How to choose an association management firm

When outside management makes sense

An association management firm runs an association's daily work under the board's direction. ASAE describes these firms as an option for organizations that prefer not to hire a chief staff executive and an in-house team directly. It notes that some associations hire a firm for full-service management and others hire one for specific services. ASAE, Hiring an Association Management Company

AMC Institute, the trade association for these firms, suggests starting with an honest look at what the association needs to do better. If the people doing the work today do not have the time or the skills for it, the board can add staff or bring in a firm. AMC Institute, Partnering with an AMC

In our experience, a firm is worth a look in these situations.

• Volunteers have been running the association, and the work now takes more hours than they can give.
• The executive director is leaving or retiring, and the board wants coverage that does not rest on one new hire.
• The association needs bookkeeping, events, membership and communications covered at the same time and cannot fund a hire for each.
• Two associations are merging, or a new one is starting, and it needs an office, systems and written procedures quickly.

In our experience a firm is a harder fit when the association already has staff who work well and the budget to keep them, or when the board wants people who work for the association alone. Hiring staff directly is a sound choice in those cases.

Hiring a firm moves the work. The board's duties stay with the board. BoardSource notes that a board cannot delegate its primary fiduciary duty, and that handing out parts of the work is fine as long as the full board keeps ultimate control. BoardSource, Board Member Roles and Responsibilities Most of the comparison below is about how a firm keeps the board in that position.

What a management firm does

A full-service firm usually covers the work below, and some associations hire a firm for only part of it. AMC Institute describes firms drawing on shared resources and the buying power of several clients, which is how a small association gets several kinds of staff without employing each one. AMC Institute, What Can An AMC Do For You?

Executive director services

A named person acts as the association's chief staff executive. That person works with the president and board, carries out the plan and budget the board approves, and represents the association with members, partners and vendors.

Membership and renewals

Applications, renewal notices and reminders, dues collection, member questions, and the record of who belongs in which category.

The member database

The system that holds member records, payments, event registrations and continuing education credits where they apply. Some firms run the association's own system. Others put the association on a system the firm licenses.

Events

Annual meetings, conferences, seminars and webinars, from the venue contract and registration to speakers, sponsors on site and the close-out.

Sponsors

Sponsor and exhibitor programs, selling them, invoicing them, and making sure each sponsor receives what it paid for.

Communications

Email to members, newsletters, the website and the social media accounts.

Finances

Bookkeeping, invoices and payments, deposits, monthly statements for the treasurer and board, the draft budget, and support for the annual review or audit and the tax return.

Board support

Meeting notices, agendas and board packets, minutes, committee support, elections and governance records.

In our experience some work belongs with outside professionals the board hires directly. The independent audit or review of the books comes from a CPA firm, and legal advice comes from the association's own attorney. A good firm works with both and says plainly where its own work stops.

Ten things to compare

AMC Institute publishes the ANSI/AMC Institute Standard, a standard of good practice for association management companies. Its areas include client contracts, service delivery, financial management and internal controls, insurance coverage, and record keeping and continuity of operations. AMC Institute, The ANSI/AMC Institute Standard AMC Institute says firms seeking its accreditation go through an independent audit of their services and procedures. AMC Institute, Accreditation History

This guide uses the standard as a yardstick for what a board should ask about. A board can ask any firm whether it holds AMC Institute accreditation and when it was last reviewed, and should still check each point below for itself.

1. Scope and exclusions

The proposal should say what the fee covers and what costs extra. Look for a written scope by function, the staffing or hours behind it if the firm works that way, and how work outside the scope is quoted and approved. Ask for the list of exclusions and pass-through costs, such as postage, printing, travel, software and card processing fees, and whether any of them carry a markup. In our experience, most disagreements between a board and its firm start with work one side thought was included.

2. Your staff contact and absence coverage

Ask who your day-to-day contact will be by name, how many other associations that person serves, and who steps in during a vacation, an illness or a resignation. Meet that person before you sign. In our experience the person in the sales meeting is sometimes a different person from the one who answers your members' calls, and the board should meet both.

3. Board reporting and approvals

Agree in writing on what the board receives and when, such as financial statements, membership counts, event results and a list of open decisions. Agree also on what the firm can do on its own and what needs an officer's approval or a board vote, such as contracts above a set amount, new vendors or changes to dues. BoardSource lists reviewing the financial statements among the fiduciary work board members carry. BoardSource, Board Member Roles and Responsibilities

4. Financial controls and who signs

In our experience, bank accounts should be in the association's name under its own tax ID, with board officers as signers. The Oregon Department of Justice, in its recommendations for small nonprofits, advises that the person keeping the books should not also have check signing authority, that bank statements be reconciled monthly by someone who does not issue or sign checks, and that payments be approved by someone other than the person who makes them. Oregon Department of Justice, Financial Control Recommendations for Small Nonprofits Ask the firm to show how it keeps those jobs apart, who can move money, and whether an officer can see the bank accounts directly at any time.

5. Insurance

Insurance coverage is one of the areas in the AMC Institute standard. AMC Institute, The ANSI/AMC Institute Standard In our experience a board should ask for certificates showing the firm's own professional liability coverage and crime or fidelity coverage for staff who handle the association's money. Confirm what the association still carries in its own name, such as directors and officers coverage and liability coverage for events. The association's insurance broker can advise on amounts.

6. Who owns the records and data, and how you get them back

The contract should say the association owns its member records, financial records, website and domain name, email lists, social media accounts, logos and files, along with the logins to all of them. It should say in what format and how quickly they come back if the relationship ends. Record keeping and continuity of operations is another area in the AMC Institute standard. AMC Institute, The ANSI/AMC Institute Standard In our experience the cleanest arrangement registers every account to the association with an officer holding administrator access, so there is nothing to hand back.

7. Technology and the member database

Ask which system will hold the member records, who licenses it and what the association pays for it. A system the firm shares across clients can work well, and it can make leaving harder if the records live in software the association does not control. Ask for a sample export, who has administrator access, how passwords are stored and shared, and how members pay online.

8. Transition in and transition out

A proposal should include a transition plan with dates. It covers moving the bank signers, the records, the website, vendor contracts and open event commitments, and telling members who to call. Ask the same questions about leaving, and ask for the exit plan in writing, including how long the firm will help after notice is given and whether that help is billed.

9. References the board can call privately

Ask for references at associations similar to yours in size and type, including one that has been a client for several years and, if the firm will share one, a former client. Call them without the firm on the line. AMC Institute lists client loyalty among the points to weigh when evaluating proposals. AMC Institute, Partnering with an AMC The questions in the next section are a place to start.

10. Contract term and exit terms

Read the initial term, how renewal works and whether it is automatic, the notice period, and whether either side can end the agreement without cause. Look at how fees change from year to year and whether any fee is due on termination. In our experience the association's own attorney should review the agreement before anyone signs it.

Questions for a reference call

In our experience references open with general praise. These questions ask about what happened, which tells a board more.

1. How long have you worked with the firm, and what does it handle for you?
2. Who is your day-to-day contact, and how long has that person been in the role?
3. What happened the last time your contact was out for a while or left?
4. What does the board receive before each meeting, and does it arrive on time?
5. Has the firm ever billed for something you thought was included?
6. Who signs checks and approves payments, and can your treasurer see the bank accounts directly?
7. If you asked for a full export of your member records tomorrow, how would that work?
8. Tell me about a problem and how the firm handled it.
9. What would you change about the arrangement?
10. Would you hire the firm again?

How to run the decision

1. Name a search committee and write down the need

   AMC Institute notes that many organizations form a search committee and work with the full board before a request goes out. AMC Institute, Requesting Information or Proposals Write down what the association needs covered, the budget range, and what the board will keep doing itself.

2. Choose a request for information or a request for proposals

   A request for information suits a board that is not yet sure it wants proposals. AMC Institute also suggests deciding first whether the association needs full-service management or specific services. AMC Institute, Requesting Information or Proposals

3. Send the request with real information

   AMC Institute suggests including financial statements and any strategic plan, and setting a deadline at least three to four weeks out. AMC Institute, Partnering with an AMC Its request page recommends allowing 21 to 30 days. AMC Institute, Requesting Information or Proposals ASAE links to a background survey that shows the kind of information firms will ask for. ASAE, Hiring an Association Management Company

4. Rate the proposals with the rubric

   Each committee member fills in the rubric below alone, then the committee compares. In our experience the Weak ratings deserve the most discussion, because each one is a question to settle before signing.

5. Interview the finalists

   Ask each firm to bring the person who would be your day-to-day contact. Ask them to walk through your first month with them and how an exit would work.

6. Call references privately

   Use the reference questions above, without the firm on the call.

7. Have the association's attorney review the agreement

   Check the agreement against the scope, reporting, records and exit terms the firm described.

8. Start with a trial period

   In our experience a defined first term or a single project, such as one renewal season or one event, lets both sides test the working relationship before a longer agreement. Agree in advance on what the board will review at the end of it.