By Richard H. Levey
Nearly all (99%) of association leaders are either “completely” or “cautiously” optimistic about their financial viability, and five in six reported being in a better financial situation today than they were five years ago.
Leaders surveyed from 228 associations indicate they have recovered from the impact of the COVID-19 pandemic and settled into a “new normal,” according to the State of Associations, an inaugural study from accounting and consulting firm Wipfli.
A fair amount of this positive outlook is driven by leaders’ perception of their finances. Nearly eight in 10 (77%) said their financial viability is equal to or better where it was a year ago. Among the largest organizations (those with annual revenue in excess of $500 million) that positivity level jumped to 84%. Regardless of size, 89% believe their financial resources are effectively managed, and 85% have long-term financial sustainability plans in place.
Other key metrics support leaders’ optimism. Around three in four (74%) of those surveyed said their overall membership had increased during the past year, with another 9% saying their ranks had remained stable, and 62% indicated their retention rates had increased. Study authors attributed these upticks in part to workplace trends such as the Great Resignation/Great Reconsideration, as well as the increased pace of technology changes, creating the need for networking, support and education opportunities.
Confidence, however, does not equal complacency. More than half of those surveyed (52%) are using member engagement and experiences as revenue drivers, and 41% are offering training and education services. Nearly four in 10 (37%) are partnering with other associations in efforts to increase profits. Mid-sized and professional associations are also very likely to use certificate programs to generate new revenue, and larger organizations are aggressively courting younger members.
Associations still face challenges, of course. Top brass from trade associations indicated “leadership transitions” as their top challenge, while professional and large associations (again, those with at least $500 million in annual revenue) cited “agility to adapt to an ever-changing environment” as their greatest concern.
Association heads are meeting these challenges in part through increased technology expenditures. Within the next 12 months, 80% anticipate spending more on artificial intelligence-fueled systems, customer relationship management structures, cybersecurity and/or data analytics.
As is often the case, embracing new technologies is easier for larger associations. As the report authors write, “[S]maller organizations often operate with limited resources, making it difficult to keep pace with larger counterparts in terms of technology adoption and data utilization. Yet, the need for transformation and data-driven decision-making is even more critical for them. Without the ability to leverage technology and data effectively, these smaller nonprofits risk falling behind in an increasingly competitive and digital landscape.”
Organization leaders in some cases are also outsourcing key positions, in part if they are unable to fill the positions with full-time in-house staff. One third (34%) have outsourced VP of membership or equivalent functions, 27% are using external technology support and 25% have outsourced at least part of their human resources functions.
For all their seeming confidence, however, many organization leaders are open to the idea of consolidating or merging with another association. Three in ten indicated this action was “very likely” within the next two to five years, and an additional 48% said it was “somewhat likely.”
The heightened consolidation considerations reflect a plethora of new organizations springing up to address emerging or highly specialized fields, with the resulting demands for membership and in-house talent increasingly resulting in smaller slices of each pie. Older legacy associations are more likely to have been formed to address problems that are no longer relevant. Mergers with other organizations offer quick ways to gain needed technology or strategy competencies that will allow the legacy associations to stay relevant.
A full copy of the report is available here: https://www.wipfli.com/-/media/wipfli/downloadable-files/NGE-State-of-Associations-Report.pdf.
