Does the management model of an association make a difference when it comes to financial performance? A new study has found that more standalone associations operated at a deficit in 2008—the first year of the recession—than those managed by association management companies.
The study—“Are AMC-managed Organizations Recession-Resistant?”—found that 53 percent of standalone associations operated at a loss at the end of 2008, up from 30 percent the two previous years. The numbers are similar for AMC-managed associations during the good times as 32 percent and 26 percent of AMC-managed associations operated at a deficit in 2006 and 2007 respectively. However, the study found that only 34 percent of AMC-managed associations operated at a loss in 2008.
The difference in 2008 can be traced to operating efficiency, said the study's author Michael LoBue, CAE, partner at LoBue and Majdalany Management Group, a San Francisco–based AMC. AMCs had better operating efficiency, calculated by dividing total assets by total revenues, than standalone associations during the recession.
The study was based on surveys of 109 standalone associations and 113 AMC-managed associations with up to $5 million in annual revenue. The AMC-managed sampling included about 55 percent societies, 44 percent trade associations, and 1 percent service organizations. The standalone association sampling included 61 percent trade associations, 32 percent societies, and 7 percent service organizations.