Understanding the ABCs of AMCs

A few years ago, staff at nonprofit organizations might have asked, “What's an AMC?” Today, in the age of outsourcing, the question is, “What isn't an AMC?”

BY SAMMI SOUTAR, CAE

AMCs — short for association management companies — have been around for more than 100 years and have been steadily gaining prominence within the nonprofit community as a viable resource. Recent economic and technological pressures have accelerated the rising awareness of this once invisible association partner. Meeting planners and executive directors, for instance, are turning to AMCs for myriad services. This outsourcing trend is bound to continue as staff struggle to meet the demands of their associations in the midst of budget cuts and downsizing.

AMCs represent the industrial-strength version of outsourcing, now a $400 billion business. Why? AMCs are designed to provide anything and everything an association needs to operate, from customized support to finish a project within a set timeframe to ongoing and full-blown services that include fully equipped headquarters, staffing and executive-level leadership.

Selecting an AMC with the right fit for your organization from a field of companies as diverse as the services and specialties they represent is crucial but not complicated. Just remember your ABCs:

“A” stands for accountability

Has the AMC in your scope of services clearly spelled out the details of the work that will be addressed, including areas of responsibility and anticipated, measurable outcomes in the proposal and service agreement? Does the service agreement address matters of client rights and AMC responsibilities concerning matters of confidentiality, transition, client indemnification and other essential contractual provisions? For a comprehensive checklist and sample contracts, contact the International Association of Association Management Companies (IAAMC), (630) 655-1669, or visit its Web site, www.iaamc.org.

“B” stands for best practices

As the market has grown, the AMC industry has developed standards and self-monitoring systems to ensure performance quality and good customer relations. IAAMC developed a Standard of Good Practices several years ago. In addition, IAAMC offers an accreditation program. You will find a copy of the AMC Standard on the IAAMC Web site, including a directory indicating which AMCs have been accredited.

“C” stands for customer service

Ultimately, satisfactory customer service hinges on excellent communication in any service business, and AMCs are no exception. Contact the AMCs on your short list to inquire about their service philosophy, approach to the work, and how lines of communication will be maintained. Do they have procedures that invite customer evaluation and feedback to benchmark and improve service? How will they adapt their internal procedures to satisfy your association's particular reporting needs? Answers to these questions will reveal the level of accessibility and customization you can expect from the AMC management team.

Within the offices of a typical AMC, you'll find a comprehensive blending of expertise, service and experience, which is why staff and volunteer leaders are turning more and more to AMCs, whether they need a quick fix, short-term solution, or long-term support.

And, within the alphabet soup of association resources, you should have no trouble finding the AMC that suits your needs by paying attention to their Ps and Qs — professionalism and quality.

Sammi Soutar, CAE, is the president of Able Management Solutions, Inc. in Columbus, Ohio; (614) 868-1144; ss@ablemgt.com; www.ablemgt.com.

When to Tap an AMC to Plan Your Conference

The times require a new level of capabilities when it comes to conference management. If you don't have it in-house, an AMC may be the answer.

BY HENRY S. GIVRAY

A great meeting used to require months of careful planning, a simple invitation to a vast audience, a not-too-time-consuming registration process, and three days of great logistics, delicious food, and a grand reception. Success was measured relative to the previous year's conference. Traditional meeting planning and trade show companies were the supplier of choice and everyone was happy.

No more, because the world has changed. And how.

The economic downturn, heightened competition, and increased demands on the most precious commodity of all — time — has forced associations to look to their annual meeting as the primary revenue-producing engine of their entire operation, sometimes accounting for as much as 70 percent of all revenue earned by the association.

With so much at stake, how do you ensure success?

Producing a successful meeting in today's world requires not only an attractive core program, but also dynamic marketing, a year-round Web presence, a savvy sponsorship and trade show element, a sophisticated technological component that touches everything from program planning to registration, and a compelling value proposition for all participants. And that's in addition to on-site logistics, food, and the gala reception. As such, success requires a deep and broad level of expertise and capabilities at both a strategic and operational level. It also requires an intimate understanding of the client organization's industry, its history, and emerging trends in order to integrate solutions in a most effective way.

What kind of service provider can do all of this?

Qualified AMCs can be among the best conference management resources. The best AMCs have in-house experts dedicated to convention and trade show planning, marketing and brand management, program and education, financial management, sales and contract negotiations, all of whom possess significant experience working with volunteer planning committees. This structure allows volunteers to apply their skills and industry knowledge in the most effective way — in building and directing a compelling program that appeals to their peers. And, a large AMC can offer even greater purchasing power than a traditional meeting planning company.

When isn't an AMC the best solution?

If an organization is fortunate enough to have specialized staff experts in addition to a robust financial and technological infrastructure at its disposal, an AMC may not add enough additional value to merit consideration. Furthermore, if your conference business is prestigious and substantial enough to command top-notch pricing, service, and attention from your suppliers (i.e‥ hotels, decorators, audiovisual companies, convention centers, etc.), which are qualities traditionally leveraged by an AMC, then the expertise an AMC provides may be redundant.

It's no secret that the annual meeting is often the key to a successful, financially sustainable association. It's simply smart business to select the approach that provides maximum return and potential for growth. Just don't skimp on that gala reception.

Henry S. Givray is president and chief executive officer for Smith, Bucklin & Associates Inc., Chicago Ill., (312) 644-6610; hgivray@sba.com; www.smithbucklin.com.

Reducing Liability

One of the most significant, though often overlooked, benefits of tapping an AMC is the tremendous reduction in potential legal liability.

BY HUGH K. WEBSTER

The leading source of lawsuits and other legal claims against associations, and for-profit companies is the employment relationship. Insurance companies report that a staggering 70 percent to 80 percent of all claims made against associations and association directors and officers are employment-related. Statistics regarding court filings and the experience of association attorneys nationwide confirm these numbers.

Charges of discrimination (based on race, sex, age, etc.) are perhaps the most common, but employment-related claims can emanate from any number of alleged wrongs. Federal and state statutes regarding pension issues (such as ERISA), unemployment compensation, workers' compensation, and overtime compensation also produce thousands of claims against employers annually. Further, while most attention is focused on federal employment laws, state and local laws can be even broader and more burdensome on employers (see box, opposite, listing kinds of claims that employees can bring).

The damages or other remedies that employees can recover include everything from back pay, front pay, attorney's fees, court costs, expert witness fees, punitive damages, and mental anguish, to name a few.

The good news is that AMCs relieve their association clients of the burden of employment-related liability by assuming 100 percent of the risk. This is because the individuals who staff the association are employees of the AMC, not the association. As a result, by making the decision to be managed by an AMC, an association avoids the single largest area of legal liability for itself and its directors and officers.

The AMC is, in effect, an independent contractor of the association client, and it is well settled in the law that the employees of an independent contractor may seek legal recourse solely against that contractor, as their employer, and not against any firm or other person for whom the contractor performs services. In fact, there is no legal relationship between an association and the AMC employees upon which a lawsuit could be based. Certainly if an association is displeased with the performance of the staff, it has ample avenues of redress with respect to the AMC itself, but this does not translate into a legal relationship between an association and the association staff who are employees of the AMC.

A core aspect of the fiduciary duty of association boards of directors is helping ensure that the association avoids liability. The prospect of eliminating as much as two-thirds or more of the potential claims against an association, therefore, must be given serious consideration by any board. As just noted, this is exactly what an association can accomplish by choosing AMC management. Certainly there are other considerations, but this one is particularly compelling.

Hugh K. Webster is partner at Webster, Chamberlain and Bean in Washington, D.C.; (202) 785-9500; hwebster@wc-b.com. Mr. Webster serves as legal counsel to IAAMC and participates in the ASAE legal section council.

The World of Employee Claims

This is just a partial list of the kinds of claims that employees can bring:

  • Age discrimination
  • Race discrimination
  • Sex discrimination
  • Religious discrimination
  • Disability discrimination
  • Sexual orientation discrimination
  • National origin discrimination
  • Pregnancy discrimination
  • Discrimination based on marital or parental status
  • Whistle-blower discrimination
  • Retaliation for complaining about discrimination
  • Sexual harassment
  • Defamation or wrongful discharge of employee accused of harassment
  • Equal Pay Act violations
  • Family and medical leave rules (federal and state)
  • Failure to accommodate a disability
  • Deficient summary plan description for pension plan
  • Negligent hiring
  • Violation of personnel manual
  • Invasion of privacy (e.g., reviewing employee's e-mails or Internet use)


Q&A: AMC Accreditation

BY SUZANNE C. PINE

Aren't all AMCs alike? The answer is no. AMCs that have decided to pursue accreditation have a strong advantage over the competition. These organizations have an interest in consistently improving their performance and client service. They have completed an arduous auditing process conducted by a third party.

What is the Accreditation Program of the International Association of Association Management Companies? This program is based on an AMC Standard that is developed under processes and procedures set forth by the American National Standards Institute.

So what is an AMC Standard? The standard is a compilation of “best practices” for the association management industry. This standard was subject to review by IAAMC member and non-member AMCs, volunteer leaders of associations, staff from stand-alone organizations, and suppliers to the industry.

The Accreditation Program provides guidelines for developing comprehensive, quality-control systems. The areas that are covered in the accreditation program include contracts, service delivery, financial management and internal controls, comprehensive insurance coverage, human resources (including performance reviews and evaluations), employee recruitment and selection, employee training and professional development, subcontracting and purchasing requirements, and record-keeping.

What's the benefit for associations? The main advantage is that volunteer leaders within an association now have a method of screening potential management companies. The IAAMC Accreditation Program ensures that a third-party auditor has already validated the systems and processes for all of the specific areas of the accreditation program.

The accreditation process should help to ensure an AMC that is focused on improving its ability to deliver consistently high-quality service. The greater the quality service, the happier both the volunteers and members of your association will be!

Suzanne C. Pine is executive vice president of Fernley & Fernley Inc., Philadelphia, Pa., spine@fernley.com; www.fernley.com.

How to Drive Revenue

Here's a look at non-traditional services that AMCs can provide to drive revenue and growth — from strategic planning and public relations to e-marketing and assistance with fundraising.

BY JEFFREY E. BARNHART

Traditional AMC services include administrative support, membership management and recruitment, meeting and trade show planning and management, and financial management. But select AMCs also offer more specialized services, ones that are critical to driving revenue for the organization. Here are some examples:

  • Strategic planning: An AMC performs, with key association members, an in-depth process that examines the organization's vision and mission for the purpose of reaching an association's goals. Once the process is completed, the AMC can develop a strategic marketing plan to meet those goals.

  • Public relations: Critical to increasing membership and industry recognition, an AMC with this expertise can develop and implement a campaign that will communicate key messages to an association's target audience through the media and build relationships between an association and the media.

  • Creative services: An AMC can provide an array of creative solutions, including print and broadcast advertisements, collateral material, and sales promotion. AMCs can help associations negotiate, research and place advertisements that often can be a time-consuming process.

  • Direct marketing: Creating a direct-mail list, plus copy, design, and packaging — all components necessary for a successful campaign.

  • E-marketing: Web sites, HTML e-mail broadcasts, e-cards, and e-presentations can be developed and supported by an AMC who has advanced technology capabilities.

  • Publications: Select AMCs have capabilities to design, write, and publish magazines, newsletters, and directories and provide in-house advertising sales capabilities for such publications. The AMC can provide turnkey publication management, including editorial calendar development, copywriting and editing, advertising sales, creative concepts, and design printing/distribution.

  • Education, certification, and standards: Working with an association's knowledge experts, an AMC can create an educational event or plan an industry curriculum that includes recruiting top speakers and program planning.

  • Industry surveys: AMCs can assist an association with details including polling the industry on a particular subject matter and working with a nationally recognized consulting firm to compile the results.

  • Fundraising assistance: An AMC can help an association in raising funds to take the campaign to the next level of nonprofit service through events, direct solicitation, public relations, event planning, direct mail/telephone campaigns, image enhancement and establishing 501 (c) 3 foundations.



Jeffrey E. Barnhart is president and founder of Creative Marketing Alliance Association Services Group (CMA ASG), in Princeton Junction, N.J.; (609) 799-6000; jbarnhart@cmasolutions.com; www.cmasolutions.com/asg.

Automating Business Processes

BY MATTHEW SCHWARTZ

Imagine a fully automated membership process with online membership applications, validations, and payments. Users can access “members only” content. Their names appear in the member directory. Automatic e-mails are sent out a month before a membership expires and the member renews the membership and pays dues online. All of this is done without any involvement from your staff, cutting down staff costs immensely.

Now imagine a fully automated event registration process: members register, payments are processed and travel is booked — all online. Members don't have to reenter data that is already on file. They don't have to use a stamp, envelope, or check. E-mail receipts and confirmations are sent out automatically.

Furthermore, badges are generated and printed, labels are printed for mailing out agendas, e-mail lists are generated and members are presented with follow-up surveys online post-event. To top it all off, the event can be held “virtually” using Web conferencing and voice over IP communications. Members don't even have to leave their homes to attend.

The sky is the limit. The more technology you use, the more value you provide to your members, and the more money you save. This added value and cost savings to the organization can grow to be quite substantial over time. The is a downside is that technology is expensive.

A good way to keep initial costs down is to use an association management company. An AMC has the ability to leverage existing technologies across multiple associations. An AMC invests in the technology to save client's associations time and money while adding benefits for members.

If making such a substantial investment in technology is something that your association finds prudent, then capitalize on the systems already in place with an AMC.

Matthew Schwartz is president of Nelix, Inc, in Schaumburg, Ill; (847) 781-9186; matt@nelix.com; www.nelix.com.

Getting Boards Out of the Engine Rooms

Every organization with a board of directors must determine if the board's essential role is to govern (steer the ship) or manage (run the engine room). Here's how an AMC can help.

BY MICHAEL T. LOBUE, CAE

Too often board members focus their time and attention on short-term tactical concerns and operational issues instead of long-term strategic concerns. For example, does your board appear more concerned with detailed implementation of this year's programs than with the continuing contribution of these programs to the organization's mission? Does it seem that your board's agenda never changes from year to year? Is there endless debate over tactical issues such as where conferences will be held instead of evaluating the relevance of these conferences to the members' profession or industry segment?

If this describes your board, consider making use of the breadth of knowledge and experience of an association management company. AMCs work with multiple boards simultaneously and have the advantage of drawing upon a wider range of solutions to address these challenges.

A governance audit process helps evaluate and assess an organization's strategic focus. It addresses how well each board makes use of organizational assets to deliver value to their members and to produce sustainable impact on their industries. This process includes the review of board practices and actions, governance documents, and organizational documents The process involves interviews with key participants and in-depth reviews of organizational materials. As important as these materials can be as tools for an organization's work, they are not essential by themselves. What is essential, however, is looking at the board members' practices and how they spend their time. An organization's core values are determined by its actions and what it rewards, versus what it says and writes. An effective governance audit highlights discrepancies between stated goals and results and produces workable recommendations to increase effectiveness.

AMCs are uniquely qualified to conduct such an audit. AMCs have a breadth of relevant experience and are themselves practitioners with a variety of clients. If your board is spending too much time in the engine room and not enough time guiding your organization, perhaps it should consider working with an AMC to conduct a governance audit. What better way to increase the probability of a strategic plan's success than to ensure that the board of directors is setting a positive example by evaluating itself and taking its governance responsibilities seriously?

Michael T. LoBue, CAE, is president of LoBue & Majdalany Management Group, San Francisco, Calif., (415) 561-6111; Majdalany@LM-Mgmt.com; www.LM-Mgmt.com

Lower Your Audit Fees With AMCs?

Association management companies can bring a high level of financial expertise to an organization at a reasonable cost.

BY WILLIAM J. BARNES, CPA, CMA

A small- or medium-sized stand-alone organization might have only a single unsupervised bookkeeper or accountant on staff. But many AMCs have a large staff of accountants or bookkeepers with an accounting manager or even a controller supervising the workflow. In the latter case, the cost of the financial function is shared among multiple AMC clients, providing an excellent value to the organization.

It is highly recommended that an association have an annual independent audit. An audit can provide verification to the membership — and to potential members — that financial integrity is very important to the organization. However, the cost of an audit can be quite high. The following conditions will generally raise the cost of an audit to an association:

  • Sloppy record-keeping, which requires the auditor to make several adjustments at year-end

  • Poor segregation of financial duties within the organization because of a limited number of financial personnel

  • A lack of competent financial management on staff

  • A lack of financial operating procedures in written form

  • Turnover of financial staff



What a difference an AMC makes

An AMC with a competent financial staff can address all of these issues that can add unnecessary cost to the audit. When working with an AMC, the following factors come into play:

  • Bookkeepers that are well trained and supervised ensure that a clean set of records is available to audit.

  • The availability of personnel allows for the segregation of duties in key functions such as cash receipts, cash disbursements, and account reconciliation.

  • Management-level financial personnel supervise staff, thus ensuring the records are accurate and that issues are properly addressed in the financial statements.

  • Written operating procedures ensure consistent accounting methodology.

  • Turnover in a one-person financial staff means that there is a high risk of errors occurring, and turnover can disrupt the operations of the organization. Turnover in a well-trained and organized finance department can be handled without disruption.

  • Organizations that can address these issues provide the auditor with a low-risk environment to perform the audit and a set of records requiring few adjustments. Those conditions result in the lowest possible audit fee. Many AMCs can provide this benefit to a client at a reasonable cost, perhaps less than they are paying as a stand-alone organization.



William J. Barnes, CPA, CMA, is partner of Givens & Barnes, in Arlington Heights, Ill.; (847) 506-1070; wjbarnes@givensbarnes.com; www.givensbarnes.com.

Building an International Presence

It is no longer a question of if but when your association should consider the implications of managing an international presence. Here's what an AMC can do for you.

BY TERRANCE BARKAN

It was not that long ago that the Internet and professional-standard Web sites were not automatically assumed to be in place. Now, members find you from the four corners of the planet rather than your having to go looking for them. But now, once they have found you, how do you service them? Using an internationally based AMC may be your best solution.

What do I need to know?

There is an impressive list of issues that organizations confront when becoming truly international. These include the following:

  • Legal registration, tax, bank accounts, form of organization: Each country has a different set of rules, regulations and customs. How do you identify the country(ies) that is the best long-term location(s) for your operations? Which type of entity needs to be established? How will the tax laws apply at home and abroad?

  • Staff recruitment: How do you recruit from a distance? Do you send a “pilgrim” to set-up a new outpost? How will you manage the remote office?

  • Acquiring premises, equipment, and infrastructure: What are the normal conventions with regard to property rental? What is included (or not included)? How can you identify reputable suppliers? Where and in which city should your office be located to best serve members, and to attract staff, volunteers, and business partners?

  • Determining the amount of investment required and the ability to repatriate income: How much is this really going to cost and in what currency? How do I get money out of the country when a surplus is made?

  • Developing a viable business case and determining a timeline for achieving it: How does an international presence fit with the organization's overall strategy? What is your timeline you've established for achieving these goals?

  • Supporting a sustainable membership and volunteer base: What is the market potential in the area, and is there a pool of potential volunteers? How can you identify volunteers who share the organizations vision and mission?

  • Conducting a competitive analysis of local associations or non-association competitors: Which organizations — not-for-profit or otherwise — compete with your organization for members, sponsorship, and recognition? What is the likely reaction of existing or emerging groups to your presence in the area? Should you collaborate or compete?

  • Exit strategy: What is a viable exit strategy if you need to retreat from the market? How do you limit liabilities and expenses? How do you maintain maximum effectiveness with a high degree of flexibility?



How an AMC can help

Using an AMC to establish a presence abroad and to organize your meetings could be the most cost-efficient as well as the most effective option. Among the many benefits of using an AMC are the following:

Cost savings: The ability to contract services, as needed, at a fraction of the cost you would normally incur for a stand-alone office

Reduced risk: Services can be contracted to your domestic organization (e.g., staffing, legal, or tax issues pertaining to setting up and registering your operations).

Flexibility: The option to scale services up/down as needed

Specialized skills: Local knowledge and language skills

Exit strategy: Limited obligations relating to the terms of the service contract(s)

There are a small but growing number of association management companies operating on an international basis to help achieve your international goals.

Terrance Barkan (t.barkan@agshq.com) is a member of the Board of the European Society of Association Executives and the ASAE International Section Council. He is the CEO of European Association Services (www.eas-eu.com), a full-service AMC based in Brussels, Belgium. EAS is part of the Association Global Services Network with offices in Washington D.C., Brussels, Zurich (Zug), Switzerland, and Kuala Lumpur, Malaysia.