Non-Dues Revenue: The Basics

Farhad Chikhliwala 12 June 2015 0 comments
Non-dues Revenue Nonprofit Basics

This is a guest post by Bob Jonas, President of Association Revenue Solutions.

Through all my years working with small- to mid-size nonprofits, I’m consistently surprised by how few of these groups are aware of their revenue-generating potential. A few groups here and there have a modest donor program, or a few money-making yearly events; but when we chat and drill down into how  their money challenges limit their ambitions, it’s often clear that the concept of ‘non-dues revenue’ is a challenge in itself.

 

What is Non-Dues Revenue (NDR)?

Simply put, non-dues revenue is any money made by an association outside of dues. There are essentially two types of non-dues revenue—revenue earned from vendors, advertisers, suppliers interested in reaching an industry and community; and revenue made from charging members additional fees for meeting registrations, webinars, books, professional certifications, publications and reports, subscriptions, branded merchandise, and so forth. While the definition is straightforward, what’s unclear to many groups is how to leverage their assets to tap into these revenue streams—especially if they currently don’t have (or have not fully developed) obvious breadwinners like basic sponsorship space in newsletters, or exhibit options at meetings.

 

Big Challenges for Small Groups

For small clubs, associations, and nonprofits, the major challenge with non-dues revenue earned from members is two-fold. First, not many small to mid-size groups host webinars, publish books, have staff doing research, produce merchandise, or run professional certification programs. At best they may have some meetings and events, or a nominal fundraising program that helps generate additional monies. The second, and in a way more difficult, challenge is that even when smaller organizations do leverage some of these additional money-making programmatic entities, they usually need to go back to the same membership well, over and over again.

This approach is wrought with political issues with members, not a good business model and while the well may not run dry, it will not fill-up either.

 

Supplier Non-Dues Revenue: A Long Term Solution

Given the challenges inherent in generating new and/or additional money from members, it’s a far better strategy to build up a robust supplier non-dues revenue program that leads to both financial growth and stability. In fact, there is an open secret that leading national associations have known for quite some time—revenue from dues alone cannot sustain an association’s basic member value proposition and cover expenses incurred when fulfilling benefit expenses and engaging in advocacy. Often member revenue is less than 50% of many national associations’ total revenue. This is why larger associations aggressively go after existing, and develop new, supplier non-dues revenue centers.

Yet, while many large national associations have become increasingly aware of this dynamic in recent years, many small to mid-size associations, clubs, and regional and affiliate groups lag behind their bigger brother and sister organizations.

 

Why Don’t More Small to Mid-Size Organizations Develop Non-Dues Revenue Programs?

The two main misconceptions I hear over and over are limited labor/time/bandwidth and/or lack of resources and deliverable tools needed – meaning software and/or systems in place that can administer supplier advertising or exhibiting. These are valid concerns, but it’s not nearly as difficult as one may imagine to launch a basic centralized supplier non-dues revenue program. Often, associations already have the necessary tools, channels, and vehicles to get started. It’s generally a matter of repackaging. An important point to keep in mind for small groups is that advertisers and suppliers often prefer to bypass national groups and reach a more targeted market directly—because generally, the members of grassroots organizations represent the most-qualified prospects.

 

Practical Packaging

So, you’re ready to stop leaving money on the table and start a non-dues revenue program… where do you begin?

Start with these practical ideas for repurposing, repackaging, and/or enhancing existing entities within your organization.

  • Work with your Website

Many small non-profits, clubs, and organizations use web platforms to build and host their sites, but often these groups feel they do not have the technological know-how to monetize their website. What they don’t realize is that it can be as simple as strategically posting a logo, adding text, or creating a new page—all tasks that can be handled by the current website administrator.

  • E-Newsletters

Some small organizations and associations regularly publish e-newsletters; however, many others do not officially “publish” a newsletter. Or to the extent they do, it’s not scheduled and more of an as-needed update to an email list for administrative purposes. Regardless of how well developed their e-newsletter is, all groups communicate with their  members somehow—and that’s all they need to offer branding, marketing, and advertising options like the following to suppliers:

  • Member Packets

If you are not already doing so, create a simple “Member Welcome/Renewal” packet and allow an advertiser to pay to have a promotional flyer included in each packet delivered.

  • Marketing Brochure

If you are already sending a marketing brochure for renewal, an annual meeting, an event, or a dinner, allow a supplier to “advertise” for a fee.

  • Lists

If your organization is comfortable and have the privacy checks in place, allow a select/limited one-time mailing to your mailing list for a fee.

  • Galas/Banquets or Special Dinners

In addition to any fundraising efforts or table sponsorships you may already offer , make a simple “Take-One’ service available, meaning that advertisers have a place to display promotional material in a high-traffic area.

  • Social Media

If your group has a strong social media following, consider sponsored social posts.

  • Meetings & Conferences

Meeting and conferences have the highest and most steady earning potential for non-dues revenue. Some organizations already have well-developed meetings with exhibitors and sponsors; while others simply convene with little fanfare. Regardless of where your organization may fall on this spectrum, the potential revenue derived from meetings is limitless. Organizations that offer few vendor options should start with the following:

Larger groups that already have basic sponsorships in place can tap into the many other ways to generate meeting revenue.  Everything from hotel infomercials to building banners to mobile app with branded floor plans to customized “build-outs” from decorators are great ideas.

This list is really just a good starting point, as each group has unique circumstances—some of which will mean even more NDR potential, and some that are similar to the tried and true of other groups. However, every one of these revenue-generating opportunities are proven methods that lead to small and mid-size organizations garnering the funding they need to sustain their legacy and embark on new initiatives.

Organizations are only limited by their imaginations.

 

About Association Revenue Solutions

How to maximize non-dues funding for small organizations is a challenging issue. Where else can organizations get revenue besides members? How do they do it? Who do they look to in their community for support? Where do they start? Learn about where to start and how underfunded associations can build a robust non-dues revenue program at Association Revenue Solutions where Managing Director, Bob Jonas also discusses how to build multi-year supplier partnership alliances and convention tiered sponsorship programs. Find him at LinkedIn.

 

Additional Resources:


Bob Jonas has been the President of Association Revenue Solutions since 2012. He's overseen the marketing, selling, organizing, and delivery of 100's of trade shows, and confirmed over 300 sponsors.

 

Get a Special Report on Simplifying Membership Management

Enter your email and receive this special report in your inbox.
Farhad Chikhliwala [Professor Apricot] Farhad Chikhliwala [Professor Apricot]

Posted by Farhad Chikhliwala [Professor Apricot]

Published Friday, 12 June 2015 at 8:30 AM

Get a Special Report on Simplifying Membership Management

Enter your email and receive this special report in your inbox.
Sorry, this blog post is closed for further comments.