The old adage that “change is the only constant” rings true for associations all around the world. Associations have to adapt to new member expectations, advancing technology and the shifting needs of their industries. Today, associations seem to be going through another shift – one that requires them to keep a close eye on their finances.
Driven by a change in what members want and are willing to pay for, associations are seeing changes in their key revenue streams, including which income sources sustain their organizations. That could – and should – change your organization’s priorities.
Where Associations Get Their Revenue Today
Association income is typically into two broad categories:
1. Membership dues revenue, also called subscription revenue
2. Non-dues, or non-subscription, revenue
Dues revenue most commonly comes in as annual payments from organization members. Many organizations also offer longer or shorter membership periods, such as lifetime memberships. Non-dues revenue covers all other income sources for associations, including events and advertising.
Traditionally, associations have focused on dues revenue. They received the bulk of their income from membership subscriptions, using non-subscription revenue as supplemental income. Research shows that might be changing.
Non-Subscription Income Now Makes Up the Majority of Association Revenue in the US and UK
The American Society of Association Executives (ASAE) reports that in 1953, associations received 95.7 percent of their revenue from membership dues. In 2016, that number fell to 45.4 percent for trade associations and just 30 percent for professional associations.
The UK has seen similar changes. UK-based Professional Associations Research Network (PARN) reports that, 30 years ago, subscription revenue made up 80 to 90 percent of revenue in professional bodies. By 2015, that had dropped to just 44 percent.
Those figures indicate that associations around the world are seeing some of the same revenue trends, with a long-term decline in the importance of subscription revenue.
The Trend Toward Non-Dues Revenue
While dues revenue is still important, sometimes making up almost half of revenue, associations now receive the bulk of their income from non-subscription sources. That’s a clear indication that the importance of non-subscription revenue is increasing.
It’s also an early sign that associations worldwide may want to re-evaluate their financial priorities. If you’re not already thinking about non-subscription revenue sources, now is the time to start. If you don’t, in a few years your organization may find itself in a tight place financially.
Fortunately, we’re nowhere near the first to notice the trend toward non-subscription revenue. Organizations in many countries are already innovating and finding new ways to generate revenue outside of membership subscriptions. Based on that success – and the ten years we’ve spent serving as a resource for organizations worldwide – here are three proven tips to help your association keep its income strong despite financial changes.
3 Proven Tips for Increasing Association Revenue
1. Improve Current Non-Dues Revenue Streams
Take a detailed look at your organization’s current revenue streams. Aside from membership subscriptions, what’s bringing in the most money?
Identify your top non-dues revenue sources and solicit feedback from members on how to improve experiences for current users as well as prospects. A recent report on non-dues revenue indicates that in-person conferences and trade shows, job boards, and mailing list rentals are three of the most common non-dues revenue streams, making them great places for your association to start.
Go through this process with all your top non-dues revenue streams, finding your top sources of non-sbscription revenue and brainstorming ways to improve them. Use what you learn to improve each strategy so you’re consistently bringing in more income.
For example, Dynamic Communities used its CRMUG online community to improve revenue from its annual conference. The conference regularly generates 60 percent of their revenue. By using their online community to improve the event experience and provide another way to register, however, they saw a 33 percent jump in attendance. In fact, the community received 10 times the registrations than any other source.
2. Identify New Revenue Opportunities
Associations and professional bodies have such a wide range of non-dues revenue streams available to them that there’s probably at least one or two you’re not currently taking advantage of. What can you add to your list?
Here are a few non-dues revenue streams that you could take advantage of:
- Videos and podcasts
- Social media advertising
- Advertising on your website or in your online community
- Advertising or sponsored articles in your print magazine or e-newsletter
- Professional development eCourses and certifications
- In-person or online mentoring programs
- Sponsored communities and events
Evaluate the opportunities on this list as well as new ideas that your staff or members think of. Test each idea with your members to see what provides value for them that they would be willing to pay for, then implement the ideas that work.
Digital advertising on websites and social media platforms is one of the fastest growing sources of non-subscription income, and helped boost the The International Franchise Association’s (IFA) revenue. When they started using banner advertising in their online community, they generated over $100,000 (approximately £74.000 or €83.350) in revenue.
3. Don’t Neglect Traditional Membership Revenue
Whatever your association’s mix of revenue sources, many organizations worldwide still get nearly half of their revenue from membership subscriptions. That means you still need to focus on traditional revenue streams, ensuring your membership packages are enticing enough to get people to join your association.
Start improving your membership experiences and the value people get from their subscriptions by looking at data. Your members’ past transactions, demographics, and the benefits and content they consume online will give you clues about what your members are interested in and willing to pay for. You can also send an email survey to ask what would convince people to join your organization or renew their membership.
The Institute of Public Works Engineering Australasia (IPWEA), improved their membership experience with updated technology, including an integrated online community, website, and membership database. The result was an 11 percent increase in membership.
By updating your own technology and member benefits, your organization could see similar improvements in membership and subscription revenue.
Improve Revenue Now to Meet Future Needs
We’re clearly seeing a change in where associations get their revenue from, but it’s hard to say where those trends will go in the future. The best way to set your organization up for a solid financial future is to ensure that your revenue streams are strong enough and flexible enough to adapt to the market and your members’ needs as they change.
Pay attention to which revenue sources are strong now, making sure they’re up to date and can be improved upon in the future. Keep an eye open for new opportunities as well. There’s nothing wrong with trying out new member benefits or revenue sources. Who knows? I could become one of your strongest earners.
Co-Chair of the Board of Directors
Andy co-founded Higher Logic with a mission to transform and disrupt the B2B group collaboration software market. He now serves on its Board of Directors, with a specific focus on M&A and other strategic growth initiatives.
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