The Non-Dues Revenue Imperative
For nonprofits there is no greater strategic purpose than fulfilling mission objectives and, in so doing, energetically serving their members, constituents, and stakeholders.
Fulfilling a mission requires multiple elements – a clear strategic vision, effective programs that engage and tangibly impact the organization’s constituencies - and financial resources.
For nonprofits and associations, ensuring financial strength requires looking well beyond the traditional foundation of member dues and developing a diversified and robust portfolio of non-dues revenue programs that are supportive of, and balanced with, mission objectives.
The vital importance and impacts of non-dues revenue are illustrated by:
Professional membership organizations, on average, generate in excess of 65% of total revenue from non-dues initiatives. Nonprofit trade organizations, on average, generate 59% of total revenues from non-dues platforms. (Data from the ASAE Operating Ratio Report, 14th Edition, © ASAE. Used with permission.)
For each individual organization, the opportunities for, and the appropriate fit of, specific non-dues initiatives – the “balancing of mission and margin” – vary and must be carefully evaluated and crafted accordingly. But in virtually every case, the development of a diversified and growth-oriented non-dues revenue portfolio is an imperative.
The diversity and breadth of non-dues revenue initiatives that may be effectively deployed by nonprofit organizations are expansive, and optimally the initiatives can be highly synergistic. Non-dues revenue platforms include:
Educational and Professional Advancement Programs
Certification and Evaluation Programs
Meetings, Conventions, and Trade Shows
Grants and Gifts
Affinity Programs: Business, Professional, and Member Products and Services
Monetized Media Channels
Data, Analytics, and Research Products
Codes and Standards
From our experience, there are three steps -- each unique, but collectively cohesive -- that an organization can take to optimize its non-dues revenue initiatives, while at the same time ensuring they are complementary with the organizational mission.
Step 1: Non-Dues Revenue Audit and Opportunity Definition: This foundational step establishes a validated baseline from which an organization’s go-forward non-dues revenue strategy can be constructed. It first audits and inventories the organization’s existing non-dues portfolio and programs, then compares that performance to sector best practices and benchmarks (comparables), and finally, uses the knowledge and insights gained to broadly define and explore new or aligned opportunities to expand and diversify the organization’s non-dues revenue portfolio.
Step 2: Business and Developmental Planning: This critical process vets each opportunity and applies the discipline of constructing a business plan for each initiative. Successful non-dues revenue ventures are like any other “business” opportunity, and must be the subject of a plan of action that defines not only opportunity, but requirements (internal and external resources, goals, launch funding, technology, business cycle, et al.). And each opportunity also needs to be defined in terms of its value (intrinsic and monetary) so that decisions and priorities are fully informed and expectations are quantified and realistic.
Step 3: Program Implementation: Through the comprehensive and collaborative processes represented in Steps 1 and 2, the organization has identified a range of robust non-dues opportunities and as such defined the platforms of an expanded and diversified non-dues revenue portfolio. Now the challenge is to effectively translate those opportunities and plans into energetically deployed non-dues revenue programs that are effectively supported by a cohesive operating structure, resources, research and product development, and marketing.
In summary, a vital and energetic non-dues revenue program is a virtual requisite for association and nonprofit enterprises today – and in coming weeks, we will be exploring in further detail each of the three critical steps necessary to identify, develop, and achieve successful non-dues-revenue initiatives.