How to Select an Association Management Company (AMC)

Traditionally, associations have hired their own Executive Director and staff, determined appropriate pay scales and benefits packages; secured their own facilities and bought their own equipment. In reality, with such busy schedules and limited time together, this actually detracts from higher-level board discussion about mission, vision and delivering member services. The good news is that the trend today is for trade and professional associations to engage an AMC.

Selecting an AMC that is right for your organization may seem overwhelming, but it doesn’t have to be onerous. But you need to start at the beginning. In order to find a good fit for management, the first thing you need to know is who you are as an organization.

checklistStep One

  • What do your members do day-in and day out and what do they need to do it better?
  • What challenges are unique to their professional niche?
  • What will help your members stay ahead of the curve?

This might mean a member survey and maybe data already exists.

Step Two

Rate your organization on the qualifications listed in this graphic below and see how you measure up.

Company Qualifications

WeighStep Three

Now it’s time to weigh your options:

  • Maintain status quo
  • Set benchmarks and goals for change
  • Hire / expand or modify paid staff.
  • Ask volunteers to do more.
  • Consider partnering with an AMC: Full service or project basis.

Your organization can work with AMCs in one of two ways:

1. Full service: AMCs deliver turnkey full service management for all operating disciplines (membership, marketing, meetings, financial administration, policy development, legal, risk management) and all daily operations ( staffing, office space, equipment, contracts, technologies, member services).

2. On a project basis. AMCs offer a wide variety of professional services on an outsourced basis to meet an association’s specific needs.
AMCs are a smart choice for many. AMC professionals are committed to YOUR vision, YOUR mission, YOUR membership. They also bring business acumen to association management, optimizing efficiencies, maximizing revenues, controlling expenses and keeping the organization ON TRACK toward long-term growth and achievement. You benefit by having shared resources under one roof.

Benefits of an AMC

AMCi Survey ResultsIn 2015, an Association Management Company Institute (AMCI) study of 167 associations showed that AMCs deliver 317% more growth in net assets and 31% more growth in net revenue, as well as offering consistently higher income from products and services.

A 2009 AMCI survey comparing associations managed by AMCs vs. standalone organizations found that:

  • Organizations managed by AMCs enjoy 10% net profitability over standalone organizations.
  • AMC organizations on average generate more dollars in revenue for each dollar of assets being employed in running the association
  • AMC organizations derive more income from non-dues revenues areas (examples – reduces risk)
  • Because less funds are being allocated to pay an AMC vs. a standalone, more funds for member services and meetings are available

Shared services/reduced costs

  • AMC clients benefit from reduced costs because AMCs are able to allocate operating costs across all clients
  • You can think of it as renting instead of buying in the way that you get all of the perks with less of the maintenance or large upfront costs

Greater Efficiency

  • All associations are different, but many of them have similar needs – great AMCs leverage this and create policies, procedures, templates and systems that allow the staff to move expertly and quickly. (eg: RFP process, post meeting reports, financials/transparency)
  • No time spent on Human Resources, equipment or property management issues

Shared Knowledge

  • Great AMCs have a heavy focus on staff education and ensure that all staff are cross-trained on multiple clients. A best practice is for staff from different client teams to meet surrounding the functional area in which they work, such as membership, meeting planning, etc.

Staff Flexibility

  • Though some AMCs may have a smaller staff than others, the key question to ask is to what extent the staff is cross-trained on the activities of other clients and any software or special processes they use. A large staff that is not cross-trained is not of any use if one staff member from another client leaves.

Scalable Services

  • AMCs are frequently described as a turn-key operation. AMCs are well positioned to headquarter your association and do everything that it takes to run a successful organization. Great AMCs are flexible; they can start where your current budget allows and as your organization and budget grow, as any great AMC will ensure it will, you can add additional services to your contract. You can revisit your services contract at the annual review meeting with your AMC.

Sample RFP Process and TimelineStep Four

Develop a timeline (see image, right).

Step Five

CommitteeAppoint a Selection Committee

  • Composition
    •  Chaired by Past President or member very familiar with the association
    • Diverse and include those with a strong historical knowledge of association activities
  • Responsibilities
    • Develop the Request for Proposal (RFP)
    • Evaluate proposals
    • Participate in interviews
    • Make final recommendations

Compile an RFP Distribution List:

  • Review profiles of AMCs through online Lists:
    • American Society of Association Executives (ASAE)
    • Association Management Company Institute (AMCI)
    • Narrow search by location, services needed, accreditation status, etc.
  • Ask people you know for AMC references

Additional Information to Include:

  • Organizing Documents (Bylaws, etc.)
  • Governance (# of Board Meetings)
  • Finance (Audits, IRS 990 Forms)
  • Membership categories and dues
  • Meetings and conventions
  • Publications
  • Request references: Clients and banks
  • Legislative Needs

Proposal Considerations

  • AMCs come in various shapes, sizes, styles
  • Look for best fit
  • Company stability
  • Flexibility
  • Choosing an AMC should be viewed as a long-term commitment.

Compared to other organizations, is yours large or small? Is it rapidly growing or in need of a turn-around? What are its priorities in terms of programs? Define your most pressing current and future needs and then make the best choice among the top proposals. Creating a matrix-rating form can help to focus and clarify the analysis.

Company Stability

A contract between an association and its management company represents a substantial commitment of time, energy and money on both sides. Does the company appear stable? Will it be able to meet its commitments? Does it have the staff and financial resources to weather a setback like an economic downturn or loss of a major client? The company’s age may be one indicator of stability, but certainly not the only one. Some newly formed companies are well planned, highly stable and forward-thinking. A new AMC should not be eliminated, but should be carefully investigated to ensure it is well positioned to weather the challenges common in the first years of any new business.

Flexibility

Is the company able to serve not just current, but future needs? The company chosen should demonstrate the ability to grow with your organization, to take on additional responsibilities, handle more members, another meeting or a new project.

Other Considerations:

  • Client mix – Is the company familiar with the specifics of running an organization like yours? Can it absorb your organization and continue to handle its other client needs or does it intend to add staff and resources?
  • Size – Will your organization be important to the management company or will it be a minor client among much larger organizations? While a large AMC may have more extensive resources than smaller ones, how will they allocate those resources to a smaller client?
  • Equipment
  • Leader and staff capacity and experience
  • Fees and variable costs

Fees

another-calculatorAMC fees are based on projections of:

  • Staff Time
  • Office Space
  • Technology
  • Professional Education
  • Medical and Wellness Benefits

How are Fees Determined?

  • Based on scope of services
  • Projections based on the amount of hours each staff spends on association functions
  • Determined by unique hourly rates per staff member/position (including benefits)
  • Or blended rate of flat fee + hourly rate (including benefits)

Items not Included in Fees

Variable Costs

  • Graphic and Web Design
  • Web Programming
  • Information Services
  • Photocopying
  • Email/Postage/Fax

Final Tips

  • Conduct phone interviews with the top five candidates
  • Select two to three AMC’s for in-person presentations
  • Conduct site visits
  • Notify all firms of your decision

Watch out for:

  • Promising the moon for little money
  • Subcontracted services
  • Faux AMCs (CME providers, attorneys and accountants are NOT AMCs. They may be very good at what they do but that may only be one function of running an entire organization)
  • Legal and ethical integrity and accountability (A great AMC will brief the Board on fiduciary responsibility, contracts, insurance, IRS requirements, ethics and apparent authority.)

For a comprehensive set of informative checklists, contact info@associationacumen.com:

  • How to Prepare an RFP
  • Questions to Ask a Prospective AMC
  • Reference Interview checklists

Watch for Part 2: Developing a Contract with an AMC and Part 3: Time for Transition: What to Expect during the First 90 Days

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