Is There an AMC Behind That $5 Million Association?

Jonathan Lurie, Vice President of Corporate Marketing at Smith Bucklin & Associates, Inc.

Picture this. A successful association with an operating budget of $5 million known as “the” source for industry knowledge with a board of directors that is strategically focused. The organization is humming on leading-edge technology, providing for efficient operations and supporting a solid financial foundation.

Question: Is this association outsourcing all or part of its functions to an Association Management Company (AMC)?

Answer: Absolutely.

In the for-profit world, outsourcing is on the upswing. According to Dun & Bradstreet, the practice of contracting out professional services is growing at a rate of 15 percent per year, and now represents a $400 billion annual market in the United States alone. One need only look at how quickly organizations have accepted the Application Service Provider (ASP) as a way of doing business to see evidence of this trend. According to The Outsourcing Institute, primary motivations behind outsourcing include gaining access to world-class capabilities, improving focus and controlling or reducing operating costs.

There is strong evidence that the same trend is occurring in the not-for-profit sector. Larger associations are using the for-profit principles of outsourcing and the AMC model to gain access to highly valuable resources that can fuel growth, enhance membership value, lend “just-in-time” support to events management and achieve overall operational excellence without any loss of identity.

Changing Dynamics Need Dynamic Solutions

Successful support models for large associations are highly customized and without exception employ a blend of dedicated and specialist staff unique to the organization. The “one-size-fitsall” management model that may benefit a smaller organization does not scale up well in size. “The AMC model allowed us to expand member value during years of explosive growth. I doubt this would have been possible with another management arrangement,” says Kim Nitz, Executive Director of America’s SAP User Group (ASUG), a business and technology professionals’ organization with a $9 million annual operating budget. ”The expertise provided by Smith, Bucklin has enabled ASUG to become the source for knowledge and information in the industry,” added Nitz.

When it comes to membership products and services, an AMC that manages large associations will have the in-house expertise to conduct meaningful market research, build strategic business analyses and plan implementation programs. This know-how can provide the association with tools to evaluate current and future programs and make funding decisions based upon those that provide the greatest strategic value.

Peggy Whitman, president of the Society for Incentive and Travel Executives (SITE) explains the reasoning behind their moving to the AMC model, “utilizing the contracted services of Smith, Bucklin provides SITE with additional resources and benefits that enhance our value to current and future members.”

Larger associations are discovering that AMCs can have best-of-class resources that can be tapped to provide a short cut to operational excellence. Pat Nichols, president of Transition Leadership International, says, “In the contemporary association environment of rapid change and increasing demands on resources, outsourcing can give thought leaders the opportunity to focus on the big picture while delegating non-core functions to experts. When I led Business and Professional Women/USA, improving our financial and database functions by outsourcing won us the credibility with our members to address important strategic issues,” added Nichols.

When larger associations look at AMCs, they want more than the basic services. They want knowledge and expertise. They understand that the association can benefit greatly from an AMC resource because the association can draw upon the collective intelligence of the AMC’s expert staff. Just compare the collective IQ of an association staff of 30 with an AMC of potentially hundreds of association professionals. The same principle holds true for technology resources, as well.

“The bar is a lot higher when it comes to providing services to associations of our size,” says Mark Thorsby, CAE, Executive Director of the 3,000 member International Carwash Association which is managed by Smith, Bucklin. “Our Board demands strategic leadership and is looking for more than standard services. They don’t want the AMC to just manage our Web site. They are looking for the AMC to design, launch and manage an e-commerce portal for the entire industry.”

Making an Outsourcing Decision That Fits

Just like selecting an outsource partner in the for-profit world, due diligence is important when selecting an AMC. These important tips can help associations determine the appropriate resource fit. Association leaders should:

• Look for a resource with experienced staff who have worked successfully with comparable clients both in terms of industry and size
• Ask for evidence of best practices that leverage the collective knowledge of their organization
• Request proof points that illustrate expert financial and budget capabilities (including forecasting) and resources

Finally, before making a decision, association leaders should visit the AMC to view the facilities first hand and meet the professionals face to face to ensure they both are of the caliber to effectively represent the organization and its interests.

Forget the myth that association management companies are only for small associations. Today, AMCs serve as the backbone behind many large growing organizations, providing access to high-value resources and fueling growth during the most productive stages of the association’s life cycle.