Despite intense financial pressure, associations need to put members first, money second

Your investments have taken a hit on Wall Street, meeting revenue is gone or at risk, and cash flow may be drying up. And that's just today. Tomorrow may bring a membership reckoning if the economy can't get moving again soon.

What to do?

Many associations with the financial wherewithal—such as a strong reserve cushion—are increasing member benefits, including discounted or free dues, products and services, like training and education for members and members' employees. Stepping up pays dividends in the form of goodwill and better positioning when the crisis is over.

"The reason that you have to have a strong trade association is moments like this," said Bob Goldberg, CEO of the $245 million-revenue National Association of Realtors. "This is not the time to worry about making extra nondues revenue. This is the time to figure a way to give something back to your members."

Among other steps, NAR is offering its 1.4 million members and their families free 24-hour telemedicine benefits for two months as part of its relaunching of "Right Tools, Right Now," a program begun during the 2007-09 financial crisis. The benefit normally costs $15 a month for a family.

ASAE has extended three months' free membership, and delayed payment terms to sponsors, mostly destination marketing bureaus. The former is worth more than $81 to each individual professional staff member over the age of 35.

"Think about it, what if we didn't do that for our members?" said Susan Robertson, CEO of $28 million-revenue ASAE. "What if we were sending out renewal notices? I'm sorry, I would get pissed off with us if that was the case. People would say, ‘Don't you understand what I'm going through?' We really have to understand that this is an ecosystem. My hope is that when we come out of this, people will look fondly on ASAE and know that we got it."

Among discounts offered by other groups:

• National Restaurant Association: Made normal food safety and restaurant operations training free for two months and quickly developed a free pandemic-related restaurant safety course through its ServSafe program.
• American Hotel & Lodging Association: Offering free online hospitality-management courses and scholarships for AHLA certifications through the group's foundation. (AHLA and the National Restaurant Association also have partnered on hospitality industry employee education programs.)
• International Coaching Federation: Pushed deadline for $245 dues from March 31 to May 31, allowed installment payments.
• American Psychological Association: Offering telepsychology course free, allowing instructors free use of the group's online learning platform, providing some free and discounted memberships, e-books and lesson plans.
• American Veterinary Medical Association: Delayed membership termination until June 1 for members in default as of April 1.
• The Optical Society: Extended grace period for payment of dues.

These benefits are worth many millions of dollars. NAR's Goldberg said the cost of the telemedicine program—already seeing fast adoption—would in the "multi seven figures," and will be borne out of reserves. ASAE's free membership period is worth well into six figures.

The National Restaurant Association ordinarily charges $15 for the food safety course for rank-and-file employees; 30,000 people have already taken it for free, the group said, which represents lost potential revenue of $450,000 on that program alone.

Janet Benoit, vice president of learning and development at the National Restaurant Association, said the group would re-evaluate its decision to offer free courses at the end of this month. The association said the industry lost about $25 billion in sales and laid off three million employees through the first three weeks of March. Other associations also said they will make future decisions on free pricing based on how things develop in the economy.

"We consider this not losing money, but an investment," said International Coaching Federation CEO Magdalena Mook. The federation's chapters played a role in the decision.

"We had a fairly well-orchestrated (push) from our chapters asking, ‘What can we do as an organization?' They understand ‘no money, no mission,' so they did not necessarily ask for waiving the fees. But they said, ‘Can we have more time?'" to pay dues.

No time for a money grab

"There's a whole body of evidence that the beginning stages of a crisis are not the best time to try and monetize your offerings," said Jay Younger, CEO of association consulting firm McKinley Advisors.

"If an association first goes to, ‘How do I monetize this?' they're going to be seen as tone-deaf, which is not a good thing to be seen as right now," he said. "You should send the clear message that we are here for you, and here is what we have put together that we think might be able to help you today.

"Hopefully when we get to something that that looks like a recovery, I do think there will be opportunities to introduce new content, new resources, new value that will require payment," he said.

ASAE's Robertson said it's important to build and maintain a sense of community in a crisis.

"We want ASAE benefits and services to be available to our members because they need them right now," she said. "Members have access to a wealth of information on our website, they have access to our social media platform called Collaborate, and both members and nonmembers have access to our free series of webinars" on responding to the pandemic.

Of course, giving discounts and freebies requires financial flexibility.

Younger, of McKinley Advisors, said that thanks to a strong 11-year run in financial markets—at least up until the current decline—associations have never had stronger balance sheets.

Rule of thumb for reserves

But the largesse cannot last forever. If reserves get too low, limits kick in.

"Once you get below the historical rule of thumb of (reserves at) 50% of operating budget, you've got to be a little stingier, and you've got to be a little more careful," Younger said. "We don't know, with any certainty, that this pandemic is the only risk that we face over the next six to 12 months."

The pandemic's impact on membership growth and renewals is unknown but could be severe. There have been no widespread association job cuts reported yet, but the ax could bite if meetings and other activity can't resume soon.

NAR's Goldberg said the association already has completed contingency planning, with a range of scenarios involving factors such as potential loss of members. Three quarters of the association's revenue is from annual dues of $150, which have already been collected for 2020.

"We're in a very healthy situation this year," Goldberg said. "When you get into other years, you start wondering. I don't think anyone has a formula other than to take worst-case, mid-case and best-case scenarios and look at all that.

"We know how to scale up, and we know how to scale back down to meet the needs of the members that we do have," he said. "It's just a matter of whether we need to pull the trigger."