CONCLUSION: Based on a comparative analysis of two parallel operating ratio studies of AMC-managed and standalone organizations, AMC-managed organizations reap considerable qualitative and quantitative advantages for membership-based organizations up to $5M in annual revenue. These results are likely valid for organizations above $5M in annual revenue, however, there was not a sufficient number of organizations above $5M in the study of AMC-managed organizations to draw any conclusions about those organizations.
IMPLICATION: Standalone organizations up to $5M in annual operating revenue should answer one question: “Are we receiving the return on our management model investment, given that on average, we may be spending 50% more for the resources to manage our organization than if we were managed by an AMC?”
Based on results of recent 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.”
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?”