Why Understanding Member Fiscal Health Is Key to Success
Running an association like a business, not a nonprofit, requires a good understanding of the financial viability of all your partners. That means asking some smart questions about how your members are faring in the current climate.
As the economic uncertainty caused by COVID-19 has unfolded in recent months, most associations have hunkered down and gone into preservation mode, assessed what they had in reserves, and then decided how to best move forward. Gary Oster, founder and strategic growth strategist at Topline Growth Partners, recommends one more key item: a comprehensive scan to assess the fiscal health of an association’s top members, sponsors, and strategic partners.
Association CEOs and senior leaders, Oster said, need to recognize they are nonprofits, but they are still running a business. He said a lot of leaders forget that they need enough money coming in to cover expenses so they can do the work their members want them to do.
Oster estimates that because of the current economic downturn, 90 percent of associations have eliminated a portion of their value proposition for their members. And they probably lost 20 to 30 percent of their revenue at the same time—largely, Oster speculates, because they didn’t understand their members’ fiscal health.
An astute organization needs to evaluate every member, strategic partner, and sponsor that makes a significant investment in the organization, because it’s imperative to know about member and partner revenue, profits, and details about whether they are looking to merge or acquire. “It’s business intelligence, and it doesn’t take a long time to do,” Oster said.
To delve deeper and find out what you know about your key members and top sponsors, he said, ask good questions: What do you know about your sponsors or your financial strategic partners? Do you really know what’s motivating them to be connected to your members and your organization? Do you know how fiscally healthy they are? Will members be fully engaged or limited in their participation? Will their staff attend conferences? Or, because they are on the edge of bankruptcy, will they cancel all forms of engagement?
Hope Is Not a Strategy
Some executives, Oster said, have the worst strategy of all: hope. “Hope is not a strategy,” he said. “Hope is a wish.” He cautioned that it is not enough to hope that membership dues will come in, or hope that people will come to tradeshows, or hope that foundation supporters will continue to donate.
“Actively manage your business at the top line so you can assure your future success and create a workplace where your organization thrives and your members become incredibly happy with the value that’s being created,” he said.
Association leaders who want their organizations to succeed must conduct thorough due diligence so they have a clear view of the financial landscape of all of their members and partners. “These insights could open the door to unseen opportunities—or unknown risks,” Oster said, “potentially inoculating the association from an unhealthy situation as they reframe and redirect their future success.”
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