2012 economic impact on associations: resilience and recovery

2012 Economic Impact on Associations:Resilience and Recovery

mckinley-advisors.com

February, 2012

Dear Colleagues:

McKinley’s 2012 Economic Impact on Associations (EIA) Study marks the fifth installment in a series that examines the impact of shifting economic conditions on our sector. The report pro-vides insight into key benchmarks of association success, measures the reality of the past year and the outlook for the coming one, and provides data that validates how challenges and oppor-tunities can differ dramatically from one sector to another.

While the series took root at a time when associations were experiencing some of the harshest economic conditions they had ever faced, each subsequent installment has provided a fascinat-ing and informed view of the association community and its resilience in times of both austerity and recovery. In this 2012 report, we continue to see a major theme of recovery—a continuation of the upswing witnessed in 2011. Both in the survey research and in our anecdotal observa-tions across a broad spectrum of clients, we see how associations have adapted to the challeng-ing climate by adjusting expectations, redefining strategy and, in many cases, creating a more streamlined and efficient internal operation. As the poet and filmmaker James Broughton once said, “Adversity is a stimulus.”

We appreciate the time invested in this project by each of the 200 association executives who responded to the survey, and we look forward to continuing to deliver meaningful studies that help organizations understand the larger environments in which they—and their members— are operating. If you would like to discuss the data in more depth or arrange for a presentation for your staff or Board, please be in touch.

Best wishes for continued optimism and recovery.

Jodie Slaughter President & Founding Partner

Jay Younger Managing Partner & Chief Consultant

Shelley Sanner, CAE Managing Consultant

Patrick Glaser Senior Research Manager

2012 State of Associations | Resilience and Recovery

McKinley Advisors 2012 Economic Impact on Associations | 2

IntroductionThe EIA series has provided an interesting, if not illuminating, view of associations through the lens of a dramatically shifting economic landscape. In the past four years, the data has shown the resilience of associations—from initial, drastic measures to preserve core infrastructure to the first signs of recovery as associations began (and continue) to reinvest in critical core initiatives. Yet in 2012, just as in 2011, optimism continues to be balanced by conservative behavior. The fact is that associations are operating in a different reality today than they did four years ago.

So what has changed for associations? Among the key findings for 2012:

> Optimism is up and, in many cases, the reality of 2011 outperformed expectations.

> Despite improving conditions, some association segments continue to face pronounced challenges, particularly associations whose members were deeply impacted by the recession (such as the building/construction industry.)

> Associations are coming off of a period of extreme austerity, but they are continuing to show signs of reinvestment in staff (with hiring trends on the rise), major capital projects such as website enhancements and database upgrades, and “devel-oping new methods for member engagement.”

> Membership continues to be an area of focus for associations. Across all indicators, respondents report a deepening concern and investment in member recruitment and retention—or, more importantly, what might be called an improved, more deliberate member “experience.”

Survey MethodMcKinley developed and deployed an online survey to senior association executives on January 4, 2012 to collect key data around the economy and its impact on associations. The survey remained open until January 18, 2012 and resulted in 200 responses representing a broad spectrum of the association community. It is worth noting that the personal and organizational characteristics of EIA respondents (e.g., budget size, sector, job responsibilities, organi-zational role, etc.) have remained roughly consistent over the four year horizon of the series.

If you wish to participate in future benchmarking studies or are interested in a tailored presentation of the EIA results to your senior staff or board of directors,

please contact Shelley Sanner at [email protected].



TABLE A

Which of the following best describes the organization you work for? Total Responses: 153

OrganizationsForty-six percent of respondents represent profes-sional societies (consisting mostly of individual members), 34% are from trade associations, 14% from a “hybrid,” 3% from philanthropic or cause-related and 2% describe their association as “other.”

Seventeen percent of the survey respondents represent healthcare organizations; 16% describe their organizations as scientific and engineering. Education and humanities associations account for 12% of respondents. The balance represents a variety of industries, including building / construc-tion, manufacturing, professional services, finance /

accounting, food industry, legal, association manage-ment and the retail industry.

The number of senior executives who responded to the survey this year is nearly equal to 2011, with 91% holding a director level position or higher. The remaining participants reflect the breadth of the profession and represent a variety of responsibilities.

Fifty six percent of survey participants represent organizations whose annual operating budgets are less than $10 million, while 10% have budgets of over $50 million.

46%

34%

14%

3% 2%

Professional(mostly individual members)

Trade

and individual members)

Philanthropic / Cause Related

Other

1%1%1%

3%4%5%

7%10%

12%16%

17%23%

RetailAssociation Management

LegalFood Industry

Finance / AccountingProfessional Services

ManufacturingBuilding / ConstructionEducation / HumanitiesScientific / Engineering

HealthcareOther, please specify



TABLE C

Which of the following most closely describes your position within your organization?Total Responses: 155

TABLE B

What field/industry does your association represent?Total Responses: 155

1%

1%

7%

8%

12%

13%

19%

40%

Coordinator

Other

Manager

Director

Managing Director / Senior Director

Senior Vice President / Vice President

0% 10% 20% 30% 40% 50%

1%1%1%

3%4%5%

7%10%

12%16%

17%23%

RetailAssociation Management

LegalFood Industry

Finance / AccountingProfessional Services

ManufacturingBuilding / ConstructionEducation / HumanitiesScientific / Engineering

HealthcareOther, please specify

0% 10% 20% 30% 40% 50%



TABLE E

What is your organization’s annual operating budget? Total Responses: 153

TABLE D

Which of the following best describe your areas of responsibility? Please select all that apply. Total Responses: 155

9%10%10%

15%16%16%16%17%

23%34%

39%55%

IT / Technology

Other, please specify

Membership

0% 10% 20% 30% 40% 50% 60%

0% 10% 20% 30% 40%

13%

22%

22%

17%

16%

7%

3%

Less than $2 million

$2 million t o $4.9 million





$100 million or more



Key Finding #1

Economic conditions were more favorable than expected in 2011.Despite a year of slow economic recovery, only about one-in-ten respondents (11%) report that the 2011 economic impact on their association was worse than expected. By comparison, about five-in-ten respon-dents (45%) experienced an impact from the economy that was more favorable than they had expected.

TABLE 1

Looking back on 2011, what was the impact of economic conditions on your association? Total Responses: 183

11%

45%

35%

9%

Far worse than e xpected (0%)

Worse than expected

About what w as e xpected



Key Finding #2

Most respondents are optimistic looking towards 2012.Almost all participants in the study indicated some level of optimism when looking at 2012 for their associa-tion. In total, about nine-in-ten respondents (88%) are optimistic about 2012. Only about one-in-ten (12%) are pessimistic when looking at the coming year.

Notably, optimism appears to be somewhat tempered, with only about two-in-ten respondents (17%) noting that they are “very” optimistic about 2012.

TABLE 2

In general, how are you feeling about the year 2012 for your association? Total Responses: 161

17%

71%

12%



Key Finding #3

Although optimism grows, the long-term economic impact of the recession is evident in membership trends. Membership growth is primarily credited to growth in the industry, a stronger membership proposition, and more strategic marketing; associations with declining membership attribute it to difficult economic conditions and an aging membership.Only one-in-four respondents (26%) reported a lower average membership trend based on the past five years. However, fewer respondents in this 2012 study (34%) reported a five-year positive membership growth trend than did in 2011 (44%) or 2010 (44%). This is consistent with economic conditions over the past several years. The National Bureau of Economic Research (NBER) placed the beginning of the recession at the end of 2007. Thus, respondents from previous studies had the benefit of one to two additional pre-recession years to consider in five year trending.

As might be expected, there are important differences in the five-year annualized trends reported by respon-dents coming from different fields. Participants that represent fields related to building and construction, for example, indicated the worst five-year membership trend, with seven-in-ten respondents (70%) reporting fewer members.

TABLE 3

Is the annualized trend in full, paid memberships for your association over the past 5 years (since January 1, 2007): Total Responses: 2012: 159

2011: 234

2010: 307

5%

23%

28%

44%

1%

18%

38%

44%

3%

37%

26%

34%

Don’t know

Flat

Lower

Higher

2012

2011

2010

0% 10% 20% 30% 40% 50%



TABLE 3B

Is the annualized trend in full, paid memberships for your association over the past 5 years (since January 1, 2007) higher, flat, or lower?

5%

30% 30% 31%

41% 40%

48%

25%

10%

30% 31% 30%28%

30%

70%

55%

40%38%

30%28%

19%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Building/Construc on/

Real Estate(N = 20)

Educa on/Humani es

(N = 20)

Professional Services(N= 20)

Public, Non-pro t, & Cause-related

(N = 16)

Manufacturing,Energy & Natural Resources, Retail

(N = 27)

Scien c & Engineer ing

(N = 25)

Healthcare(N =27)

Higher

Flat

Lower

Annualized 5 Year Membership Trend Analyzed by Field Represented by Association



10%11%

31%

28%

12%

7%

TABLE 3C

Over the past 12 months, has your retention rate:

TABLE 3D

Is the annualized trend in full, paid memberships for your association over the past 5 years higher, flat or lower?

33% 32%

55%

27%30%

14%

39% 38%

32% Higher

Flat

Lower

29%27%

41%

23%27%

18%

46% 45%

36%

Increased

Decreased

Stayed the same

Trade (N = 52)

Professional(N=71)

Hybrid(N=22)

Trade (N = 52)

Professional(N=71)

Hybrid(N=22)



TABLE 4

What is the approximate annualized increase/decrease in full, paid memberships for your association over the past 5 years (since January 1, 2007):Total Responses: 108

10%11%

31%

28%

12%

7%

Base: Respondents whose 5 Year Association Retention Changed

-10% or less

-5 to 10%

0% to -5%

0% to 5%

5% to 10%

10% or more



Key Finding #4

Concern across all core association business lines continues to lessen, although the decreases are less dramatic than in 2011. Two notable areas are corporate support (advertising and sponsorship), which continues to see significant decreases in terms of those who are concerned and membership (retention and recruitment) which still tops the list as the issue of concern to the greatest number of associations.Respondents were asked to share their levels of concern across core business lines. Advertising and spon-sorship continued to show some of the greatest overall decreases in terms of numbers who are concerned (sponsorship showed the most significant drop of 11% from 2011 to 2012 while concern for advertising and annual meeting attendance decreased by 10%). Taken together, these two areas show optimism about the recovery of the private sector and the continued viability of corporations as a source of revenue support. All other areas decreased between 4% and 10%. Volunteer participation, which showed a slight bump in con-cern from 2010 to 2011, fell 6% in concern.

On the other side of the engagement spectrum is membership, which (for many associations) represents the most fundamental reason for existence. Throughout the survey, respondents expressed heightened concerns, reported flat or declining trends, and described investments geared specifically towards improving member-ship benchmarks and the member experience. When asked specifically about recruitment and retention, the survey respondents ranked these two issues of highest concern.



TABLE 5

Considering the current economic situation, how concerned are you with the following issues? (Percentage who answered “extremely” or “somewhat” concerned shown based on a four-point concern scale) Total Responses: 2012: 162

2011: 237

2010: 340

2009: 283

0% 20% 40% 60% 80% 100%29%

58%

74%

74%

83%

88%

86%

88%

36%

66%

80%

74%

79%

88%

78%

84%

42%

50%

59%

68%

69%

76%

78%

78%

36%

46%

49%

58%

59%

65%

72%

72%

Volunteer par cipa on

Product sales

Adver sing

A endance at other educa onal seminars

Annual mee ng a endance

Sponsorship

Membership recruitment

Membership reten on

Concerned 2012 Concerned 2011 Concerned 2010 Concerned 2009



TABLE 6

What do you expect to happen at your association in 2012 as a result of current economic conditions?Total Responses: 158

Key Finding #5

While associations continue to show improving budgetary outlooks, there are indications that the recession has caused them to behave more deliberately and conservatively when it comes to internal operations.The majority of cost-savings activities that participants were asked about appeared to be less popular in 2012 than in previous years. However, exceptions include staff reorganization and outsourcing of staff func-tions, which have remained relatively stable for several years. Still, significant fewer participants in 2012 and 2011 signaled a hiring freeze than in previous years.

IS HAPPENING

NOW

DEFINITELY WILL

HAPPEN

PROBABLY WILL

HAPPEN

PROBABLY WILL NOT HAPPEN

DEFINITELY WILL NOT HAPPEN

DON’T KNOW TOTAL

Layoffs / elimination of positions 3% 1% 11% 51% 32% 3% 158

Hiring freeze 6% 3% 13% 39% 33% 6% 157

Freeze on salary increases 3% 3% 12% 45% 32% 5% 159

Staff reorganization 8% 7% 20% 44% 17% 5% 158

Budget cuts 7% 7% 20% 42% 18% 6% 159

Reduction of programs and services 4% 3% 12% 48% 28% 6% 158

Change in investment strategy 5% 3% 15% 40% 16% 21% 159

Outsourcing of staff function 8% 5% 16% 44% 17% 10% 158



TABLE 7

What do you expect to happen at your association as a result of current economic conditions? (Percentage answering: happening, will happen, probably will happen)

0% 20% 40% 60% 80% 100%26%

44%

45%

58%

51%

25%

84%

36%

22%

54%

45%

53%

35%

27%

70%

44%

12%

20%

18%

24%

24%

23%

44%

36%

15%

18%

18%

22%

23%

29%

34%

34%

Freeze on salary increases

and services

Hiring freeze

Change in investment strategy

Budget cuts

2012

2011

2010

2009



Key Finding #6

Improving economic conditions have shifted some focus from member retention to member engagement strategies.Focus on improving member retention continues to fall among respondents in 2012. Only about three-in-ten respondents (34%) indicated retention as a priority in the 2012 study. This represents a drop of 16 percent-age points over the preceding four years. By contrast, interest in new strategies for member engagement, website enhancements, new product research and development, and diversifying membership has grown in recent years.

TABLE 8

What are your three highest priorities for 2012? (Limit 3 responses per participant)Total Responses: 160

2012

2011

2010

2009

22%

12%

26%

15%

36%

50%

34%

17%

9%

30%

16%

14%

32%

18%

49%

27%

15%

14%

23%

14%

18%

27%

22%

40%

28%

11%

14%

19%

19%

23%

28%

29%

34%

37%

results

among younger members

Diversifying membership /

New product research and development

Branding /Increasing Awareness

Website enhancements

Developing new methods for member engagement

0% 10% 20% 30% 40% 50%



Key Finding #7

Membership retention rates are stronger in the past two years than in the previous two, signifying a potential recovery for associations.About four-in-ten respondents in the 2012 and 2011 EIA studies reported a member retention rate of 90% or higher for the preceding year (42% and 39%, respectively). By contrast, only about three-in-ten participants to the year 2010 and 2009 studies said the same (32% and 33%, respectively)

TABLE 9

What is your current membership retention rate? Total Responses: 153

8%

7%

11%

21%

20%

22%

11%

7%

10%

10%

18%

22%

20%

12%

5%

9%

10%

15%

21%

20%

19%

3%

5%

7%

16%

27%

24%

18%

Less than 70%

70-74

75-79%

80-84%

85-89%

90–94%

95-100%

Percen t 2012

Percen t 2011

Percen t 2010

Percen t 2009

0% 10% 20% 30% 40% 50%



Key Finding #8

Associations continue to plan to hire in 2012.Plans for hiring almost doubled from 2010 to 2011 and the 2012 survey revealed that associations continue to plan for adding positions. The brunt of hiring is projected to be in the areas of education / professional development, marketing, IT, membership and goverment affairs.

TABLE 10

Does your association plan to add new staff positions in 2012?Total Responses: 159

16%

60%

24%

15%

44%

41%

14%

37%

50%

Don’t know

No

Yes

Percen t 2012

Percen t 2011

Percen t 2010

0% 20% 40% 60% 80% 100%



TABLE 11

In which of the following areas does your association plan to add staff in 2012? Please select all that apply.Total Responses: 77

0% 10% 20% 30% 40% 50%

6%

15%

9%

17%

28%

30%

31%

6%

12%

11%

22%

19%

32%

21%

8%

10%

12%

12%

13%

16%

21%

22%

26%

30%

30%

Membership

IT / Technology

Percen t 2012

Percen t 2011

Percen t 2010

N/AN/A

N/AN/A

N/AN/A

N/AN/A



Key Finding #9

Market research and building an online presence continue to dominate the marketing focus for associations in 2012, while more traditional efforts such as direct mail, print advertising and trade show marketing enjoy comparatively less emphasis.Respondents consistently report declining or weak investment levels in traditional marketing channels such as trade shows, direct mail and print advertising (all of which saw steep declines of at least 7 percentage points from 2011 to 2012). On the other hand, survey respondents anticipate growing investments in areas that are likely to reveal- and align- more closely with members’ current behaviors and expectations. Market research, social media, email communications and online advertising all rose in priority for associations.

TABLE 13

Do you anticipate that your budget for each of the following will increase, decrease or remain the same in 2012?Total Responses: 2012: 160

2011: 240

2010: 316

2009: 258

INCREASE

2009 2010 2011 2012

Web site modifications 61% 62% 71% 73%

Social media (blogs, Facebook, Twitter, etc.) 52% 56% 57% 59%

Email communications to members 56% 49% 43% 45%

Online advertising (Google adwords, banner advertising, online sponsorships) 22% 31% 42% 42%

Word of mouth marketing 40% 39% 34% 33%

Market research 13% 17% 26% 32%

Trade show attendance / marketing 16% 23% 36% 28%

Public relations 30% 26% 29% 28%

Direct mail 10% 14% 23% 14%

Print advertising 7% 6% 15% 8%


2012 State of Associations | Partial List of Participating Associations

AcademyHealth

American Academy of Dermatology

American Academy of Medical Administrators

American Academy of Pediatrics

American Association for the Study of Liver Diseases

American Association for Laboratory Animal Science

American Association for the Advancement of Science

American Association of Motor Vehicle Administrators

American Association of Physicists in Medicine

American Association of Physics Teachers

American Association of Snowboard Instructors

American Chemical Society

American Dental Hygienists’ Association

American Forests

American Industrial Hygiene Association

American Institute of Architects

American Institute of Chemical Engineers

American Library Association

American Message Therapy Association

American Physical Therapy Association

American Psychiatric Nurses Association

American Society for Clinical Pharmacology and

Therapeutics

American Society for Quality

American Society of Civil Engineers

American Society of Interior Designers

American Speech-Language-Hearing

Association

American Water Resources Association

American Water Works Association

Association Connecting Electronics Industries

Association Forum

Association Management Center

Association of Pool and Spa Professionals

Association of Public Health Laboratories

Building Owners and Managers Association

International

Canadian Institute of Mining, Metallurgy and

Petroleum

Center for Association Leadership

College and University Professional Association for

Human Resources

Construction Specifications Institute

Council of Industrial Boiler Owners

Council on Foundations

Ecological Society of America

Endocrine Society

Entomological Society of America

Global Association of Investment Professionals

Hardwood Plywood and Veneer Association

Independent Office Products and Furniture

Dealers Association

Industrial Supply Association

Interlocking Concrete Pavement Institute

International Association of Movers

International Code Council

International Food Information Council


2012 State of Associations | Partial List of Participating Associations

International Franchise Association

Irrigation Association

Kitchen Cabinet Manufacturers Association

Manufacturers Alliance for Productivity and Innovation

Medical Group Management Association

Missouri State Teachers Association

National Affordable Housing Management Association

National Association for Gifted Children

National Association of Counties

National Association of Criminal Defense Lawyers

National Association of Educational Procurement

National Association of Enrolled Agents

National Association of Home Builders

National Association of Independent Schools

National Association of Local Boards of Health

National Association of Social Workers

National Association of Theatre Owners

National Business Officers Association

National Federation of Humane Societies

National Fluid Power Association

National Investor Relations Institute

National Precast Concrete Association

New Jersey Society of CPAs

North Carolina Nurses Association

Northwest Food Processors Association

Pennsylvania Institute of CPAs

Produce Marketing Association

Promotional Products Association International

Reinsurance Association of America

Risk Management Society

Society for Marketing Professional Services

Society for the Advancement of Material and Process

Engineering

Society of Chemical Manufacturers & Affiliates

Society of College and University Planning

Society of Consumer Affairs Professionals in Business

Society of Hospital Medicine

Society of Manufacturing Engineers

Society of Nuclear Medicine

Society of Tribologists and Lubrication Engineers

Solar Electric Power Association

Southern Association of Independent Schools

Special Libraries Association

The New York Academy of Sciences

United Nations Associations of the USA

University of Kentucky

University Risk Management and Insurance Association

Washington Area New Auto Dealers Association

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