Monday, May 16, 2016

Associations Are Non-Profits for a Reason

There is a clear and important reason that associations are organized as non-profit organizations, and it isn't so they can get out of paying taxes.

My musings in this regard were inspired by this post by Anna Caraveli on The Demand Networks blog. Titled, Are you Marching to your Board’s or your Customers’ Pace?, the post explores the difficult and important territory of slow-moving associations growing increasingly obsolete, either because they disenfranchise younger members or because they lose the service delivery battle with for-profit competitors (or both).

Caraveli, always a vocal champion for associations to adopt a "for-profit" mindset in identifying and responding to the needs of their members, reveals in this post a growing frustration with the opposite point of view, still well entrenched in many areas of the association landscape. Associations, the countervailing wisdom goes, are not organized as for-profit entities for a reason. Their strengths are not tied to agility and market responsiveness, but to stability and advocacy, and as such, they have cultures and governance structures that resist (and should resist, I suppose) the kind of market-driven solutions Caraveli supports. Caraveli, to the people that hold this viewpoint, comes across as not fundamentally understanding the role of associations in our environment. While to Caraveli, these defenders of the status quo are just whistling past their own graveyards.

It's a good post. Don't just accept my paraphrasing and, with apologies to Caraveli, my unasked-for analysis. Go read it for yourself.

If nothing else, it got me thinking. Thinking specifically about what it uniquely means to be an association and whether that has any lasting utility in the marketplace. Because, truth be told, my gut is more on the side of those that Caraveli is railing against. Although I loathe to think of myself as a "defender of the status quo," I have to admit that I have more allegiance to the idea that associations are not solely here to provide market-driven goods and services to their members. Too much focus in that area, in fact, robs an association of its ability to pursue its vital purpose.

Clearly, I'm talking about mission, the socially-beneficial reason that every association exists and was granted their non-profit status in the first place. And while I very much ascribe to common maxim of "No Money, No Mission," too much focus on money for money's sake can result in no one paying attention to the mission at all.

Here's how I look at it. Every association, to be successful, must master two distinct types of relationships with its members. First comes the transactional. As a member of this association you get the following benefits, and those benefits have bottom-line value in your marketplace. You get intelligence you can parlay into better operating ratios, or education that you can parlay into personal career growth and advancement. When it comes to the transactional relationship, Caraveli and her demand-driven approach has a lot to offer struggling associations. You'd better figure out what your members need and position your association as the only place they can get it. If you don't get this right, for-profit competitors are going to put you out of business quick.

But there is a second kind of relationship that associations must have with their memberships, a relationship I call aspirational. This almost always coincides with the non-profit mission of the organization. Our association is dedicated to solving a specific challenge or problem that our industry or profession is facing. It's not something any of our members can do by themselves. In fact, it can only be tackled through the collective actions of everyone in the industry or profession, and our association is the instrument that allows that collective action to be legal and focused. When it comes to the aspirational relationship, the cultures and governance structures of Caraveli's "defenders of the status quo" have the most to offer. They are what give associations the authority and support they need to tackle its aspirational challenges.

Inside an association, the need to maintain both of these relationships can create an enormous amount of tension. Unless everyone understands that there are two objectives here, and that the objectives must live in harmony with one another, things inevitably decay into warring factions. When the transactional side wins, the association loses its way, and becomes a mere provider of services, and often one still less nimble and effective than for-profit competitors. When the aspirational side wins, the association loses its members, who, as altruistic as they may be, have businesses to run and careers to grow, and will not support any organization that doesn't help them with these goals.

As I said at the beginning, there is a clear and important reason that associations are organized as non-profit organizations. It is to fulfill their socially-beneficial missions. But just because you can't fulfill that mission without providing your members with valuable responses to their market-driven needs, don't let the quest to provide those responses destroy your ability to fulfill your mission.

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This post first appeared on Eric Lanke's blog, an association executive and author. You can follow him on Twitter @ericlanke or contact him at

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