On Tuesday October 5th, along with the Ottawa Business Journal, we were pleased to have our sponsors…
On Tuesday October 5th, along with the Ottawa Business Journal, we were pleased to have our sponsors and many association representatives from across Canada join us for the launch of the 2021 OTUS Association Exchange (OAX) report.
OAX is an annual association management practice survey created to help association executives succeed by exploring strategies for overcoming common challenges.
In 2021, OAX focused on how associations are surviving and thriving during the COVID-19 pandemic.
When we asked about revenue changes over the past year, 18% of associations said their revenue increased, 54% of associations said their revenue decreased and 28% said their revenue stayed the same. This blog post offers suggestions for facing financial difficulties and how to mitigate associated risks.
To watch the portion of our OAX event where David Colletto covers this topic, click here: David Colletto – OAX 2021 Revenue and Strategic Planning
When your organization is facing financial difficulties, is your first instinct to reduce spending, or is it to find ways to increase and diversify revenue?
While there’s a limit to how much expenses can be cut, there’s theoretically no limit on how much revenue can be increased. We may often be better off by focusing our time and energy on driving more revenue, rather than on searching for ways to reduce expenses.
Diverse revenue streams are important so as not to become overly reliant on any one funding source. In the case of not-for-profits, such diversified funding sources may include:
- Membership fees
- Conference or convention revenue
- Sponsorship revenue
- Advertising revenue
- Grants and donations
- Fees for services rendered
Revenue diversification results in greater stability in the organization, and mitigates the risk of over-dependency on a single funding source.
Pricing of each product and service should be regularly reviewed and optimized. If you are an association, are your membership fees reviewed annually and adjusted for inflation? Are members financially incented to renew their memberships on time? Are conference registration fees and exhibitor fees competitively priced? Do you use dynamic pricing (changing pricing in response to market demand) for event registrations?
Is a Silent Partner Taking a Share of Your Revenues?
Your credit card payment provider may be taking a significant percentage of your revenues. When credit card payment is accepted, 3% or more of revenues may go directly to the merchant service provider. Fortunately, there are now payment card providers (such as PandaPay) charging much lower fees, allowing you to retain more of your hard-earned revenues.
Professional Financial Oversight
To help identify new funding sources and drive revenue growth, consider investing in a virtual CFO – a professional accountant with experience working with organizations in your sector. OTUS Group virtual CFO’s have worked with numerous not-for-profits to help them grow and diversify their revenue streams.
While cost control is important, there is a limit on how far costs can be cut. Organizational growth ultimately depends on revenue growth, ideally diversified across multiple sources.
To learn how associations are building more resilient and sustainable organizations for a post-pandemic future, download the 2021 OAX report here.