Stay Afloat in Unprecedented Times

Canceled meetings, drastically reduced advertising and sponsorship income, and complicated member renewals are taking a toll on associations amid the COVID-19 pandemic. But strategic associations are already planning for sunnier days ahead. Seeking to stay solvent in unprecedented times, they are reducing overhead costs, testing budget-friendly virtual member offerings, and revising financial plans—often, with the help of AMCs.

“We need to be investigating how our associations will survive and thrive,” says Lane Velayo, CAE, CEO of Synergos AMC. After the stay-at-home mandates forced many association professionals to work remotely, some may be “reconsidering their office spaces and overhead costs, and considering new ways to run their associations,” says Velayo. Partnering with an AMC—to take on part or all of the association’s workload—has become a viable solution for many organizations.

Reducing Overhead

“In these times in particular, reducing the impact of the infrastructure” should be a consideration at every association, says Velayo. Given the financial strains caused by coronavirus, associations are looking for ways to provide the same—or even more—services to members on a reduced budget.

An AMC can disperse overhead costs among several association clients—expenses for real estate, computers, software, phones, equipment, benefits, and payroll production. “These resources get a higher rate of efficiency with an AMC … so more resources can be driven to the association’s vision and mission,” says Velayo. The savings can go toward reserves and a “stronger safety net.”

Often, the savings from shared staffing can make an immediate impact—while expanding access to subject-matter expertise. “Small associations have a lot of ‘jugglers’” responsible for a wide range of responsibilities, explains Velayo. With an AMC, “you gain specialists in areas you otherwise couldn’t afford.”

This was precisely the case when AMPED Association Management onboarded a small association after the pandemic hit. Prior to the transition, the client had a full-time executive director “who did everything,” says Lynda Patterson, FASAE, CAE, president and owner of AMPED. Her team replaced that executive with three people—an exec, a finance manager, and an assistant, plus office staff to help with calls, packages, and internal financial controls. The client saved 25 percent compared to what it had been paying the full-time ED and related benefits, according to Patterson.

And it’s not just small organizations that may benefit from an AMC partnership, says Joseph Sapp, MBA, CAE, COO of Talley Management Group (TMG). Larger organizations may choose to outsource part of their workload—either taking a hybrid approach, with a mix of staff and support from an AMC, or via direct outsourcing of a department, such as membership, marketing, or accounting.

More associations have been considering a hybrid approach lately, says Patterson—including one that partnered with AMPED in an integrated management model after the pandemic forced layoffs.

“Our collective team replaced three to four staff, saving nearly 40 percent in staff and overhead while modernizing operations and focusing on strategy and growth,” Patterson says.

Problem Solving

Given their deep knowledge pools and brainstorming abilities, AMCs can also help associations create alternative revenue streams that work well in the current environment. At Synergos, staff has helped clients bring back the revenue associated with canceled in-person meetings. “We’re creating opportunities to do things differently … with a series of webinars and vendor sponsorships,” says Velayo.

At AMPED, staff pulled off a seamless transition from an in-person to a virtual meeting in the beginning of April. Patterson’s team focused on creating an “accessible” meeting, designed to attract the previously expected in-person attendees plus others who might be interested in the new virtual format. By charging 50 percent of the normal registration fee and offering live sessions that were also accessible in archives, the event exceeded attendance projections by 34 percent—and took a predicted break-even meeting to a profit of nearly $60,000. Patterson attributes the program’s success to “our buying power and industry relationships, our nimble, technology-savvy staff, and our shared resources.”

As associations seek cost-effective strategies to meet members’ needs, AMCs can offer solutions that will be beneficial for years to come.

Buying Power

AMCs have more buying power because they source for several clients and have access to economies of scale. This can be advantageous when purchasing technology, as well as during event planning. “Because of the number of meetings we schedule, we have a deeper relationship with a lot of brands,” says Velayo.

These connections have proven critical during the pandemic. Velayo notes that three Synergos clients had scheduled in-person meetings for summer 2020 at the same venue; all three were canceled or transitioned to virtual events. Because of the AMC’s longstanding relationship with the venue, the cancellation fees were waived. One of the clients avoided a $100,000 liability, says Velayo. Overall, Velayo says Synergos’s three client associations went from losing $120,000 to losing only $10,000.

Long-Term Planning

One of the biggest lessons learned from the pandemic is that associations should be prepared for disruption, says TMG’s Sapp. AMCs can help associations cut expenses by examining contracts, assessing operational costs, and cutting programs that aren’t providing value—while working to boost reserves in case of emergency.

When the International Society for Extracellular Vesicles first partnered with TMG five years ago, the association had only $500,000 in annual revenues. TMG spearheaded an effort to improve ISEV’s financial health by “diversifying ISEV’s revenue beyond relying on the annual meeting”—developing technology platforms for member engagement, designing educational events, and aiding the association in partnering with an investment advisor. Now, ISEV has more than $1.6 million in annual revenue—and $650,000 in reserves. This approach paid off when the pandemic hit, and ISEV was forced to switch to a virtual meeting—relying on operational funds without tapping reserves.

As associations seek cost-effective strategies to meet members’ needs, AMCs can offer solutions that will be beneficial for years to come. “There has never been a better time for small and medium-sized associations to consider partnering with an AMC,” says Sapp.