Q) What size budget should my Association have in order to retain an Association Management Company (AMC)?
A) The fees assessed by an AMC are based on the services requested by the Association. For a full service management relationship (which would include management, accounting services meeting planning, membership solicitation, newsletter publishing, etc), an Association should have a minimum of a $50,000 - $75,000 annual budget. Fees for services such as these start from $24,000-30,000 per year. Membership size, government or public relations services, convention planning, member services, insurance programs or accreditation programs will all influence this base amount. However, smaller Associations can obtain basic management for lower fees by selecting only those services they need on an"ala carte" basis. You will likely need to seek quotes from several firms in order to find the best fit.
Q) Our Association has volunteers who do a lot of the work on our convention and newsletter. Will this save us money on management fees?
A) It depends on the level of involvement by the volunteers, and the level of control over the project or event which is left with the AMC. Most AMC's will prefer to have responsibility and control over the production of conferences, newsletters or member services. Ideally, the volunteer's role should be to set policy or goals, offer direction and expertise specific to their industry or profession, and then permit the AMC to plan and manage the event or project. If the operational aspect of completing a project is shared or partially managed by a volunteer, you many find your AMC charging you a higher fee! In these instances, not only must the AMC complete their normal tasks, now they must monitor the activities of the volunteer and complete those tasks the volunteer couldn't. Ultimately, the blame for an unsatisfactory end result will rest with the AMC. Any time the AMC is responsible for the end results, they will insist on having the authority to do what is necessary to ensure success.
Conversely, if a volunteer or committee is completely in charge of newsletter content, printing and mailing or planning, promoting and managing a conference, for example, that should help lower your management fees. In these examples, the AMC is exempt from responsibility for any aspect of the task, and does not have to charge for staff time, nor answer to an angry Board if problems arise.
Q) We have several Board members who worry we will lose control of the Association if we hire an AMC.
A) Our experience has been that your Association leadership will increase control by retaining an AMC. Remember, an AMC is your hired management team. Ownership of the Association rests with the membership and policy is established by the Board of Directors. Your AMC is responsible for effectively and professionally implementing those policies to benefit your membership. Many AMCs will bring a depth of staff to your Association which will permit reporting in much more detail on events, financial status and governance. Concerns over control are often expressed by Board members of Associations which have never retained an AMC, had a paid staff executive or who had a bad experience with an Association Executive who "took ownership" of the Association away from the Board and membership. Your professional AMC understands the role we play as well as that of the Board, committees and membership. You will find that turning to an AMC for management is a guaranteed way of regaining control of your Association.
Q) When does it make sense for an Association to hire an AMC?
A) The most logical reason to hire an AMC is because your Association wants to make a significant change in direction. Some Associations hire AMCs because the contractual arrangement offers a greater degree of accountability. The Board may want to pursue growth in a direction which is beyond the capabilities of your current staff. You may have leadership who are exclusively volunteers and don't have the time or expertise to keep up with the needs of the membership. Or perhaps your Association=s growth has stagnated and you are looking for fresh leadership. If the Association has experienced financial irregularities or dissatisfaction with previous management, hiring an AMC represents a bold step which can be used to restore the membership's confidence in the Board and the Association itself. For larger Associations, an AMC brings a depth of staff expertise immediately, which can permit the Association to avoid the delays of having a paid executive build a staff over time and possibly cost the Association missed opportunities.
Q) How does an AMC calculate its fees?
A) AMCs have different formulas to determine what fee structure to assess. Some AMCs establish an hourly fee and compute actual hours spent working on behalf of your Association, and you are invoiced each month based on those hours. The disadvantages of this system is that you may see low fees one month and high fees the next depending on work performed which can make budgeting difficult for the Association. Other AMCs may assess a base fee and apply a surcharge for special projects as defined in their contract with your Association. The disadvantages of this system is that the Association leadership may balk at approving a special project, knowing they are "on the clock" at that point. Eurich Management Services carefully evaluates the services your Association requests, then establishes a set monthly fee, to provide those services. This system permits precise budgeting by your Association and eliminates surprises when the monthly invoice arrives. Your Association leadership knows that when they call the EMS office, the answer to their request is always "Yes!"
Q) How can we tell if the price we are quoted for management is fair?
A) From a budgeting standpoint, expect your management fees to average between 30 - 40% of your overall revenue. This can vary depending upon your Association's service profile. Managing large conventions, for example, is very time consuming and will require higher fees. Monthly seminars, Board meetings and chapter activities demand more time and cost more to manage than less frequent meetings. Publications which are lengthy or printed frequently will require considerable staff coordination and will impact fees as well.
Be cautious not to base your entire decision on price. If an AMC bids particularly low on managing your Association, there is the possibility that they missed some component in their pricing. Remember, you are entering into a partnership with the AMC. It is important to provide them the necessary resources to manage your Association effectively. Boards which pride themselves on convincing an AMC to lower their price to an unreasonable level to keep or win a contract may find service levels deteriorate as a strained relationship emerges with the AMC. Experience shows that you have a greater chance of receiving exceptional service from an AMC that feels appreciated. Conversely, by pressing an AMC into accepting a low management fee, you risk not having your minimum service standards met.
Q) What is the difference between "fees" and "expenses"?
A) The "fees" outlined in your Agreement or Contract with an AMC represent the amount your Association has agreed pay the AMC for management services. They consist of the costs associated with the AMC's time and personnel needed to carry out the tasks and services requested by your Association. Every Association also has "expenses" related to their daily business operations such as postage, long distance telephone calls, stationery, letterhead, envelopes, copying and printing, etc. These expenses should already be recognized and itemized in your Association budget as costs the Association would sustain whether it had paid staff or an AMC. Most AMC contracts will itemize the expenses the Association is expected to pay. Often, the AMC is able to provide some services (such as photocopying) at a cost less than what the Association would pay to seek these services directly from a copy center or print shop.
Q) Are there fewer hours devoted to our Association by an AMC than by a full time staff?
A) Some Associations refer to AMC staff as "part time" staff because they may be sharing the personnel with other Associations. In fact, the AMC may well be designating more people and time to your Association's activities than you had previously. The Association must remember to measure "full time" in terms of tasks completed. If the AMC is completing all tasks and duties requested to manage the Association efficiently, then the commitment is that of a "full time" staff. "Part time" can refer not only to hours worked, but to the partial completion of, or responsibility for, work assignments. If an Association signs a full service management agreement with an AMC, they receive full time representation and commitment from the AMC. The Association membership will view the AMC staff as their own employees, which is exactly what they are.