Tuesday, July 7, 2009

There's nothing wrong with generating non-dues (non-membership fee) revenue

Recently I've met with several organisations whose leaders believe that once a member has paid their membership fee all services should be free. This kind of outdated thinking can hold an association back from providing a high quality service to its members.

Don't be ashamed about generating revenue for your organisation. Not-for-profit does not mean "for-loss" … or “for-break-even”. A more correct term would be "for-surplus" as a surplus is necessary for any organisation to remain sustainable and have reserves to put towards extra-ordinary activities when necessary. By generating a surplus you can provide an even better level of service to your members.

When a member joins your organisation that are making an investment - whether a business owner making an investment in the success of their business or an individual investing in the success of their career. And they expect a return on that investment. They expect your organisation to be able to provide them with a one stop shop for the products and services they need to be able to achieve that success.

Their membership fee gives them access to a basic level of products and services. As a member they can add extra products and services as needed to assist them to be successful. The association funds these extra products and services through the extra fees charged to deliver that service. This system is much fairer as members who don't wish to access those products and services aren't subsidising those who do want them.
Sure, there are some instances where providing a free service is appropriate - there will always be exceptions to every rule. But, generally speaking, running free events and providing free services for members who are in a position to be able to afford market rates devalues your offering.


  1. How would you rewrite that article for philanthropic organisations ie our members are not looking to 'advance their careers'. Where do we start and stop offering free, or break-even, events in return for annual donations?

  2. Good question. If you are running events in return for donations then those events are a marketing cost. When planning your strategy for raising funds assess how effective the investment is when compared with other other tools that could generate funds. I would consider the investment of staff and volunteer time, financial, volunteer and other resources.

    If your events aren't generating you a large profit to put towards your cause then you either need to review the events you are running to make them more profitable - or do something else to raise funds.

    I'm currently working on an article on how to maximise returns from a gala event while also ensuring delegates have such an amazing time that they will return year after year. It will be posted on the blog in the next couple of weeks. Stay tuned!


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