Survey: Associations See Hints of Economic Weakness on the Horizon
Associations generally are expanding services and staff, but economic pessimism among leaders is gradually rising, and more organizations are thinking about cuts this year than last, according to a new report on how the economy is affecting the sector.
Association executives remain optimistic overall about their economic fortunes, according to a new survey, but economic storm clouds are also prompting many organizations to reorganize staffs, consider budget cuts, and examine how to diversify revenue streams.
The 2016 “Economic Impact on Associations Report,” [PDF] published by McKinley Advisors, notes that 13 percent of respondents—approximately 250 leaders from a variety of associations in terms of size, structure, and industry—said that the impact of economic conditions on their association was worse than expected. That’s the highest proportion since 2011, when 16 percent made that statement.
“Since 2009, things have been on a steady growth curve overall for most of the groups that we work with,” says Jay Younger, managing partner and chief consultant at McKinley Advisors. “I think this is the first time that sentiment has shifted a little bit.”
In tandem with that, associations have experienced a “gradual increase in pessimism,” as the study’s authors put it: Thirteen percent of respondents say they are “very pessimistic” about their association in 2016. That uptick in concern about financial stability correlates with an increased interest in diversifying revenue priorities going forward. For instance, the highest priorities among respondents for the coming year are:
- new member acquisition (27 percent)
- generating nondues revenue (26 percent)
- developing new methods for member engagement (25 percent)
- diversifying membership/attracting new audiences (19 percent)
That’s a substantial change from 2011, when more than 40 percent of respondents cited member acquisition and retention as top priorities.
Reflecting that new mix of efforts, associations are increasingly shaking up their products and staffs: Nearly half (46 percent) say they’ve expanded programs and services, and more than a third (36 percent) have undertaken a staff reorganization. Younger adds that those staff changes often involve brand-new positions. “You have all of the classic functional areas as meetings and membership and marketing and finance and HR, and all of the things that associations probably will continue to have,” he says. “But I’ve seen a lot more emphasis on digital now in new positions.”
More broadly, Younger says the data suggests that association leaders have a challenge in the coming year about whether it’s best to invest in new efforts, even amid concerns about a downturn, or play things more conservatively.
“There’s an opportunity to engage in some generative discussion about different scenarios,” he says. “You don’t have to have ironclad plans, but ask, What assumptions are we making about our business that we might want to question?”
Some of the survey data suggests that associations are already doing so. Two-thirds of respondents (66 percent) said that they either will or are likely to expand programs and services in the coming year, and a similar proportion (69 percent) said they plan to add staff positions in the coming year. The bottom line isn’t entirely safe, however: While only 19 percent of organizations cut their budgets last year, 28 percent say they will or are likely to in 2016.