Associations Executives Summit II

1. Associations Executives Summit II • 19 November 2014 • Proudly arranged & organised by PCAAE • Presentation by • John Peacock, Associations Forum PCAAE AES II November 2014

2. 1.1 John’s career in association management • Bachelor of Commerce from University of NSW, Sydney • In my 20’s: large commercial eg Ernst & Young, Proctor & Gamble • In my 30’s: middle manager, solo employee Executive Officer, Executive Officer with 6 staff • In my 40’s: established Associations Forum: training, information & consulting • In my 50’s: growing AF & assisting associations in Asia • Why I like the associations and charities sector PCAAE AES II November 2014

3. 1.2 About Associations Forum • Commercial entity assisting associations • 450 members; largest Australian/NZ event; Singapore; Malaysia; India; HK; South Africa; The Philippines • From viewpoint of services, similar to an association • Education and training as the basis • Publications and communications • Surveys and research • Consulting and advice • Collegiality, camaraderie and friendship • Association management can be lonely! PCAAE AES II November 2014

4. 1.3 The Associations Sector in Australia • 600,000 entities: charities, community, sports, associations • Perhaps 30,000 entities that employ staff • Competition in some areas between commercial players and NFPs • AUD$43 billion to Australian GDP • Associations meetings boost delegate knowledge & meetings business • Current discussions re Regulation of the sector • The associations sector: influential, independent and booming PCAAE AES II November 2014

5. 1.4 Associations in Context • Democracy = the freedom to associate (& speak out) • Core principles • Independent = not controlled by another entity • Freedom to join • Stewardship is handed on to others • “Mutual” entities: members don’t have shares they can sell • No distribution of accumulated equity • Distinction between charities and associations • Charity = good cause • Association = any cause, and self-interest is OK! • Types of associations • Trade / industry and professional associations • Sports, arts and special interest associations • Charities, community groups, overseas aid, NGOs • Local, national and international associations PCAAE AES II November 2014

6. 1.5 Scale, type and scope of association makes a difference • Scale matters in governments and companies • USA compared to East Timor • Apple compared to a small business • Issues relating to type of association • Can we generate income from members? • Are we reliant on donations and government funding? • Will corporations pay to gain access to members? • Are volunteers willing to hand over to management? • Scope of association • Can we increase membership, including from other countries? • Are we broad based or niche/boutique? • Benchmark yourself to similar associations  • Do the best possible work regardless of who you are! • Association Executives Summit is about things in common to all PCAAE AES II November 2014

7. 1.6 Issues for associations whether large or small • Constitution is your mini-law - must be relevant and clear – it states structure eg Board composition • Mission leads to Strategic Plan; Plan leads to Budgets • Relevant services must generate a surplus overall • Positive and ethical behavior and culture • Good administration, infrastructure and staff • But how to achieve this? • When funds permit, Board needs to employ capable management to run the association - and take a step back to be watchful and vigilant PCAAE AES II November 2014

8. 1.7 For ongoing viability, major change may be required • Most associations are viable: some tiny, niche causes exist for years • Merger with other organisation(s) • Evolution (or revolution) in what association does/Mission • Internal changes in Constitution, Governance, Operations, Services PCAAE AES II November 2014

9. 1.8 Reminder: problems can occur in an association • Scandal or fraud • Going broke • Confusion as to purpose • Internal schisms, factions and politics • No regular transition to new Directors • Poor governance by the Board • Micromanagement by the Board • Wrong person as CEO • Not getting professionals to assist when required PCAAE AES II November 2014

10. 1.9 Constitution contents • Purpose / Objects • Members • Defining who can be a member; expulsion of a member’ • OK to be exclusive and particular, but not discriminatory • Stating who has right to vote at a “General Meeting” • Directors • Who appoints and how; how to dismiss them • Office Bearers should not make decisions separate to the Board • Composition, length of term and term limits for Directors & Office Bearers • Procedural stuff • Constitutions should include “locked-in” matters requiring AGM 75%; not operational matters PCAAE AES II November 2014

11. 1.10 Board Meetings (for Directors) cf. General Meetings (for Members) • Board Meetings can happen frequently and at short notice according to needs • General Meetings require 21 days notice • Subject to previous advice, any subject can be raised and decided on-the-spot at Board Meeting • General Meetings require documentation stating the matters to be covered and no motions should be raised from the floor • Directors should not be able to give proxies to another Director - and Alternate Directors are not recommended • Members should be able to vote in person or by proxy at General Meetings PCAAE AES II November 2014

12. 1.11 Core documents I ask for: • Constitution – can be changed by member vote • List of Office Bearers and Directors (and how long on Board and indication of “day job”) • Board Governance Charter – can be changed by Board • Minutes of 2 or 3 recent Board meetings plus AGM • Staff organisation chart – can be changed by CEO • Annual Report (the words describing activities) • Audited financial report (plus for 5 years) • Strategic Plan • Budget • Other key documents PCAAE AES II November 2014

13. 1.12 Issues in Good governance and effective Boards • Governance as distinct from management • Respective roles of Board/Committee and Staff • Board/Committee & Officers Responsibilities • Role of the Chair • Avoiding conflicts of interest • Transparency and measuring risk • Board selection, evaluation & assessment PCAAE AES II November 2014

14. 1.13 Definition of Governance • “Corporate governance is the system by which companies are directed and controlled • Boards of Directors are responsible for the governance of their companies • (Members) role in governance is to appoint the Directors & the Auditors and to satisfy themselves that an appropriate governance structure is in place.” • - Cadbury Report (UK) 1991 PCAAE AES II November 2014

15. 1.14 Fiduciary duty at Common Law • “A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence.” • - Bristol & West Building Society v Mothew [1998] Ch 1 at 18 per Lord Millett (UK) • “. . . a director must act honestly, in good faith, and to the best of his/her ability in the interests of the organisation. The director must not allow conflicting interests or personal advantage to override the interests of the organisation.” • High Court of Australia PCAAE AES II November 2014

16. 1.15 Director’s duties (Australian) statute law • Act in good faith • Act with due care and diligence • Not to gain personal advantage by improper use of position • Duty not to misuse information • Duty not to trade while insolvent PCAAE AES II November 2014

17. 1.17 Association Director’s Duty to Act in Good Faith • act honestly, exercise power in the interests of the organisation & avoid conflicts; • exercise independent judgment • take positive action PCAAE AES II November 2014

18. 1.18 Association Director’s Duty to Act in Due Care and Diligence • The question to ask is – what would a reasonable person have done? • Expected to have basic financial skills • Must objectively assess information presented PCAAE AES II November 2014

19. 1.19 Association Director’s Duties also include: • Not to gain personal advantage by improper use of position • Duty not to misuse information • Duty not to trade while insolvent PCAAE AES II November 2014

20. 1.20 The human factor in associations • People are naturally cautious about change • Leadership styles and ability to Chair meetings • Some people are ‘martyrs’, work too hard, are control freaks and poor at delegation • A few abuse process, behave poorly in meetings and send untold unnecessary emails • Change management requires process, communication and time! • Associations should have processes and systems to minimise issues caused by personalities PCAAE AES II November 2014

21. 1.21 Growing membership • Association name must be descriptive: it is marketing in itself • Reputation is paramount: word of mouth will be your best marketing • Have systems, processes and clear responsibilities for staff • Database including both members and prospects is vital • Excel spreadsheets are not databases; on line may not be necessary • Charge non-members 50% more than member rate PCAAE AES II November 2014

22. 1.22 Membership recruitment processes • Leads become prospects • Prospects come members • Database as the repository of information • Word-of-mouth recommendations and testimonials • Member-get-member campaign • Sales & telemarketing • Membership growth needs a campaign PCAAE AES II November 2014

23. 1.23 Retaining members • People join associations by free choice • Having to be a compulsory member is registration • It is easier (and cheaper) to retain a member than recruit a new one • Amend, improve and refine the association’s Mission and Goals if appropriate to what members need • People or organisations that do not renew often return at a later stage • Perpetual challenge to be a “must-join” association PCAAE AES II November 2014

24. 1.24 Membership retention processes • Need for the membership offering to be delivered • Have a database that tracks all participation and interaction • Personal attention and customer service • Member needs research through surveying • Appeal to Generation X, Y and Z • Have processes to follow up! PCAAE AES II November 2014

25. 2.1 Assisting commercial aims of members • A example of where charities and associations differ • OK to have an association supporting people/businesses who wish to make money • Industry-specific information can be proved by an association seen as neutral • Salary surveys are popular • Make your on-line job board the leader PCAAE AES II November 2014

26. 2.2 Education other than at Conference time • Small events (meetings, workshops, seminars) are important and lead to larger events (conferences & congresses) • People are time poor, so short sessions are popular • Increasing use of e-learning and webinars • In professional associations, providing CPD (after university graduation) is an ideal area to offer events • Post-grad qualifications are money-makers when sought-after in the marketplace (eg CPA) • Plus Special Interest Groups are a winning idea! PCAAE AES II November 2014

27. 2.3 National Conferences and International Congresses • Large events bring in bigger surpluses • Make your associations conference the “must-attend” event: eg “the Olympics of Accountants” • Having a strong national association will assist bids for World Congresses • Tourism Promotions Board Philippines can assist in bids for regional or international events • World congresses are major wins for The Philippines • Stronger associations have capacity to run regional or international events PCAAE AES II November 2014

28. 2.4 Exhibitions / Trade Shows • Members like to meet suppliers in one place • Exhibitions are very time and cost effective for association members who buy • Exhibitions are very time effective for sellers • For the association, exhibitions can be very profitable • If your association doesn’t run it, someone else will! PCAAE AES II November 2014

29. 2.5 Awards and Other Events • Popular if well handled and respected • Start small and build • The awards by AMPAS are famous, but less so the association that runs them… (who are AMPAS?) • Awards programs are also popular with sponsors, hence profitable • Other special events, including sports days and networking PCAAE AES II November 2014

30. 2.6 Communications, Promotions and Publicity • Communications sub-plan is required • Printed magazines and journals: still alive and healthy • Annual reports • Delivering content on multiple platforms • Media campaigns for the association brand or issue • E-newsletters are popular if sent sparingly • Websites have replaced physical libraries • Dedicated “social networks” are popular, rather than • Income can be generated from communications eg ad sales PCAAE AES II November 2014

31. 2.7 Setting Standards for your industry or profession • If the association does not set and enforce standards, government may do so instead • Public interest needs to be considered, not just member interest • Code of Conduct / Ethics is foundation standard • Accreditation and “Aspirational professional designations” (eg CPA) will be very popular if they increase member income • Associations should self-regulate and have standards higher than ‘mere’ licencing • Disciplinary procedures are required for fairness PCAAE AES II November 2014

32. 2.8 Position statements and advocacy • As independent entities, associations are allowed to have policy ‘position statements’ • Positions on relevant matters need to be thoughtfully developed over time – but be prepared • Most advocacy is done softly and gradually • Advocacy in some nations has influenced changes of government • Media management skills • Crisis communications PCAAE AES II November 2014

33. 2.9 Research & Development into science behind your association • This is Research & Development into the “art and science” of the association, not member needs survey • Advances can result from quality research • Associations often foster research by academics • Scholarships can be paid for or sponsored PCAAE AES II November 2014

34. 2.10 Selling other products or services • Resources or guidelines • Insurance (some associations are rich from insurance) • Less successful if against free market offerings • Find out what your members already need every day PCAAE AES II November 2014

35. 2.11 Surveying members regarding their needs • Organisations must know what their customers want • More senior members on Boards can lose touch • Relevant services? • Timely services? • Consider surveymonkey.com • This is all to become a must-join and must-renew organisation PCAAE AES II November 2014

36. 2.12 Volunteers • Associations have active volunteers who are usually members • Associations can’t usually choose their volunteers – or can they? • Like staff, planning, induction and assessment is important • No volunteer is indispensable – need succession plan PCAAE AES II November 2014

37. 2.13 When affordable, having staff is vital • Associations need to generate profits, hence retained earnings • Financial reserves should be used to hire staff • Administrative staff will need to be managed by volunteers • However, management staff will implement Mission and plans • Associations will not reach potential without management level staff • Association staff must have association management training – and this training motivates staff PCAAE AES II November 2014

38. 2.14 Human Resources requirements • Staff organisation chart linked to Plan • Job descriptions • Staff recruitment policies and procedures • Training and mentoring • Staff assessment & performance measurement • Fostering positive teamwork • Sometimes, paid staff respectfully “manage” volunteers • Employing staff in income generating areas • Utilisation of volunteer sub-committees PCAAE AES II November 2014

39. 2.15 Overview of association finances • “Not-for-profit” is the wrong term: surplus or profits are necessary • Reserves are never to be distributed to members • Directors can be reimbursed for reasonable expenses • Adequate or large financial reserves are important for future growth • Financial reporting in associations is sometimes poor - yet should not nor need not be substandard • Budgeting can be linked closely to Plans PCAAE AES II November 2014

40. 2.16 Budgeting and Finance • Basic financial and bookkeeping principles • Importance of utilising modern accounting software • “Activity Based Costing” budgets • Finances over ten years and the annual external audit • Presenting finances to the Board/Committee • Official financial reporting requirements • Managing bank accounts • Systems to facilitate E-payments • Investment strategies including property • From Treasurer position to Audit & Finance Committee PCAAE AES II November 2014

41. 2.17 Financial management • Modern accounting software • No needs for volunteers to sign small amount cheques: separate accounts • Volunteers must review what payments have been made • “Activity based costing” is vital so you know what part of the association is profitable and what part is not • Allocate salaries to projects, hence real costs will be known • Of course, losses are OK • Diversify income sources PCAAE AES II November 2014

42. 2.18 Sponsorship is valuable extra income • Suppliers to your members will want the opportunity • Suppliers should not get and don’t expect to have a vote • Exhibition booths and advertisements in journals are first likely activities • Prices can start reasonably low and increase in future years • Ideal if one staff member co-ordinates all sponsorship approaches PCAAE AES II November 2014

43. 2.19 Databases, Websites, Social Media and Technology • Website technology • Social media • Databases with CRM • Membership administration • Technology to assist in Board/Committee papers PCAAE AES II November 2014

44. 2.20 Office Management • Disaster recovery & backup • Occupational health and safety and other laws • Technology • Record keeping • Insurance PCAAE AES II November 2014

45. 2.21 Introduction to Planning • Every organisation (corporate, government or association) needs a Plan • Associations particularly need Plans as there are non-financial goals • Planning days are motivating: Board and Staff share ownership of the Plan • Independent facilitators that understand associations are necessary • When you know your Plans, and the financial picture is clear, a Budget can be developed • Association plans will be strategic plus operational • Plans must be referred to at every Board meeting • Ownership of the Plans within the association PCAAE AES II November 2014

46. 2.22 Mission, Goals and Activities • VISION is big picture for the industry, profession or cause – optional as less relevant to associations • MISSION is vital: purpose for the association’s existence • GOALS are timeless and are there to achieve the Mission • Specific ACTIVITIES are current and are there to achieve the Goals PCAAE AES II November 2014

47. 2.23 Plan practicalities and implementation • Moving from high-level planning to operational details and budgets • Performance management, review and Reporting to the Board/Committee = use a grid / table format • Organisation capability, risk management and monitoring KPIs • Issues with good governance and the Constitution • Selling benefits to management and Board/Committee of the planning process: Communicating the Plan and “champions” PCAAE AES II November 2014

48. 2.24 Moving from “management” to “governance” • When sufficient money in the bank, staff should be employed • Paying for administration is the first, easier step • Hiring an association professional who will manage is a harder step • Constitutions need to change when management staff appointed, and the culture of the Board “managing” the association • Let volunteers enjoy their time, not be overworked and suffer burnout, and become do oversight, not everything PCAAE AES II November 2014

49. 2.25 Associations must grow! • Like corporations & nations, associations must grow • If associations are stagnant, they will be superseded • Major events are motivational to an association • Volunteers need to agree to growth then hire management staff • Once capable senior staff employed, set Plans and targets PCAAE AES II November 2014

50. 2.26 Thank You! • John Peacock, General Manager • Associations Forum Pty Ltd • www.associations.net.au • +61 2 9904 8200 • jpeacock@nfp.net.au • Welcome to Associations Forum Australia Conference in Adelaide: 14-15 July 2015 • Journals, flyers and business cards available • Special thanks to delegates and leadership of PCAAE • Drop me a line anytime! PCAAE AES II November 2014