Membership Audits and Dues Structure Changes

Jennifer (AZ) and Kelly (NE/IA)

Recent experience…?

• Who has audited or changed dues recently? Any horror stories?

• Recent experience• ME (Katie) raising dues July 1st, 2019• ND (Dana) raised top tier dues recently• OK (Sara) & PA (Lauren) recently upped all their dues tiers

• Audit vs. dues change• An audit makes them pay what they should• A change makes them pay more/different

Why would you put yourself through this?...

• Systematic (annual?) or Ad-hoc (whenever we need to) increases?• increases tied to a tangible benefits are more readily accepted (Jacobs, 2016)

• ‘enhance our advocacy efforts’ vs. ‘provide more finance training dates/locations’

• some members will do a simple cost-benefit analysis

• Sources of an ad-hoc change

• Consider the values you are telling your members you espouse (honesty, integrity, accountability, etc.)• gather member inputs (lovers AND haters)• get input from key stakeholders (& include in comm plan)

…for a revenue gain of $24,812!

• 886 Nonprofit Members were audited

• 155 (17.5%) members were paying at a different level than they should

• 19 members were paying too much

• 136 (15%) members were paying too little

“This would be a great place to work if it wasn’t for our members.”

• Benefit of the doubt: IRS BMF vs Guidestar vs what they tell me• My priority is to ensure they stay members at a level they can pay

• Offered to let them make payments

• To some that complained about new dues amount:• “Adjustment: 1-year Membership Level Hardship Adjustment granted to keep

dues at the xxx level for 2019”

One technique

• *Assumption: you have EIN as a parameter in your member database

• Download and encode/recode your database of members

• Download and encode/recode the latest IRS BMF

• Match EINs

• Compare [parameter]• =OR (logical1, [logical2], ...) - https://exceljet.net/excel-functions/excel-or-

function

• Audit file - www.nonprofitam.org/CONFAB2019

Dues structures vary

• Based on…• Annual budget (AK, DE, MS, NJ, OR, WY)• Annual ‘revenue’ budget (AL, CT, OK)• Annual ‘expense’ budget (NE/IA, GA, ID, KY, NH, NC)• Annual ‘operating’ budget (LA, ME, MI, MN, MT, WI, TX, UT, WA) • Flat fee (FL, NV)• Free? (TN)• Budget and FTEs (SC)

• Premium services?

• Processing fee?

• “Free” with ala cart or all-in with all benefits?

How to start

• Association policy – board approval required?• Ex: from NAM/AZ bylaws• Provide the board several different models; have them weigh in through the “dues

philosophy” lens/strategic priorities - adds board ownership (Katie - ME)

• Membershippers HAVE to know:• membership retention rate, benefits usage rate, cost to provide benefits,

association reputation, cost to recruit, cost to retain, membership dues income, membership segmentation, and…

• …how much you intend to increase dues revenue (even if it’s zero)

(By now you are thinking…”Can we raise revenue by any other means?”)

• Figure out the delta and divide into the member segmentation

Member segmentation

Methods of increase• Direct increase (increase all by x.x%)

• Tiered or ranged increases • Regressive - lots of small members• Progressive - lots of large members• Curvilinear - lots of medium sized members vs lots of large AND small members• Targeted

• tier w/most members gets biggest increase• tier that used most benefits gets biggest increase (Katie - ME)

• Division of the top tier• If your top tier is “Over $5M”, what’s the difference between as $5M NPO and a $25M

NPO?• Most popular top tier cut-offs: $5M and $10M

Get the tech right first!

Considerations• Technical details will kill you – get the IT systems right first

• Invoicing systems have lot of moving parts

• IT system latency• Invoice in advance? Who pays what, when?

• Offer early renewal at the [lower] rate? (Katie - ME)

• Staff time - hours and hours must be dedicated to the process - (but, 17% of your time should be spent thinking)

• Figure out when to implement - e.g., don’t do it the same month as your major conference

• Great time to make other changes to your billing/member systems• Sleight of hand, or the “George Brett” lesson

Communications• Prepare the battlespace – let people know how awesome the association is

• Continually reiterate the value proposition - member renewal notices = money saved

• Figure out the increase & tie the messaging to the increased value proposition

• Communication content - www.nonprofitam.org/CONFAB2019

• Announce the change, but it’s not a big deal• It’s not an increase, it’s an adjustment (unless its an increase)

• If you have a rolling membership, only about 1/6th of your members (next two months) will get the message right now• Those that renew later on will not remember

• But, if you continually remind your members, you make it a big deal• “many associations find that making too much of an issue of dues increase can be counterproductive”; many choose

to “remain relatively quiet about the increase” (Jacobs, 2016)

Mopping up

• Did it work? Why did it work?

• What were the major pitfalls?

• What did your members not understand? Why?

• How did you handle complaints/refusals? (write and enforce a policy)

• What type of members will ask the most questions?

Be prepared to send supplemental invoices, and to process them

Document the process!

If was EASY, they would get anybody to do it.

They chose US.www.nonprofitam.org/CONFAB2019

www.nonprofitam.org/staffresearch

https://www.irs.gov/charities-non-profits/exempt-organizations-business-master-file-extract-eo-bmf

jenniferb@arizonanonprofits.org

kelly@nonprofitam.org