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 Jay Younger Shelley Sanner, CAE Patrick Glaser
President & Managing Partner & Managing Consultant Senior Research
Founding Partner Chief Consultant Manager

2012 State of Associations | Resilience and Recovery

Introduction Survey Method
The EIA series has provided an interesting, if not McKinley developed and deployed an online survey
illuminating, view of associations through the lens to senior association executives on January 4, 2012
of a dramatically shifting economic landscape. In the to collect key data around the economy and its
past four years, the data has shown the resilience impact on associations. The survey remained open
of associations—from initial, drastic measures to until January 18, 2012 and resulted in 200 responses
preserve core infrastructure to the first signs of representing a broad spectrum of the association
recovery as associations began (and continue) to community. It is worth noting that the personal and
reinvest in critical core initiatives. Yet in 2012, just organizational characteristics of EIA respondents
as in 2011, optimism continues to be balanced by (e.g., budget size, sector, job responsibilities, organi-
conservative behavior. The fact is that associations zational role, etc.) have remained roughly consistent
are operating in a different reality today than they over the four year horizon of the series.
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.”

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 ssanner@mckinley-advisors.com.

McKinley Advisors 2012 Economic Impact on Associations | 2


accounting, food industry, legal, association manage-
Organizations
Forty-six percent of respondents represent profes-
sional societies (consisting mostly of individual ment and the retail industry.
members), 34% are from trade associations, 14%
from a “hybrid,” 3% from philanthropic or cause- The number of senior executives who responded to
related and 2% describe their association as “other.” the survey this year is nearly equal to 2011, with
91% holding a director level position or higher. The
Seventeen percent of the survey respondents remaining participants reflect the breadth of the
represent healthcare organizations; 16% describe profession and represent a variety of responsibilities.
their organizations as scientific and engineering.
Education and humanities associations account Fifty six percent of survey participants represent
for 12% of respondents. The balance represents a organizations whose annual operating budgets are
variety of industries, including building / construc- less than $10 million, while 10% have budgets of
tion, manufacturing, professional services, finance / over $50 million.

Which of the following best describes the organization you work for?
TABLE A

Total Responses: 153

3% 2%

Professional
(mostly individual members)
14%
Trade

46%
and individual members)
Philanthropic / Cause Related

34%
Other



What field/industry does your association represent?
TABLE B


Other, please specify 23%
Healthcare 17%
Scientific / Engineering 16%
Education / Humanities 12%
Building / Construction 10%
Manufacturing 7%
Professional Services 5%
Finance / Accounting 4%
Food Industry 3%
Legal 1%
Association Management 1%
Retail 1%
0% 10% 20% 30% 40% 50%

Which of the following most closely describes your position within your organization?
TABLE C


40%

Senior Vice President / Vice President 19%

Managing Director / Senior Director 13%

Director 12%

8%

Manager 7%

Other 1%

Coordinator 1%

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



Which of the following best describe your areas of responsibility?
TABLE D

Please select all that apply.

55%
Membership 39%
34%
23%
Other, please specify 17%
16%
16%
16%
15%
10%
10%
IT / Technology 9%
0% 10% 20% 30% 40% 50% 60%

What is your organization’s annual operating budget?
TABLE E


$100 million or more 3%

$50 million t o $99.9 million 7%





Less than $2 million 13%

0% 10% 20% 30% 40%



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.

Looking back on 2011, what was the impact of economic conditions on your association?
TABLE 1


9% 11%

Far worse than e xpected (0%)
Worse than expected
About what w as e xpected
35%

45%



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.

In general, how are you feeling about the year 2012 for your association?
TABLE 2


12%
17%

71%



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.

Is the annualized trend in full, paid memberships for your association over the past 5 years
TABLE 3

(since January 1, 2007):
Total Responses: 2012: 159
2011: 234
2010: 307

34%
Higher 44%
44%

26%
Lower 38%
28%
2012
37% 2011
Flat 18%
23% 2010

3%
Don’t know 1%
5%

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



Is the annualized trend in full, paid memberships for your association over the past
TABLE 3B

5 years (since January 1, 2007) higher, flat, or lower?

Annualized 5 Year Membership Trend
Analyzed by Field Represented by Association
80%

70%
70%

60%
55%

50% 48%

41%
40% 40%
40% 38% Higher
Flat
31% 31% Lower
30% 30% 30% 30% 30% 30%
30% 28% 28%
25%

20% 19%

10%
10%
5%

0%
Building/ Educa on/ Professional Public, Manufacturing, Scien c & Healthcare
Construc on/ Humani es Services Non-pro t, & Energy & Natural Engineer ing (N =27)
Real Estate (N = 20) (N= 20) Cause-related Resources, Retail (N = 25)
(N = 20) (N = 16) (N = 27)



Over the past 12 months, has your retention rate:
TABLE 3C

46% 45%
41%
36%

29%
27% 27%
23% Increased

18% Decreased
Stayed the same

Trade Professional Hybrid
(N = 52) (N=71) (N=22)

Is the annualized trend in full, paid memberships for your association over the past 5
TABLE 3D

years higher, flat or lower?

55%

39% 38%
33% 32% 32% Higher
30%
27% Flat
Lower

14%

Trade Professional Hybrid
(N = 52) (N=71) (N=22)



What is the approximate annualized increase/decrease in full, paid memberships for your
TABLE 4

association over the past 5 years (since January 1, 2007):

Base: Respondents whose 5 Year
Association Retention Changed

31%

28%

12%
11%
10%

7%

-10% -5 0% 0% 5% 10% or
or less to 10% to -5% to 5% to 10% 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.



Considering the current economic situation, how concerned are you
TABLE 5

with the following issues?
(Percentage who answered “extremely” or “somewhat” concerned shown based on a four-point concern scale)
2011: 237
2010: 340
2009: 283

72%
Membership reten on 78%
84%
88%
72%
Membership recruitment 78%
78%
86%
65%
Sponsorship 76%
88%
88%
59%
Annual mee ng 69%
a endance 79%
83%
58%
A endance at other 68%
educa onal seminars 74%
74%
49%
Adver sing 59%
80%
74%
46%
Product sales 50%
66%
58%
36%
Volunteer par cipa on 42%
36%
29%
0% 20% 40% 60% 80% 100%

Concerned 2012 Concerned 2011 Concerned 2010 Concerned 2009



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.

What do you expect to happen at your association in 2012 as a result
TABLE 6

of current economic conditions?

IS DEFINITELY PROBABLY PROBABLY DEFINITELY
DON’T
HAPPENING WILL WILL WILL NOT WILL NOT TOTAL
KNOW
NOW HAPPEN HAPPEN HAPPEN HAPPEN

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

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

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

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

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

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

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

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



What do you expect to happen at your association as
TABLE 7

a result of current economic conditions?
(Percentage answering: happening, will happen, probably will happen)

34%
36%
44%
36%
34%
Budget cuts 44%
70%
84%
29%
23%
27%
25%
23%
Change in investment strategy 24%
35%
51% 2012
22% 2011
Hiring freeze 24%
53% 2010
58%
2009
18%
18%
and services 45%
45%
18%
Freeze on salary increases 20%
54%
44%
15%
12%
22%
26%
0% 20% 40% 60% 80% 100%



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.

What are your three highest priorities for 2012?
TABLE 8

(Limit 3 responses per participant)

37%
Developing new methods 28%
for member engagement 27%
34%
34%
40%
49%
50%
29%
Website enhancements 22%
18%

28%
Branding / 27%
Increasing Awareness 32%
36%
23%
New product research 18% 2012
and development 14%
2011

19% 2010
Diversifying membership / 14%
16% 2009
15%
19%
23%
30%
26%
14%
14%
among younger members 9%
12%
11%
15%
results 17%
22%
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)

What is your current membership retention rate?
TABLE 9


18%
95-100% 19%
12%
11%
24%
90–94% 20%
20%
22%
27%
85-89% 21%
22%
20%
16%
Percen t 2012
80-84% 15%
18% Percen t 2011
21%
Percen t 2010
7%
10% Percen t 2009
75-79%
10%
11%
5%
70-74 9%
10%
7%
3%
Less than 70% 5%
7%
8%
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.

Does your association plan to add new staff positions in 2012?
TABLE 10


50%
41%
Yes
24%
Percen t 2012

37% Percen t 2011
44% Percen t 2010
No
60%

14%
15%
Don’t know
16%

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



In which of the following areas does your association plan to add staff in 2012?
TABLE 11

Please select all that apply.
Total Responses: 77

30%
21%
31%

30%
32%
30%

26%
IT / Technology N/A
N/A

22%
Membership 19%
28%

21%
N/A
N/A

16%
22%
17% Percen t 2012
Percen t 2011
13%
N/A Percen t 2010
N/A

12%
11%
9%

12%
12%
15%

10%
N/A
N/A

8%
6%
6%

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



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.

Do you anticipate that your budget for each of the following will increase, decrease
TABLE 13

or remain the same in 2012?
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
22% 31% 42% 42%
sponsorships)

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 Message Canadian Institute of
Therapy Association Mining, Metallurgy and
American Academy Petroleum
of Dermatology American Physical
Therapy Association Center for Association
American Academy of Leadership
Medical Administrators American Psychiatric
Nurses Association College and University
American Academy Professional Association for
of Pediatrics American Society for Human Resources
Clinical Pharmacology and
American Association for Therapeutics Construction
the Study of Liver Diseases Specifications Institute
American Society
American Association for for Quality Council of Industrial
Laboratory Animal Science Boiler Owners
American Society
American Association for of Civil Engineers Council on Foundations
the Advancement of Science
American Society of Ecological Society of
American Association Interior Designers America
of Motor Vehicle
Administrators American Speech- Endocrine Society
Language-Hearing
American Association Association Entomological Society
of Physicists in Medicine of America
American Water
American Association Resources Association Global Association of
of Physics Teachers Investment Professionals
American Water
American Association Works Association Hardwood Plywood and
of Snowboard Instructors Veneer Association
Association Connecting
American Chemical Society Electronics Industries Independent Office
Products and Furniture
American Dental Association Forum Dealers Association
Hygienists’ Association
Association Industrial Supply
American Forests Management Center Association
American Industrial Association of Pool Interlocking Concrete
Hygiene Association and Spa Professionals Pavement Institute
American Institute Association of Public International Association
of Architects Health Laboratories of Movers
American Institute of Building Owners and International Code Council
Chemical Engineers Managers Association
International International Food
American Library Information Council
Association


2012 State of Associations | Partial List of Participating Associations

International Franchise National Federation of Society of Manufacturing
Association Humane Societies Engineers

Irrigation Association National Fluid Power Society of Nuclear Medicine
Association
Kitchen Cabinet Manufacturers Society of Tribologists and
Association National Investor Lubrication Engineers
Relations Institute
Manufacturers Alliance for Solar Electric Power Association
Productivity and Innovation National Precast
Concrete Association Southern Association of
Medical Group Independent Schools
Management Association New Jersey Society of CPAs
Special Libraries Association
Missouri State Teachers North Carolina
Association Nurses Association The New York Academy
of Sciences
National Affordable Housing Northwest Food
Management Association Processors Association United Nations Associations
of the USA
National Association for Pennsylvania
Gifted Children Institute of CPAs University of Kentucky

National Association of Counties Produce Marketing University Risk Management and
Association Insurance Association
National Association of
Criminal Defense Lawyers Promotional Products Washington Area New Auto
Association International Dealers Association
Educational Procurement Reinsurance Association
of America
Enrolled Agents Risk Management Society

National Association of Society for Marketing
Home Builders Professional Services

National Association of Society for the Advancement
Independent Schools of Material and Process
Engineering
Local Boards of Health Society of Chemical
Manufacturers & Affiliates
Social Workers Society of College and
University Planning
Theatre Owners Society of Consumer Affairs
Professionals in Business
National Business
Officers Association Society of Hospital Medicine


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2012 Economic Impact on Associations: Resilience and Recovery

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