There’s an association for everything, as the saying goes. But what exactly are associations, what do they do, and how do they benefit their members and society? Here are answers to some common questions about the association industry.
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Sabrina Kidwai, APR, CAE
Senior Manager, Public Relations
What is an association?
The IRS sums it up this way: “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 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 [Tax] 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.”
How many associations are there?
The short answer: a lot. 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 1.6 million in the United States.
ASAE members primarily include 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). ASAE also has individual members who lead, manage, and work in these organizations.
According to the IRS Data Book, in 2013 there were 66,985 trade and professional associations and 1,052,495 charitable and philanthropic organizations.
Why are associations tax-exempt?
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 on 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 tax-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.
How do associations benefit their members?
Associations are organized for all types of purposes, but there are some recurring benefits they typically provide their members:
- 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 orientation—opportunities for volunteerism and community service
- community, network, “home,” identity, participation
How do associations benefit society?
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 it most. A community of varied interests and missions, associations tend to move with one purpose in moments of crisis. Many of the community service initiatives started by associations 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.
ASAE’s Power of A initiative tells the story of how associations create positive change in America. Visit the Power of A to learn more.
How are associations governed and staffed?
The power of associations lies in the collaboration of like-minded people working to achieve common goals. In general, associations do this through the contribution of time, expertise, insight, and passion of volunteers. Each association is led by a board of directors, which—often in partnership with a paid staff—sets the strategic direction for the organization, ensures that the organization is legally compliant, and advances its mission.
Some associations are run entirely by volunteers at first. As an association grows or its needs change beyond what volunteers can handle, the board may want to consider hiring an individual or company to professionally manage the association. Choosing the right staffing option is one of the most critical responsibilities of the board and can lead to expanded association services, increased member satisfaction, and growth. There are two primary executive staffing options for a board to consider: directly retaining an individual staff executive as an employee of the association or hiring an association management company to run the association.
What is an association management company?
An association management company is a professional service company that specializes in providing management services for associations on a fee-for-service basis. AMCs provide the professional staff, administrative support, office space, technology, and equipment an association needs to operate efficiently. An association management company typically manages several associations from one company location, providing a wide range of benefits, including shared technology systems, access to expert specialized staff, and shared purchasing power.
What career opportunities do associations present?
As employers, associations require numerous skill sets to effectively serve their members. There are career opportunities in professional fields like finance and accounting, marketing, advertising, communications and public relations, government relations, law, and information technology, as well as industry-specific areas like membership marketing, foundation grant-writing, event planning, and tradeshow management. Associations offer highly competitive salaries and benefits, as well as a rewarding higher purpose.
Believing in the mission of an organization is 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.
Visit Association CareerHQ to learn more about career opportunities in associations.
What is the connection between ASAE and the association community at large?
ASAE is often thought of as the association of associations, because it is the largest organization of its kind working to advance and promote the association management profession. Our organizational members are trade associations and individual membership societies that represent almost every sector of the economy and countless professions. Our more than 21,000 individual members—association professionals and industry partners—lead, manage, and work in or partner with organizations in more than a dozen association management disciplines.
The promise ASAE makes to members is to provide exceptional experiences, a vibrant community, and essential tools that make them and their organizations more successful.