To encourage and promote an understanding of associations, we have compiled answers to the following Frequently Asked Questions.
Q: What is an association?
A: The official definition from the IRS is: “In general, an association is a group of persons banded together for a specific purpose.” That leaves a lot of room for interpretation, since associations are formed for an enormous variety of purposes and provide a huge range of products and services for their members and, in many cases, for society at large.
A sense of community coordination is at the heart of the association profession. People voluntarily join associations because they want to work together on a common cause or interest. America’s associations have deep roots in our history. The first American settlers formed “guilds,” patterned after British traditions, to address common challenges and support each other’s work and lifestyle. In 1830, French statesman and author Alexis de Tocqueville toured America and remarked that the new nation seemed to be succeeding so well at democracy because Americans of all ages, all stations of life, and all types of disposition were forming associations.
This trend toward community coordination has shaped and advanced America since its birth and has historically set America apart from many other nations (although associations or “non-governmental organizations” are now growing in number internationally, as well). While the complexity of associations and their role has evolved, today’s associations still share the purpose of coming together to produce positive results.
More technical qualifications from the IRS: “To qualify under section 501(a) of the Code, the association must have a written document, such as "articles of association," showing its creation. At least two persons must sign the document, which must be dated. The definition of an association can vary under state law. You may wish to consult the law of the state in which the organization is organized. Note that for an association to qualify under section 501(c)(3) of the Code, its articles of association must contain certain language.”
Q: How many associations are there?
A: The short answer is, lots. And the number keeps growing every year. We must distinguish those associations represented by ASAE members from the overall tax-exempt community, which numbers more than 1.9 million in the U.S.
ASAE members primarily represent trade associations, and individual membership organizations or professional societies, organized under Section 501(c)(6) of the tax code; and philanthropic organizations, organized under Section 501(c)(3).
In 2009, there were 90,908 trade and professional associations, and 1,238,201 philanthropic or charitable organizations.
Q: Why are associations tax-exempt?
A: The first integrated federal income tax statute, enacted in 1913, provided exemptions for business leagues, as associations were known at that time. The 1913 Act also provided exemptions for charitable, scientific, or educational organizations.
Congress first gave associations favored tax treatment largely in recognition of the benefit the public derives from their activities. The legislative history also indicates that the exemption was based upon the theory that the government is compensated for any loss of tax revenue by its relief from the financial burden that would otherwise have to be met through appropriating public funds. In simple terms, associations earn their exempt status by meeting many of the needs of their members and the general public that the government would otherwise have to meet.
As tax-exempt entities, associations are barred from accumulating equity appreciation for private benefit. Instead, these organizations undertake programs or initiatives to benefit members and the public rather than private individuals. Their earnings, therefore, must be dedicated to furthering the primary purpose for which they were organized.
Q: How do associations benefit their members?
A: Associations are organized for all types of purposes, but there are some recurring benefits they typically provide their members, including:
- Education / professional development
- Information, research, statistics
- Standards, codes of ethics, certification
- Forum (face to face or virtual) to discuss common problems and solutions
- Service / mission oriented – volunteerism and community service
- Provide a community, network, “home”, identity, participation
Q: How do associations benefit society?
A: Although they are membership organizations, many of the contributions made by associations today are vital to society and to maintaining our quality of life.
Hundreds of national, state, and local associations coordinate assistance to individuals and families in times of natural disaster or urgent need. Others write product standards for everything from children’s toys to airline and traffic safety. Still more invest millions of dollars to advance the post-college professional training of our nation’s workforce.
With their membership networks and communication vehicles, associations are uniquely prepared to respond with aid when America needs them most. A community of varied interests and missions, associations tend to move with one purpose in moments of crises. The outshoot of many of the community service initiatives started by associations is that they encourage volunteerism. By logging nearly 200 million volunteer hours in community service each year, associations empower people to get involved in issues and crises that affect their communities and their quality of life.
Q: What sort of career opportunities do associations present?
A: As employers, associations require numerous skill sets to effectively serve their members. There are career opportunities in traditional fields like finance and accounting, marketing, advertising, communications and public relations, government relations, legal, and information technology, and in industry-specific areas like membership marketing, foundation grant-writing, event planning, and trade show management. Because of the breadth and diversity of the profession, there is literally something of interest for everyone. Associations offer highly competitive salaries and benefits, as well as a rewarding higher purpose.
Believing in the mission of an organization is a powerful incentive, and a great reason to go to work every day. Associations have a responsibility to achieve results, not only for their members but for society at large.
Q: What is the role or connection between ASAE, and the association community at large?
A: ASAE is often thought of as the gateway to associations, because it is the largest organization of its kind working to advance and promote the association profession.
ASAE represents more than 21,000 association executives and industry partners representing 10,000 organizations. Our members manage leading trade associations, individual membership societies and voluntary organizations across the United States and in nearly 50 countries around the world.
The promise ASAE makes to members is to provide exceptional experiences, a vibrant community, and essential tools that make them and their organization more successful.
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