The Association Management Company (AMC) market is varied and there are AMCs in every region of the country. Given the number and varied experience levels of AMCs available to associations, it’s difficult to say there are no exceptions to the following answers; however, to our knowledge, the exceptions are few. Also, just because an AMC might have different approaches to providing services to their clients than represented below, it by no means suggests that those different practices are wrong or inferior. As with any professional service, the value of the service is derived from the outcomes enjoyed by the client.
Association management companies, or AMCs, are for-profit businesses that manage associations to help them grow and prosper. They offer the expertise, staffing and resources that allow professional societies, trade groups, not-for-profits and philanthropic organizations to effectively manage day-to-day operations and advance their long-term goals. AMCs deliver high levels of expertise and accountability so that associations can continue to increase their value and relevance to members. (AMC Institute).
It may also be useful to define AMC services in terms of the benefits enjoyed by the client associations from their AMCs. Clients of full services from an AMC are:
- Completely avoiding the legal liabilities as an employer – the AMC is the employer in both practical and all legal respects;
- Headquarters services, thereby avoiding a lease and shouldering the full costs of occupancy; and
- Unless there’s a special need, completely avoiding the need to spend scarce revenues on capital goods (e.g., furniture, furnishings, computers, software, etc.) .
Numerous studies have documented the following measurable benefits enjoyed by AMC-managed associations over associations that employ their own staff:
- Stronger key performance indicators (e.g., higher net profitability, higher operating efficiencies and lower operating risk);
- More diverse revenue profiles;
- Higher percentage of revenue spent on meetings, trade shows and education activities for their members; and
- Lower costs (as much as a 33% savings, on average) for staffing, occupancy and capital resources.
(Source: “AMC Management and Standalone Organizations – A Sibling Study;” by: Michael T. LoBue, CAE, © 2009 AMC Institute)
A second study (a 10-year longitudinal study) compared the effects of the Great Recession on representative samples of AMC-managed and standalone organizations and demonstrated that:
- AMC-managed organizations outperformed non-AMC managed organizations in 7 of the 10 years between 2006 and 2015 in terms of generating operating surpluses;
- AMC-managed organizations were more effective aligning expenses with revenues than their non-AMC managed counterparts throughout the study period.
(Source: “AMC Managed Model Has Advantages over Non-AMC Models;” by: Michael T. LoBue, CAE © 2018 LoBue & Majdalany Association Management)
In recent years there’s been an increase in the number of organizations that employ their own staff engaging selective services provided by AMCs to complement their own staffing resources. L&M currently has two clients that engage their own executive directors, including other staff or contracted resources. One client has been with L&M since its formation in 2004, having grown to an annual operating budget in excess of $2M. The other has been with L&M for about 2 years and is still in an early growth phase.
L&M has also had the experience providing an organization with executive management to its own employees. That engagement was from 2013 through 2019. Click here for more specifics about this very successful engagement.
The following checklist is an excellent start. The time invested on the front-end of this process will pay solid dividends later in the process.
- Identify organization’s key member benefits and the services/support needed to provide support those benefits.
- Prepare a request for proposal (RFP) (RFP template here).
- Distribute RFP to organizations like the AMC Institute and/or state societies of association executives. It is recommended that you target firms by exploring AMCs that you think are good fits for your organization.
- Develop selection criteria ahead of distributing the RFP (see sample criteria).
Generally, there are three fee structures offered across the AMC market. The most common is a flat monthly fee tied directly to a negotiated scope of services. A few firms will charge a fee based on actual time and materials each month. It is not uncommon to find a hybrid of these two methods where core services are covered by a fixed monthly fee with special services (e.g., to support new programs where some amount of unknown exists about the scope of the work) billed at actual hours for the identified work.
In many cases AMC-managed association boards enjoy more control over their association and the services received because of the existence of a contract for the scope of services. This contract can be amended as the organization’s needs change. This is one of the fundamental benefits of the AMC model – the right sizing of services.