Member Dues: Budgeting, Structuring, Increasing, and Communicating
As you approach budgeting for the upcoming year, in an effort to align revenue to costs you may find your association considering whether or not to raise member dues. Here are some things to consider.
In the ever-evolving landscape of associations and non-profit organizations, sound financial management is the cornerstone of long-term sustainability and growth. Particularly as we face an uncertain economy, association leaders have the challenging task of striking a delicate balance between providing valuable services to members, keeping membership dues accessible, and maintaining a stable financial foundation for the organization.
If you’re an association professional serving a mission-driven organization, I bet there are times you wish membership could just be free! But when that’s not the reality for your association (and, let’s be real, it isn’t for most) how do you decide when it’s time to raise member dues? And if you need to raise dues, how do you do it without upsetting or losing members?
As you approach annual budgeting at your association, here is some food for thought.
Consider How Dues Are Structured
Before trying to figure out if member dues should be raised under the existing structure, maybe the dues structure itself deserves a second look. Are your dues set up in a way that makes the most sense for your association’s services and mission? Consider some of the following structures…
Based on Duration
Are your members more likely to pay dues annually or would it work better for them to pay quarterly or monthly? Maybe they’d like all those options with a discount for paying annually (as many online services offer). It’s about providing choice and flexibility so dues payment can be customized by the member.
Based on Value
This is when members can pay per benefit used. Again, this a la carte setup is about providing choice, customization, and personalization. Members feel they are only paying for what they use and thus feel they’re getting maximum value from the association.
For their dues, members get membership in the association, but also other offerings from either the association or a third-party partner. Maybe membership includes access to a publication, an annual event, a certain number of webinars, or a special database or job board.
Based on Membership Type:
If you have different membership categories, such as job function, geography, industry sector, or professional level, different dues amounts can be assigned to those categories. In this way, a brand-new entry-level member would not have as steep a dues burden as say a C-level member.
Every organization is different and has different financial abilities and characteristics. You can create different dues levels so that a small non-profit is not paying the same as a for-profit enterprise-level organization. You can base this on revenue, size, or how long the organization has been operating.
Based on Tiers
Tiers can give you the best of multiple options – a guaranteed baseline dues amount but with optional add-ons for additional fees. The member has all the benefits a basic membership provides, plus a menu of additional benefit options with higher corresponding dues amounts.
Probably the most common structure, where all members pay the same rate. It’s certainly the simplest dues structure for the organization, but it can omit opportunities for members to customize benefits to their needs, getting maximum value from an experience they design. That said, some associations find members appreciate this approach because it grants full access to everyone, so it’s important to evaluate what structures will resonate best with your audience/market.
Institutional or Group Memberships
For many association members, it’s their employer who pays for membership – which means that the employer organization is likely paying for multiple memberships (and perhaps limiting the number of memberships they allow for). This presents associations with an opportunity to offer special perks for organizations that enroll a certain number of members, to encourage them to approve more memberships. Perks could include bundled and/or discounted fees, access to exclusive resources, etc. A group membership brings in a lot of new members at once, and with one recruitment effort, which is a cost and time savings. It’s more than worth the discount you offer a group to bring members in bulk. Not to mention, it can boost the advocacy power of your organization. More members and more voices, plus the buy-in of the organizations behind those members, means more influence.
If you’re exploring a new dues structure, it’s also important to think about whether or not your membership management system is equipped to handle the structure you’re considering. The member management tools within Higher Logic Thrive Platform, for example, support the option to offer group memberships, but some AMSs have different functionality.
When It’s Time to Raise Dues
Raising dues can feel nerve-wracking and it can be challenging to ask members to pay more, especially when no additional benefits come with the increase. But certain circumstances necessitate a member dues increase so that your organization can stay relevant, maintain operations, and continue supporting members.
Increased operating costs
External factors can impose increased operating costs on an association that must be at least partially passed on to members (though, if you have a non-dues revenue strategy, you can reduce the impact on member dues). These can include government regulations, compliance requirements, or legal obligations that may even require you to add personnel or bring on contractors.
Like any other entity, associations have to keep themselves financially stable. Failure to do so endangers the long-term existence of that association. If you’re seeing consistently declining revenues, budget deficits, or if you’re always tapping into reserve funds, you may have no choice but to raise dues.
A Larger Membership to Serve
It’s generally good news when an association experiences a boom in memberships. But you also must ensure you have the infrastructure to accommodate all those members and maintain the quality of your membership services. Absent technology tools that help you scale, additional resources may be needed to serve that bigger community.
Associations often want to expand their membership benefits, offering, for example, new online resources, networking events, webinars, mentor programs, learning programs, etc. But innovation often costs money, which has to come from somewhere. (Pro tip: make sure your members really want the new offering you’re considering before you roll it out and raise dues.)
Everything Costs More
Even without adding any programs or resources, the cost of providing the same things can go up due to things like economic conditions, inflation, and higher wages. Your choices are to absorb those additional costs, pass them (at least partially) along to members in the form of higher dues, or drop the benefit altogether.
As you examine the reasons you might need to increase member dues, make sure you also think about the risks. These risks don’t necessarily mean you shouldn’t raise dues, but considering these risks can help you plan how you’re going to address them.
- Competition: If your members have other associations they can join, and they feel they can get the same value or more for less money, they will leave. Conversely, if you’re the one offering high value at a low cost, they will leave other associations to come join you.
- Member Satisfaction: Lower dues give members one less reason to drop their membership. And since they’re always running a dues-to-value equation, the lower the dues, the more satisfied they’ll be with the value they’re getting.
- Accessibility and Diversity: Lower dues open membership up to more people, pure and simple. When financial constraints are removed, the community becomes more representative, vibrant, and interesting. This kind of community then becomes more attractive to members of all financial means.
If you have large concerns about any of these risks, ask yourself if there’s another way to achieve the dues you need – maybe by considering a new dues structure, or expanding your non-dues revenue efforts.
Communicating and Rolling Out a Member Dues Increase
So maybe you’ve determined it’s time to raise your member dues – what now? Think carefully about your communication strategy and your process for rolling out dues increases.
- Consider increasing dues gradually, by small percentages over several years. (This is one of the reasons it’s helpful to consider your dues and financial stability often so that you’re not in a position of needing to rush an increase).
- Get member buy-in and input. If you have a membership committee, now is the time to pick their brains about what matters most to your members and what messaging will resonate with them. You could also tell highly engaged members first and get their feedback as a method for anticipating (and creating a plan to address) the concerns of other members.
- Communicate early, consistently, and transparently. Let members know what changes are coming and why – make sure your team is prepared with key talking points and get the word out to members across multiple channels and events well before the dues increase goes into effect. Most association members are very invested in their industry, and most consumers in general understand that inflation and changes in operating costs will impact the amount they pay for things. Express to your members that the increase in dues is not taken lightly and that it’s a necessary undertaking to keep providing them with the level of support they count on
As you approach annual budgeting and consider the role dues will play for your organization’s finances, the key thing to keep in mind is balance. Your members are budgeting too, and for them, it’s about balancing the amount they’re paying with the value they feel they’re getting. For your association, it’s about balancing the benefits and services you promise with your ability to provide those offerings with high quality, consistency, and reliability.