Associations that provide their directors with orientation materials and live training are much more likely to have an upward revenue trend.

Respondents were asked what they’d like to change in terms of how their board operates. Four themes were echoed repeatedly:

  1. Greater director engagement
  2. Better preparedness for board meetings
  3. Better knowledge/understanding of governance
  4. Higher success in fulfilling commitments

Website and Ecommerce

Respondents are paying more attention to keeping their websites current, in that almost 80% of them have done a major overhaul of their website in the past 3 years.

However, less than 30% have a website that is responsive to mobile devices. This is an issue both from a functional and a visibility perspective. Mobile devices are becoming increasingly the tool of choice for online activity. When a website cannot serve the members adequately with their tool of choice, the association itself is perceived to be unresponsive to the needs of its members. Furthermore, Google has been using mobile-friendliness as a ranking signal for 2 years now; so if an association’s site is not responsive, the search engine ranking will suffer and its online visibility will be reduced.

In terms of providing ecommerce for members, the industry/trade associations are substantially lagging professional associations in offering online payment for member dues and events.

Government Relations and Issues Management

The percentage of respondents with a government relations/advocacy program is similar to 2015. However, in 2016 there was a much stronger likelihood for organizations with a government relations/advocacy program to have an upward revenue trend. There was also a marked increase in the percentage of organizations reporting the existence of an issues management program. This was more pronounced for industry/trade associations.

Looking for higher revenue?

If higher revenue is important for your association, consider adopting as many of these attributes and practices as make sense for you. Organizations that have these attributes and practices are more likely to have an upward revenue trend and those who don’t, are more likely to have a downward revenue trend. The top best practices are noted in the diagram below. Those on the right, with a yellow highlight, are consistent with the results for 2015. Those on the left, with a green highlight, are new for 2016.

BEST ATTRIBUTES AND PRACTICES FOR INCREASING REVENUE

Attributes

  1. Members are individuals (as opposed to companies)
  2. Industry/profession is regulated
  3. Organization has regional networks/chapters
  4. Organization has a high penetration rate
  5. Member dues are no more than 50% of total revenue
  6. Member fees are increased annually

Member Services

  1. Have a government relations/advocacy program
  2. Do regular member survey
  3. Have online registration and payment available for events

Member Attraction and Retention

  1. Have a budget for member recruitment
  2. Ensure all staff and directors know your member value proposition and can articulate it

Employees and Volunteers

  1. Have employment contracts for all employees
  2. Ensure effective attraction, retention and engagement of volunteers
  3. Do annual performance reviews for the CEO

Board of Directors

  1. Ensure all board members are engaged
  2. Ensure board meetings are productive
  3. Ensure board is effective in making decisions and accomplishing goals
  4. Provide directors with orientation materials and live training

Changes from 2015 Survey

  1. In 2015, certification/accreditation was strongly consistent with an upward revenue trend. In 2016 the impact was negligible.
  2. In 2015, respondents with a government relations/advocacy program were no more likely to have an upward revenue trend than those who did not. In 2016 this programming became more strongly tied to revenue.

Interesting Observations

Top Challenges for 2016

The top challenges cited by respondents are, in order of magnitude: demonstrating value for money, attracting new members and lack of funds or staff. Demonstrating value for money was in the top spot in 2015 as well, but attracting new members has moved up in the rankings.

There are substantial differences in the rankings between industry/trade and professional associations and even more dramatic differences between those with upward or downward trending revenue.

Industry/Trade Versus Professional Associations

While both types of associations had demonstrating value for money as a top challenge, this was much more pronounced for professional associations. Industry/trade associations showed attracting new members as tied for the top challenge. Professional associations are much more optimistic of their ability to attract new members.

Member engagement was the third most cited challenge for the industry/trade group, while the professional group had attracting younger members and lack of funds or staff tied for third place.

Upward Versus Downward Trending Revenue

Upward trending associations cited demonstrating value for money and lack of funds or staff as their top challenge whereas downward trending organizations cited attracting new members as their top challenge.

Member Attraction and Retention

The mean member attraction rate for 2016 was 7% compared to 12% in 2015. The mean member retention rate for 2016 was 95% compared to 94% in 2015.

Membership Fees

The percentage of respondents who have increased their fees within the past 2 years continues to grow. In 2013, 40% had implemented a fee increase within the past 2 years. In 2016 this was more than half, at 55%.

As has been the case for the last number of years, the majority of respondents increase member fees "as needed". Not surprisingly, this is much more prevalent amongst those organizations with a downward revenue trend. A best practice is to increase fees a small amount each year.

Looking Forward

The 2016 Benchmark Survey results continue a trend that we have seen since we started this survey in 2011. Each year there is increasing pressure on membership organizations to deliver higher standards of service, value and performance.

Membership organizations are now held to the same standards of professionalism as for profit service providers. The 2016 Benchmark Survey results tell us that we need:

  1. A clear, compelling value proposition that the entire leadership can repeat consistently
  2. A government relations/advocacy portfolio
  3. Regular member surveys
  4. A budget for member recruitment
  5. Clear accountability and an annual performance review for the chief executive
  6. A highly effective board of directors
  7. Consistent fee increases

2012 survey highlights

2013 survey highlights

2015 survey highlights