2023 marked an important shift in how associations are prioritizing the challenges they face every day. For the first time in its 12-year history, respondents in Naylor and Association Adviser’s 2023 Association Benchmarking Report identified “generating non-dues revenue” as their greatest challenge. This speaks volumes about how important financial stability and growth are to an association being able to provide value to members both today and into the future.
Associations have long recognized the importance of non-dues revenue, understanding that it serves as a financial lifeline, supporting daily operations and enabling them to invest in new programs and technologies. However, recent years have brought a deeper understanding of the critical role diversifying and securing sustainable sources of non-dues revenue plays in ensuring the longevity of their organizations.
The Importance of Non-Dues Revenue
These days, non-dues revenue isn’t just a nice-to-have for associations – it’s often a fundamental piece of their overall financial puzzle. While non-dues revenue can cover essential costs, including operational expenses, staff salaries and program development, it can also be earmarked for investments, upgrades and innovations for the future. On the other hand, a shortage of non-dues revenue can lead to budget shortfalls, forcing associations to make difficult decisions to cut back on educational programs, networking events, advocacy efforts or industry research. All this to say, member satisfaction and the value an association can provide is on the line.
The next question then is obvious: What barriers stand in the way of associations generating more non-dues revenue? Associations tell us that being “understaffed without enough bandwidth” and having a “limited resources” are the two primary reasons that they have trouble generating the revenue needed to gain the financial stability desired or raise funds for future endeavors.
Due to a strong job market this year, most associations feel they are staffed appropriately in most departments, including education, meetings and events, and government affairs. The same doesn’t hold true for those roles focused on driving non-dues revenue – 55% of respondents said they are understaffed when it comes to advertising and sponsorship sales teams.
Associations don’t have to go it alone though. Associations that can strategically leverage partners and vendors who can supplement staff efforts with key resources and expertise have the potential to expand the range of products and services available to members and tap into new offerings, ultimately driving additional income streams for your association.
As a result of many associations feeling they have limited resources in-house, nearly double the respondents this year (23%) said they are outsourcing advertising sales. While that increase is great news, there’s still room for opportunity. It also appears associations could be neglecting where a partner or vendor could enhance other sources of revenue – only 18% outsource job posting sales, 12% outsource exhibitor sales, and 11% seek help with sponsorship sales (which alone accounts for nearly a third of most associations’ non-dues revenue pie).
The Power of Customization
While people resources are critical to the growth of non-dues revenue, having the right technology and tools in place to customize your communications can also play a key role in increasing the value of those offerings. With the right platforms, your association has the potential to not only grow non-dues revenue but also streamline operations, expand your audience, and increase overall member satisfaction.
Data management, marketing automation and content management platforms are just a few of those being increasingly adopted by associations and utilized to their fullest to provide a personalized experience for member subgroups with specific demographics in common (new members, for example, which is the most common group associations customize for based on this year’s survey). Payment and e-commerce management, event registration, and customer relationship management (CRM) systems can also take that customized approach to the next level by targeting members with messaging and information based on past actions and behaviors.
It’s important for associations not to sleep on the revenue-generating potential of customization for their financial supporters. Rather than one-size-fits-all offerings or tiers of support for advertisers and sponsors, tailored packages that meet the needs, objectives, target audiences and budget constraints of those companies are showing success and are worth the investment in time and effort. Yet, only one in 10 associations surveyed provide fully customized packages for advertisers.
Associations are setting big goals and strategic objectives after years of uncertainty and the constant need to pivot when faced with unexpected challenges. The 2023 Association Benchmarking Report serves as a critical reflection of the evolving challenges and opportunities within the world of associations. The shift highlighted in this year’s report in association leaders’ focus towards non-dues revenue generation underscores the importance of financial diversification and stability, and it emphasizes their focus on investing in the successful future of their organizations and industries.
To learn more about how associations can maximize non-dues revenue, join Sarah Sain, CAE, Naylor’s Vice President of Content Services, along with Naylor’s Chief Revenue Officer Jack Fordi, for Association Adviser’s CAE-eligible webinar, Solving the Non-Dues Revenue Puzzle: Strategies for Sustainable Growth, on October 25. Register today!