Two Paths of Decline: Non-Profit Mindset and Membership Dues

Blog_22.pngCan you imagine if the shareholders (i.e. donors) at Apple had told the board similar things about the way Steve Jobs ran the company? He made too much money. Cut his compensation. Spend less money on research and development – can’t you find volunteers to help out with that stuff? Your marketing budget is way too big — cut that in half. I’m sure we can find someone to give us those services as an in-kind contribution…We’d be without many of the products and technologies that right now are fueling economic growth around the globe. And thousands of people might be out of work because Apple was too focused on short-term goals….Then why is the exact same approach to capacity building the accepted norm for the nonprofit sector?”

I have recently become convinced that there is an epidemic of dual personality disorder going around among association executives. The two personalities have a way of emerging when the hapless victim discusses solutions to problems or deliberates about a future direction. Personality #1 will talk rationally about strategy, ambitious stretch goals and responses to trends and needs in its environment. Enters personality #2 to shed doubts on decisions and spread confusion over what had seemed clear a minute ago. You see, Personality #2 could care less about the context, especially member needs.  It turns on a special “Association Logic” switch that suspends reality and blocks any memory of how real people think and behave.  The anchor of Association Logic is the “Non-Profit Mindset.” And what might that be? You ask. This is how a typical conversation might go once the “Non-Profit Mindset” light is on:

Personality #1: Our members, the sailboat warriors of the kingdom of Oz, are increasingly replacing sailboats, with steamboats and airplanes. If we want to serve their changing needs, we should change our name and focus from “serving the warriors who use sailboats,” to “solving the warriors’ transportation needs.”

Personality #2: Yes, but then we will not be true to our mission of promoting the sailboat industry. Instead, let’s just convince them that sailboats are better than steamboats or airplanes, okay?

Personality #1: We noticed that making our research available online hit a nerve. Members are flocking to our site and asking for more. Why not capitalize on this opportunity, add research from other data bases around the globe and create a subscription service that gives subscribers access to this entire data base?

Personality #2:  This is a great idea as long as we make sure never to charge for it. It is an important member benefit and they are already paying dues.

If you like Personality #2, you are in luck because it’s everywhere. It is the status quo!  It thrives on mutually exclusive and artificially sharp dichotomies—member vs. customer; non-profit vs. commerce; mission vs. business– that pit against each other things that often converge or are integrated in today’s fluid environment and its porous boundaries.

By looking at your environment through your constructed, association lens, rather than the other way around, logic and common sense go out of the window, eventually creating absurd premises for decision-making or economic strategy that benefit neither member nor provider organization. Welcome to Non-Profit mindset 101! Below are a few of its mainstays.

  1. Revenue can only come from membership dues and the annual conference
  2. It stands to reason that if you need to boost your financial health, you need to recruit more members or increase your dues. Increasing value or re-configuring the way you do business is NOT good Association Logic.
  3. Should you come across groups or market segments who can benefit from your assets but do not fit your membership criteria or model, just drop them. You are not out to get “customers” as if you were a vulgar business. You are just looking for “members.”
  4. It is fine to increase dues arbitrarily, but not to leverage your value into higher-end products and membership tiers that will increase both benefit to members and your revenue.  Anything of real value to members should be free of charge or discounted
  5. It is better to put all your efforts into recruiting more members at $195 each in annual fees than to charge ten, twenty, forty and more times as much for custom services and specialized subscriptions that they sorely need.
  6. It is far preferable to badger members with marketing and sales campaigns to persuade them of the value of your membership and your choice of products, than to really observe their behavior, understand their problems and co-develop with them the solutions they need.
  7. If you develop new sources for non-dues revenues, make sure they are as far from what members define as real value as possible. For example, say yes to coming up with a random idea for a new certificate or global expansion because others are doing it. Say no to actually ferreting out members’ interests or developing your own members to strategic buyers through cross-selling, customization, innovation and outcomes.
  8. If these make no sense financially or in terms of member outcomes, don’t worry. We are NOT a business and do not have to follow their logic. We use Association Logic, which is superior to business.

It is time to question our assumptions and exit association-centric logic. What is a non-profit after all?  Wikipedia defines it as: “an organization that uses surplus revenues to achieve its goals rather than distributing them as profit or dividends.”  The difference is not in whether or not you make profit, but in how you dispense it.

Andrew Olsen in his blog “Why Nonprofits Don’t Do Big Things” sees this mentality as the reason why most non-profits do not rise above mediocrity:

He lists some of the aphorisms of the Non-Profit mentality that enter our DNA through constant repetition:

  • We only fund program, not operating costs, and certainly not fundraising costs.
  • You’re paying your staff too much. Don’t you know this is a nonprofit?
  • You’ve really got to spend more on programs and less on infrastructure and capacity building – donors don’t want to fund that stuff.

None of these is inherently bad,” Olsen notes. “But it is incredibly naive to think that any organization (tax-exempt or not) can do real, lasting good on this planet without having the capacity to try new things, staff appropriately (and pay appropriately), take calculated risks that could lead to major breakthroughs, and have the financial reserves to withstand fluctuations in the economy.”  He believes that, unfortunately, actions like congressional hearings and “watchdog rating mechanisms” increase risk aversion and discourage non-profits from building long-term, sustainable solutions to our most pressing problems.”  He continues:

 


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