By Daniel Tessier-Young
Balancing the needs to provide valuable benefits to members and achieve financial sustainability is what usually drives associations to explore options to increase non-dues revenue. These days, however, there’s a growing trend toward revenue models that rely on the strength and value of these programs and initiatives alone, at the same time charging much lower membership fees — or none at all.
For decades, dues and annual fees offered associations some consistency — and for some organizations, they still do. However, more and more, associations are evolving to serve a new generation of members that wants to see value for dollars and is willing to pay more to achieve higher priorities.
Whatever your reason, deciding to pursue non-dues revenue (especially if your organization is established and large) can require a significant change of perspective. If your primary goal is to bring in more revenue, you’re not likely to be successful. Instead, your decisions should be supported with evidence. As well, such a plan doesn’t happen overnight. Rather, it’s critical to deeply research and consider the options and their impact. Your approach must be part of a long-term strategic plan and it must keep your strategic objectives in focus.
Here’s a quick guide to working up to and implementing a plan to determine where non-dues revenues fit within your business objectives.
ASSESS YOUR GOALS AND EXPECTATIONS
Before launching new initiatives to generate non-dues revenue, leadership and staff should review the organization’s goals. Do your existing activities support your members? Are they getting value from these activities, or could funds be used differently for more significant impact? Do your members expect you to raise revenue? Do the proposed new initiatives align with the organizational goals? You need to assess where you are, where you’d like to go, and why. Increasing revenue with no particular goal or aim will make your job difficult — and you’ll begin to lose sight of strategic goals and what really matters to your members.
Try creating a cross-departmental working group explore these questions. Include your board but start with your staff — they are closest to your offerings and members. Also consider engaging a consultant to help evaluate market conditions and trends.
AIM FOR IMPACT
After conducting a deep dive and consulting with members, some organizations determine that they need to explore options for increasing non-dues revenue. In choosing new initiatives, such as workshops and conferences, they first need to consider the value to members. Are you giving up particular resources or dedicating resources at the cost of something that is important to your membership?
In surveying members, one of my association groups received the feedback that its work was good, but not a high priority. As a result, they were able to review the annual budget, redistribute funds to higher-priority initiatives, and increase value to members. For the association, this was a significant shift in the right direction.
Double (and triple) check that your organization can achieve success with its new offerings. In their enthusiasm to achieve financial goals, senior leadership can sometimes overcommit staff. When your staff can’t keep up with demands, their ability to meet strategic objectives is diminished considerably.
ADJUST RESOURCES — AND EXPECTATIONS — ACCORDINGLY
Committing to a plan may mean that your organization will need new or different resources. Do you have the right staff in place? Will you need external support? Do you need to redirect current staff or funds to address a particular need? Do you have the right plan in place to market your new initiatives?
To make the most of your resources, you may want to consider exploring joint ventures with other associations. While it’s no secret that associations can be territorial, leveraging strengths and sharing resources can be a win-win for like-minded teams and members.
One of my clients is a group of organizations that had worked in isolation for more than two decades. As part of solving a problem that they were all experiencing, they have agreed to a national working group to which they all contribute resources — and it’s working. Building a good relationship with organizations that have complementary mandates or audiences can open doors to collaborating on offerings and revenue models.
TRACK YOUR SUCCESS AND KEEP LISTENING
Remember that new initiatives take time to build. Therefore, it’s a good idea to set ambitious but achievable metrics. If you choose to move forward with new initiatives, start small. Set goals, check in and assess progress regularly. Continue to canvas your members on a regular basis. Listen to what they say and adjust your offerings accordingly.
The most critical part of pursuing a non-dues revenue plan is putting forward a solid rationale to your members. If your members see a benefit in the offering, they may be more willing to champion the direction and, if the value is there, they could potentially enhance their contribution to help it grow.
In putting your plan together, here’s a checklist of some of the questions your organization will need to answer:
• What does your organization want to accomplish through non-dues revenue (NDR)? Diversify revenue for sustainability? Increase revenue to do more? Serve members?
• How will NDR advance your organizational and strategic goals? Are there unmet organizational needs that require an infusion of investment to succeed?
• Is your board of directors supportive? Will they see the benefits and are they prepared to commit to the plan?
• Does your organization have the resources (e.g., staff) to make your NDR plan a reality?
• Are you prepared to invest in the resources (time, energy, dollars) required to develop an action plan, including a feasibility study?
• What level of financial risk are you willing to take on with your new NDR initiative?
• Will your members see the value in your new NDR offering? Will you meet a need?
• Are you prepared to scale up and collaborate with other organizations if the need arises?
• Do you have an exit strategy in case the program does not meet expectations?