General Construction

Trade Associations, Societies And Technical Institutes Are The “American Way”

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by S. Scot Litke, Hon. D.Ge

In all likelihood 90%, or perhaps more of you who are reading this article are members of at least one Trade Association, Society, and/or Technical Institute that represents your particular professional area of interest.

According to the American Society of Association Executives, (the Association that represents Associations), there are approximately 10,000 such organizations operating in the United States.

While there are similar manifestations of these kinds of groups throughout the world, the U.S. is the leader of the pack when it comes to the overall number of such organizations, and of the number of companies and individuals who are members of same.

There are associations for everything from “Honey Bee Producers” to “Honey Pot Distributors”. The alphabet soup of acronyms identifying these organizations would overwhelm the imagination of the most analytic of folks who might try to make sense of it all.

If you want a taste of just how complex a picture this is all you need do is undertake an internet search of any organization whose acronym begins with the letter “A”, and ends in “.org”, and randomly go through the alphabet stopping at any following letter.

Trust me, you will be “A-mazed”.

For purposes of this article I will refer to these entities as “Associations”, but fully realize that such a designation is only one of many that fall under this general umbrella. In most cases association membership is a voluntary option.

In others membership is a requirement for practice in a given profession.

Certainly in some professions or vocations membership in the field’s major association is indicative of one’s commitment to one’s craft and may be perceived by users of one’s products or services as identifying said provider as a preferred partner in a relevant undertaking.

Since most of you participate in one or more organizations as described, in all likelihood you have a sense of what they do and how they operate. You know for example that associations are comprised of volunteers, and that most maintain paid staff.

They are served by elected boards of directors. Members provide leadership and direction for what the association does, how it does it, and so on.

Levels of member participation vary greatly. The old adage you-get-out-of-it, what-you-put-in, applies in full measure.

This article is merely a snapshot of the workings of associations, and offers an insight to some of the things that you may not have considered. It is by no means an exhaustive treatment of the subject. If you are inclined to find out more I suggest that you visit the ASAE website at: ASAE.org (of course…)

The sidebar accompanying this article offers a somewhat incomplete, but instructive sample of the kinds of organizations that are associated with the industries served by this magazine. They are listed in alpha order along with their published number of members.

Membership numbers are a bit elusive as some associations are populated by companies whose employees are sometimes included in their membership count. Others are noted as individual members, be they corporate or actual individuals.

Some organizations report only their full members, while others include associates and affiliates.

To add to the confusion some associations function as national entities, others as chapters, and others as both.

Plus, there are associations-with-in-associations such as ASCE’s Institutes, and subsets within these subsets.

The membership numbers are not exact but are as close as research reveals.

You may begin to be getting the picture. Suffice to say, mind-boggling would be an understatement.

Those listed in the attending sidebar are organizations that represent only the business, or professional aspect of the lives of their members.

If there is an area of interest, or an interest group, there is an association to represent it.

Remember, in the U.S. there are at least 10,000 of these that have been identified by the ASAE. I would venture to guess that there are a good number more hiding in the association weeds.

Membership in these organizations number in the hundreds of thousands, with gross budgets representing billions of dollars. This doesn’t even consider the overall revenue that associations produce through the conducting of their activities.

You might now be getting the picture.

You may ask, “Why should I care, after all this is a magazine about geo-engineering and geo-construction?” The reason is associations are BIG BUSINESS!

Moreover, in the case of trade associations, their ultimate purpose is to directly or indirectly bring business to its members.

In the case of Technical Societies and Institutes, the business aspects of the organization’s activities are more subtle. They may be achieved through advancing the field’s body-of-knowledge, improving principles of practice, or providing a forum for the exchange of ideas.

The most successful associations achieve their goals in a variety of ways.

WHAT ASSOCIATIONS PROVIDE THEIR MEMBERS

• Advocacy (not to be confused with lobbying… enough said).

• Education through seminars, conferences, and workshops.

• Training via special schools.

• Certification (a sometimes controversial undertaking).

• Networking through a wide variety of avenues including membership in general, serving on committees, boards, exhibiting or attending trade shows and conferences (this may be the MOST valuable benefit of all).

• Sales and promotional opportunities through trade shows, advertising in association publications, providing sponsorships.

• Publications which may include magazines, journals, newsletters, bulletins.

• Research that advances the technologies represented by the organization.

• Scholarships that not only support student’s educational needs but may also provide them with a conduit to future employment.

• Specification Development that affect the very bottom line of those engaged in the industry represented.

• Discounts on a wide variety of goods and services within and outside of the association.

TYPES OF MEMBERSHIPS

As it relates to types of membership there are basically three kinds of associations, one is comprised of individuals as members, another is typified by company memberships, and the third is a combination of both.

When it comes to dues, there is no standard structure. Typically, individual-based dues are relatively small, with some exceptions of course.

The dues rate for company members also come in all sizes, some based on annual company revenue, some on the magnitude of contracts for work undertaken, and a multitude of iterations of like kind.

It is virtually impossible to adequately cover the dues spectrum. Know this, dues have been known to range from a low of $50 for an individual to a high of $25,000+ for a company or similar organization. The old bromide, you-get-what-you-pay-for, applies here, at least in principle…

TAX STATUS, A LAYMAN’S PRIMER

Without venturing too deeply into the arcane world of how associations are viewed by the U.S. Department of the Treasury, the associations are most often categorized as not-for-profit entities. As such, it is instructive to know that they do receive some level of preferred tax status depending on what they are created to do, how they are structured and governed, and how their funds are received and allocated.

As it relates to this system of classification, the one considered the most favorable for those contributing to its operations and activities is a 501 (c) 3.

However, the most common in the world of associations are classified as a 501 (c) 6 corporation.

There are other designations but these are the two primary types with which you would be familiar.

The 501 (c) 3 falls under the general heading of a charitable entity, and therefore contributions made to it are tax deductible. Its income is treated as non-taxed. It does have to file a tax report and must carefully follow the IRS rules governing this kind of entity.

A 501 (c) 6, while considered a not-for-profit corporation, contributions made to its activities are not tax deductible. Any monies spent with this type of organization are normally treated as a business expense by members utilizing its services. This includes dues paid, events attended, etc. A word of caution here… This type of organization does not pay dividends, nor distribute its revenues in any way other than to support its activities. Furthermore, it must be able to demonstrate that any monies that are received are used to directly-fund its cost of operations.

Of particular concern is that the organization be mindful of accounting for any non-dues revenue that may appear to be excessive. What constitutes, excessive is a matter for the accountants to deal with.

These revenues must be balanced by the funds expended to support those activities. This applies to revenue generated from advertising in publications, conference and seminar registration fees, sponsorships, and virtually any funds which come into the association’s coffers.

Many associations designated as 501 (c) 6 may be aligned with 501 (c) 3 entities. Examples of this would include educational trusts, research and scholarship funds, and the like.

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