Are AMC-Managed Organizations Recession Resistant?
Based on results of new study, it appears they are!
OVERVIEW: The current economic climate is having an impact on
associations, just as it is on virtually all business sectors. This paper
reports on a recent study showing that until 2007, about 30% of all
organizations up to $5M in annual revenue operated at a loss. But,
organizations that employ their own staff, lease their own office space and
incur their own capital expenses (aka: standalone) were nearly twice as likely
to have ended 2008 with deficits than AMC-managed organizations. More than 50%
of standalone organizations with up to $5M in annual operating revenue operated
at a loss that year! The reduction for AMC-managed organizations between 2007
and 2008 was a nominal 7% two-thirds of AMC-managed organizations
reported a surplus in 2008! Therefore, the answer to the question posed in the
title would seem to be a resounding "yes."
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IMPLICATION: Standalone organizations up to $5M in annual operating
revenue should answer one question: "Are we receiving a return on investment
in our management model, given that on average we may be spending 50% more
for that management approach than if we were managed by an AMC
especially given the performance benefits produced by AMCs?"
- There are no differences in the types of organizations examined in the two
groups (AMC-managed and standalone organizations) whether by tax exempt status,
member type, geographic scope or age of organizations;
- AMC-managed organizations experienced only a nominal drop in the number of
organizations operating with deficits in 2008 as compared to the two previous
years (a drop of 2.19%);
- Standalone organizations experienced a dramatic drop of more than 31% in
the number of organizations operating with deficits in 2008 as compared to the
two previous years (more than 14 times greater than AMC-managed organizations).
It is difficult to escape such an overwhelmingly obvious conclusion based on
the results of this study. Organizations managed by AMC Institute member firms
enjoy greater net profitability, greater efficiency, lower operating costs,
and, at least for 2008, the avoidance of deficit operations due to harsh
economic conditions. A clear advantage over standalone organizations was shown.
The results of this study are consistent with the white paper published in 2009
comparing the operating ratios of organizations based on the standalone and AMC
management models. Based on common parameters of size, type, age or tax
exemption status, there are demonstrated differences in the operating results.
During these challenging times we need more than opinions and conjecture to
justify the important strategic and management decisions being made by
associations. Toward this end, this study is another evidenced-based analysis
of critical performance measures supporting the bold steps leaders need to take
to ensure healthy operations.
Associations are created to have positive impacts on professions and market
segments. This report will help leaders of standalone organizations better
understand the AMC option and how it can
deliver the types of results and value enjoyed today by approximately 1,500
societies and trade associations under management by members of the AMC
For more information about whether an AMC is right for your
organization, contact L&M for a no cost, no obligation conversation with us.
If we're not the best fit for your organization, we can refer you to other excellent firms in the field that may be
a better suited for
your challenges and opportunities.