Leadership

Is it Time to Recession-Proof Your Association?

By / Jan 6, 2019 (claffra/iStock/Getty Images Plus)

Economic signals suggest some belt-tightening may be on the agenda for 2019. Lessons from the last recession may offer some guidance for handling the next one.

Happy new year! So, have you made a resolution about what you’re going to do about the coming recession?

I’m being a touch hyperbolic—I’m no better equipped to predict when a recession is going to strike than anybody else who scans the business headlines every morning. But those headlines are concerning enough that a downturn ought to be, if not top of mind, at least on your mind. A sizable number of corporate CFOs believe one is coming in 2019, the markets swooned in unsettling ways in recent weeks, and some who read the market see a slowdown of some sort in the offing.

Chasing shiny new objects is never going to be a successful strategy in a downturn.

It’s been a decade since association leaders have had to think seriously about a downturn. That’s long enough, in fact, that plenty of association leaders have never occupied the C-suite to deal with one. “Many leaders today have not really been tested in a downturn, whether the 2007 downturn, 9/11, the dotcom implosion, or many of the others that preceded those times,” tech executive F. Scott Moody recently told Fast Company. “It’s never easy to be a leader, but it is darn harder when the tide is not in your favor.”

For the moment, association leaders are still feeling optimistic. According to McKinley Advisors’ 2018 Economic Impact on Associations Study [PDF], associations are eager to expand: 72 percent of respondents plan to expand programs and services, and 54 percent intend to add new positions; only about a third (31 percent) planned budget cuts. But associations are notoriously a lagging economic indicator. Headwinds hit the industries first, then the organizations that serve them, as employers cut back on their outlays for employee travel, dues, and other expenses that keep associations running.

So, what to do? As it happens, I entered the association world 10 years ago, and 2009 was the year associations began truly feeling the pain of the recession that formally started in 2007. For those who were in the C-suite at the time—and especially for those who weren’t—a few lessons from history may be in order.

Don’t look for a silver bullet. As revenues began to trickle at associations and travel budgets tightened, there was much talk about what kind of technological fixes might help right the ship. Maybe if meetings went all-virtual? Maybe these newfangled social media tools could be monetized somehow? But according to ASAE research during the last recession, member engagement in virtual-only meetings never cracked 10 percent. Associations wisely increased their investment in web and mobile during that period, but chasing shiny new objects was never going to be a successful strategy.

Members will be resilient—but you have to serve them. Even during the deepest trough of the recession, members wanted to retain their commitment to an association—more than half in early 2009 said they would pay their dues themselves [PDF] if their employer decided not to cover them. But fewer younger members were likely to do that. If member retention matters to you, now is the time to talk about what you’ll do keep those members if the economy goes south. During the last recession, some organizations tinkered with dues-forgiveness programs, but more often they focused on designing educational programming around helping members survive the downturn and providing tools that helped them make the business case for attending a conference.

Don’t panic about investments, and focus on governance that’ll help you weather the storm. At the heart of the recession, many executives worried that their reserves might vaporize. In 2009, only about 5 percent anticipated increased investment revenue, but nearly 27 percent actually enjoyed them. Association leaders got a little better in the aggregate at predicting the fate of their investments as the recession rolled on, but they were always an overly pessimistic lot; more associations saw revenue increases than association leaders predicted.

That’s not an excuse to simply ride the storm out without a plan, of course. Indeed, it may be a prompt to consider how forward-thinking your volunteer leadership is and to encourage them to be more so. What opportunities did those associations in 2009 let pass because they were overly pessimistic about their financial position? In a commentary on the Economic Impact on Associations Study, McKinley and Company CEO Jay Younger, FASAE, emphasized nimble governance as one of the essential needs for associations amid uncertainty.

“I think it’s fair to say that traditional modes and methods of association governance seem ill-equipped to address these high-stakes issues and opportunities in a timely and transparent fashion,” he writes. “Going forward, association leaders will need to work together to build the capacity to anticipate and respond to an external environment that will certainly continue to shift in the years ahead without sacrificing essential tenets of consensus-based decision-making and member representation.”

You needn’t start 2019 in panic mode. But consider that a gift—an opportunity to think about how your association will sustain itself and serve members when the tough times do arrive.

Has your association been working on “recession-proofing” itself? If so, what steps have you taken? Share your experiences in the comments.

Mark Athitakis

Mark Athitakis, a contributing editor for Associations Now, has written on nonprofits, the arts, and leadership for a variety of publications. He is a coauthor of The Dumbest Moments in Business History and hopes you never qualify for the sequel. More »

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