How to manage: AMCs help take the headaches out of running associations
The Great Recession and the tepid economy that followed left many companies and organizations looking for any financial edge they could find. That’s no less true among nonprofits and professional and trade associations, which often need to leverage small budgets while staying focused on big missions.
While it’s tempting to say that the recent recession sunk all boats, some associations hoped to gain an edge by calling on association management companies (AMCs) to handle their day-to-day operations.
Indeed, according to a study conducted by LoBlue & Majdalany Management Group, standalone organizations (industry speak for associations that manage their own operations) fared significantly worse than AMC-managed organizations during the recession. According to the study, 66% of AMC-managed organizations operated in the black during 2008, at the height of the recession, while only 47% of standalone organizations did.
Another survey, this one conducted by the AMC Institute in 2009, an association management trade group, noted that more associations were following the AMC model as the recession took hold. While desperate times call for desperate measures, any businessperson will tell you that anything that improves efficiency in down times is also worth looking at when an organization is flush. And as the economy continues to struggle to gain a secure foothold, many organizations are likely hoping to keep their heads above water.
Given the well-publicized troubles nonprofits in general have experienced in recent years, the potential cost savings of going with an AMC may be hard to ignore for many organizations.
That’s where folks like Lynda Patterson come in.
Patterson runs Association Management Partners, a Madison AMC that specializes in managing trade and professional associations. According to Patterson, cost savings are just one reason for going with an AMC.
“I think they really get a lot more for their money, and it also allows them to have a variety of areas of expertise for their dollars, where typically maybe they would hire a generalist to do the books and answer the phones and plan the meetings,” said Patterson. “In our model, we have people who focus on each one of those areas and then bring it together as a team.”
The AMC model also allows associations to focus on their core missions, says Patterson, removing some of the headaches that go along with running any organization.
“They don’t have to be an employer, dealing with hiring and firing staff and employee benefits, office space, and leases,” said Patterson. “We become the headquarters for these associations, so we provide everything it takes to turn on the lights, answer the phones, and collect and send mail.”
In addition, small staffs are vulnerable to major disruptions whenever inevitable turnover occurs, says Patterson.
“When they only have one or two staff members, and one staff person leaves, they really have no continuity,” said Patterson. “Everything is kind of in one person’s head, so this is spread across a team. So providing that continuity and retaining that information is really a key benefit as well.”
Doing it all
Patterson started Association Management Partners four years ago. The business provides everything an association’s full-time staff normally would, including membership development, marketing and communications, social media and website development, financial management, and public relations.
“That model really allows for us to kind of flex up and down as needed through [clients’] calendar year as things change just in terms of resources and time needed around specific events or meetings or membership renewals,” said Patterson.
The business focuses on large statewide and small national associations – typically organizations with an operating budget between $500,000 and $2 million. Its clients come from a range of industries – everything from finance and insurance to wetland science.
Right now, AMP has a total of seven full-service clients, and it also does consulting work for several others. In addition, Patterson owns Office Management Partners, which provides office space and equipment to small businesses.
One common – and fairly obvious – objection that associations have to outsourcing their management functions, rather than hiring staff or relying on volunteers, is that they’ll lose autonomy. That’s a legitimate concern, but according to Patterson, it’s not a deal-breaker. For one thing, as her company’s name suggests, Patterson is careful to emphasize the partnership she enters into with her clients. That includes getting to know each association intimately.
“I think getting to know their industry really helps us in achieving our mission, and the mission of our company is to perfect operations and accelerate growth for the associations we manage,” said Patterson. “So in order to really do that, we obviously partner very closely with their boards and their leadership to make sure that we understand their industry, clearly understand the mission and the strategic plan of their organization, so that we can help grow the organization while we’re developing efficiencies in operations to best utilize their resources.”
Earlier this year, Association Management Partners received accreditation from the AMC Institute, becoming one of only 70 AMCs around the world (out of around 500 total) to receive the distinction.
According to Patterson, the scrutiny her company received during that process helps reassure her clients and potential clients that their organizations will remain in good hands.
“They took a look at our operations, came in and did a full-day audit to look at everything from accounting procedures to HR – including meeting with and interviewing employees to make sure that they had a good development plan, professional goals, understood their job descriptions and duties – to looking at how we interface with our clients,” said Patterson. “So accreditation is really a testament to that, and I think gives our clients good peace of mind that they hired a real company with good systems to manage their operations.”
As for the future, while the association management model leaves plenty of room for growth, Patterson’s company may be close to hitting its ceiling.
“We have a total of 10 employees, and we have room in our office to grow to 12,” said Patterson. “When I wrote the business plan, it was to be a small company so that essentially as the owner of the business, I really know all the employees and I really get to know the associations, their mission, and the boards that we work with. So once we hit 12, we may reevaluate, but that’s kind of the cap that I’m looking at right now.”
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