If you’re serving on a board of directors that is considering changing your staffing model, the options may seem overwhelming. Here are a few key considerations to help you determine the best solution for your organization.
There are two approaches to finding professional management for an organization: Captive staff or through association management companies. Here is an overview of these two models and their pros and cons.
Model 1: Captive Staff
The “captive staff” model is familiar to most. In this model, your organization would set up a headquarters with a physical office and hire staff members.
While this model may be considered a traditional approach, there are drawbacks.
First, your organization’s overhead may be expensive. Beyond rent and utilities, you must consider the cost of office equipment—copiers, printers, technology, mail machines—and maintenance of these.
And it’s often difficult to find the most successful mix of staff that will successfully fulfill your organization’s needs. An organization may hire an executive director—who then spends most of the time doing administrative work—or hiring a sole administrator, who is then unable to provide strategic guidance and leadership. In either case, it’s not uncommon for this paid staff member to quickly burn out because of the variety of demands and tasks, or for the person to not perform to the board’s expectations.
Additionally, if the organization’s CEO leaves and needs to be replaced, the board must become familiar with non-profit salary benchmarks, benefits administration, employee reviews, and ensuring that adequate financial controls are in place to protect the organization from fraud, theft or embezzlement. There are also risks and liabilities related to hiring and personnel issues.
All of these add up to time-consuming tasks for board members. The board must be hands-on in ensuring efficiencies, minimizing risk and overseeing finances of capital assets. All of these tasks take away from serving your core mission and your members.
If you’re concerned about these drawbacks, it makes sense to consider an association management company.
Model 2: Association Management Company (AMC)
Consider the AMC model as the “sharing economy” for non-profits. AMCs allow your organization to share staff, resources, office space and equipment with other non-profit organizations. By partnering with an AMC, organizations increase efficiencies and reduce operating costs.
AMCs are able to provide exactly the services you need, when you need them, how you need them. Rather than having to hire one person to do it all, your organization is able to utilize professionals with expertise in any given area.
For example, you may need an executive director for 10 hours a week, an administrator for 15 hours per week, and a communications specialist to update the website, develop publications and maintain social media for 15 hours week. You will pay the appropriate rates for professionals who are experts in these areas, rather than overpaying a full-time executive to do those things.
All finance, hiring and human resources is done through the AMC, which reduces liability for the Board of Directors.
You’re also splitting overhead costs with other organizations, which brings them down substantially. And because of the volume of work an AMC does, AMCs typically are able to negotiate favorable deals with vendors that captive organizations are unable to replicate.
This economy of scale enables organizations to thrive while still maintaining unique identities and meeting member needs.
The benefits of using an AMC are irrefutable. According to 2016 research by AMC Institute, the trade association for the association management industry, organizations managed by an AMC on average have:
- 3x more net asset growth
- Consistently higher income for products/services
- 31% higher revenue growth
- Since 2008, organizations using AMCs grew their membership 300% versus just 23% for standalone organizations
Interested in learning more about what an AMC can do for you? We’ve created a free guide to AMC selection to help you get started, or contact us at info@raybourn.com.