It is a problem that plagues every professional organization and charity. There is never enough money. Organizations have to cut back, scrimp, and save for every purchase and expense. But it does not have to be this way. Associations can create more revenue. They simply need to stop relying solely on members' dues. While member dues provide a dependable, regular infusion of cash, it has its limits. Only so many members will join an organization every year, retention will only stay at a certain level, and dues can only be raised to a certain point. This means that organizations need to start thinking outside of the box and looking at the potential of non-dues revenue.
Non-Dues Revenue: The Facts
Because of the struggle to generate funds with members' dues, many organizations are prioritizing other funding strategies. According to Association Advisor, over half of the organizations in the U.S. are making diversifying revenue sources a strategic financial priority. The same study found more than three-quarters of U.S. organizations rely on non-dues revenue for up to 50% of the total organizational annual revenue. Many of these organizations then use this money to demonstrate member value, increase member retention, and grow membership.
Sources Of Non-Dues Revenue: By The Numbers
A recent study found that 90% of Executive Directors, and other executives of associations, believe that live events are very valuable. The reason for this is likely that, since 2011, the fastest-growing organizational media channels are appointment-setting events. Another reason is that two-thirds of organizations with small membership use events as their secondary source of revenue, behind only membership dues.
One of the factors that makes events so lucrative to organizations is the opportunity for corporate sponsorship. Associations integrate these sponsorships into their social media, which is the primary source of promotion for the event. They can also incorporate the sponsorship into their virtual access portals, as 33% of organizations offer members live virtual access to events.
Sponsorships And Advertising
In the past few years, more and more for-profit companies are seeing how profitable it can be to sponsor not-for-profit organizations. The annual spending in this arena has surpassed half a billion dollars each year for the past several years. When it comes to magazine advertising spending, according to the Angerosa Research Foundation, roughly three-quarters goes to print magazines, with the remainder going to organizations' digital magazines.
Many associations also utilize their website to raise money with advertising. On average, annually a professional organization can raise almost $60,000 with this method. Organizations could make additional money through sponsorships by utilizing them more in their various communication strategies. Nearly half of all associations already rely on video to reach their members. Additional revenue could be generated by adding sponsorships to these videos, especially if they are educational or training webinars.
Organizations that make publishing a priority can generate significant non-dues revenue. On average, they generate over $1.2 million every year, which makes up nearly half of an average association's revenue. Typically, over $800,000 of the revenue from publishing comes from annual subscriptions and circulation. Additional funds can be raised by annual content licensing. And over the past few years, executive directors have only seen this number continue to increase. This increase is likely due to the fact that more and more publishing organizations have concentrated on customizing their published content for different membership sectors, including new members, young professionals, and student members.
Publishing, sponsorships, and events only make up a portion of the non-dues revenue that associations and organizations generate every year. The following are additional avenues that can be taken:
1. Social media: While social media was previously mentioned, it can be further utilized. Entire social media platforms can be monetized. As more members connect with an organization's platform, that platform page becomes more and more valuable to for-profit companies. Some associations harness this to offer advertising and sponsorship options for various businesses. This is most common on Facebook, where 91% of organizations have a page. Twitter and LinkedIn closely follow, at 86% and 75% respectively. However, the most underutilized channel for sponsorships and advertising is YouTube, as only 57% of associations have a channel on the platform.
2. Apps: Just as nearly every business has an app, many not-for-profit associations are moving towards creating their own app. 96% of associations' apps are provided to members, non-members, or community stakeholders for free. Only 4% charge to download or use the app. This 4% is on to something, though. On average, associations' paid apps create $31,000 in revenue every year. Other organizations, that want to keep providing their app for free could consider getting a sponsorhip or looking into possible advertising partnerships.
The truth is, there are nearly endless options for generating additional revenue. Organizations can sell merchandise, whether branded or unbranded. They could even specialize in making a certain accessory for the profession or industry that they support. Other associations could look into developing a career board. There are many ways to monetize this type of website, whether through sign-up fees for businesses or through advertisements. Some organizations might want to begin offering certification or training programs—experts in the field would likely be willing to donate their time towards developing a program. Finally, providing insurance options, although potentially complex to configure and setup, is an excellent way to create non-dues revenue for any professional association.
While all of these methods are proving to be worthwhile methods for organizations to raise non-dues revenue, these organizations still need to monitor their activity closely. The reason for this is two-fold. The first reason is that not every method will work well for every organization. Any particular method may take some customization and re-tooling or it should be abandoned for another revenue generating option. The second reason is to ensure that the organization's tax-exempt status is not jeapordized. Different options for generating revenues have different tax implications. Organizations should speak to a tax professional to secure the safety of their tax status.