BlogMembership The Easiest Way To Collect and Track Membership Dues Membership The Easiest Way To Collect and Track Membership Dues Author: Sayana Izmailova July 29, 2022 Contents 🕑 8 min read If you’re starting a membership organization, one of the first things you’ll want to think about is how to collect membership dues. Membership managers often find it challenging to: Decide on a fair price and payment schedule for their membership Ask members to pay their dues or communicate a price increase Keep track of and chase down payments However, collecting membership dues doesn’t have to be a struggle! In this post, we’re covering everything you need to know about membership dues and, most importantly, how to make this aspect of managing your membership organization an absolute breeze. Let’s dive in! What Are Membership Dues or Member Fees? Membership dues, sometimes called member fees, are the payments members make to your organization on a regular basis in order to keep their membership. In exchange, they receive access to exclusive benefits and resources. They lose this access if they stop paying their membership dues. What’s the Purpose of Membership Dues? Membership dues are one of the biggest sources of revenue for nonprofit organizations. Without them, you’d have to rely on grants, sponsorships, and donations — while you can and should pursue these, it’s extremely challenging to raise enough money to cover 100% of your expenses, while still focusing on providing value to your members. For many organizations, membership dues keep the lights on — they provide the funds needed to cover operating costs, run programs, organize events, and give their members an exceptional member experience. When membership dues are appropriately priced and accurately reflect the value the membership program provides, members don’t mind paying them. In fact, paying members are much more likely to be engaged and motivated to make the most of their membership compared to those who are in a free membership tier. Annual Dues vs. Monthly Dues: What’s Better? The two most common payment schedule types for membership dues are monthly and annual. They both have their pros and cons, so the best option for your organization depends on your and your members’ preferences. Here’s what to consider: Monthly Dues: Pros: Members are more likely to sign up because there’s no long term commitment and they can cancel at any time. Plus, the monthly price is lower and is therefore, more appealing. For your organization, monthly revenue is easier to track and analyze — your monthly member retention rates provide immediate feedback about how well your program is working, and you can implement changes right away. If you have membership tiers, every month is a new opportunity to upgrade members to the next level. Cons: Monthly payments can be a hassle to track down — if they’re not automated, members can forget to pay them. Some members simply find it inconvenient to have to pay every month. Your revenue is less predictable because members can leave at any point throughout the year. Annual Dues: Pros: Many members like the convenience of paying once a year and forgetting about it. For your organization, annual dues offer predictable revenue, since members pay upfront for the whole year. Cons: It’s difficult to know how well your membership program is doing, since members are only asked to renew once a year. Your member engagement rate can be affected, since some members tend to forget about their membership if they’re not asked to renew on a more regular basis. If you’re not sure which payment schedule to implement at your organization, consider offering both options and letting your members decide. If you choose this route, it’s best practice to offer the annual membership at a discount. Although it feels like you’d be making less revenue, this will entice more people to choose the annual option and may actually lead to more revenue in the long run. Read More: The Complete Guide to Setting Up a Robust Membership Model How To Ask for Membership Dues As we’ve already discussed, members don’t mind paying membership dues, so there’s no need to hesitate when asking them to pay. Nonetheless, here are a few tips to help you collect membership dues with confidence: Clearly explain the value members will get in exchange for their membership fees. Make this information easy to access (for example, create a member benefits page on your website) and remind members about it every time you ask them to pay. Express your gratitude and appreciation. Your members are the lifeblood of your organization — they give you both your purpose and the means to achieve it — so make sure they know this. It’s okay to ask more than once. When it comes time to renew, start sending reminders early and do it a few times leading up to their membership expiry date. Make it easy. Members are much more likely to pay if the process is effortless. This means letting members pay online or, better yet, automating it completely. Read More: 8 Simple Tips to Improve Your Membership Renewal Letters and Emails How To Collect and Keep Track of Membership Dues Too many membership managers still track their member dues in an Excel spreadsheet. This solution may work if you have 10-20 members, but can get very problematic as your organization grows. Your members will all have a different renewal date, a different amount (based on their tier), and a different method of payment (cash, cheque, credit card over the phone or online, etc.). You’ll also want to keep track of how many renewal reminders you’ve sent them. Managing all this while trying to get your members to pay is a recipe for disaster. Not to mention, any of your staff members can go into your spreadsheet and accidentally delete or rearrange data, causing even more headaches for both you and your members. Successful membership organizations steer clear of spreadsheets and use something called membership management software (MMS) instead. This all-in-one tool makes it easy to keep track of membership dues, collect payments online (most members’ preferred method of payment), and do much more. Let’s take a look at its features in more detail. Membership Management Software: The Ultimate Solution for Member Dues Tracking Membership management software (MMS) is an all-in-one tool that helps membership organizations automate most of their administrative tasks and save both time and money. With an MMS like WildApricot, you can build a website that connects to your member database, process payments, track member dues, communicate with your members, organize events, and do a whole lot more, all from one functional and easy-to-use dashboard. MMS creates a seamless experience for your members, too. They can sign up or renew their membership online, make payments, and update their member profile in the member portal. In the back end, you can keep track of who’s coming up for renewal and send automatic reminders and payment receipts. Once you set up your MMS, all of your tasks related to membership dues can run on autopilot, while you focus on what really matters — creating value for your members and building a community. 5 Tips for Communicating a Membership Price Increase One thing even experienced membership managers sometimes struggle with is telling their members that they have to increase their membership prices. They worry that the increase will upset people and cause them to leave their membership. The good news is, this worst case scenario is entirely avoidable, as long as you communicate the increase with the right approach. Here’s how: 1. Decide when and how the increase will happen Give your members plenty of notice (at least a few months) and get clear about how the increase will take effect. The easiest way to do this is to set a go-live date and charge the new price for any renewals and new member sign-ups that happen after that date. 2. Create a communications plan Get ready to tell your members about the price increase early and remind them often. Just sending one mass email is not enough. For best results, keep track of email opens and keep sending reminders to those who don’t open your previous messages. The goal is to make sure that when the price increase takes effect, it’s not a surprise to anyone. 3. Explain your reasoning When announcing the price increase, be sure to explain why it’s happening. Is it to account for inflation? Are you adding more programs and benefits? If members understand that a price increase is necessary, they’ll be much less likely to be upset by it. 4. Provide options If you don’t already have membership tiers, consider adding a tier that costs the same as the original membership (or even less), but has fewer benefits. This way, people who really can’t afford to pay more can remain a part of your community and continue receiving at least some benefits. When they’re ready, they can consider upgrading to a higher tier. 5. Keep the communication lines open Let your members know that they’re welcome to reach out to you should they have questions, concerns, or require more information about the price increase. FAQs Q: Can a nonprofit charge membership fees? A: Absolutely! In fact, many membership organizations are nonprofits. Think clubs, societies, associations, chambers of commerce, and cultural organizations. Q: Do nonprofit board members pay dues? A: This one is up to you. Most nonprofit board members are there as volunteers — they donate their time and talents to help advance your mission, so some membership managers don’t think it’s fair to charge them members dues. On the other hand, many nonprofits strongly encourage (or even make it a requirement) that board members make a regular donation to help support the organization. More often than not, these donations actually end up being much more substantial than the regular membership dues. Q: Are membership dues tax deductible?* A: Generally, membership dues are not tax deductible, but there are some exceptions. For example, some memberships cost more than the value of the benefits members receive, and the remainder is considered a charitable donation to the organization. In this case, the charitable donation portion would be tax deductible. Q: Is a membership fee an expense?* A: If some of your members are self-employed or operate a business, they may wish to know whether they can claim their membership fee as a business expense. In general, this is allowed in cases where their membership is directly related to their business. For example, membership at a professional association can be considered an expense, but membership at a tennis club cannot. *Disclaimer: The answers above are for informational purposes only and are not intended to provide tax, legal, or financial advice. To ensure that you give accurate information to your members, be sure to check with your state and the IRS about the specific rules and how they apply to your organization. Try Membership Management Software for Yourself! If you’re ready to try membership management software and see how it can help you effortlessly track membership dues, collect payments, and send out renewal reminders, sign up for WildApricot’s free 30-day trial. And if you’d like more tips on how to simplify your member renewal process, check out our Ultimate Membership Renewal Guide. Best of luck with your membership program! Related Membership Articles Membership 🕑 7 Min Read Membership Card Template: How to Create Membership Cards In 3 Minutes Tatiana Morand Jul 23, 2023 Membership 🕑 10 Min Read 10 Member Appreciation Day Ideas + 6 Quick Steps to Show You Care! Sonia Urlando Jul 21, 2023 Membership 🕑 10 Min Read The Top 10 Best Practices for Managing Your Association Dues Sonia Urlando Apr 30, 2023 The Membership Growth Report: Benchmarks & Insights for Growing Revenue and Constituents Get the report now!