After the pandemic—once stimulus funding had tapered off— when presenting audit results to the governance body of a professional membership association, the conversation shifted to a key question: Did the organization have sufficient reserves? Committee members cited different figures for some time, but there wasn’t a shared framework for what “enough” looked like.

We suggested conducting a benchmark analysis using similarly situated professional membership associations of comparable size and structure. When we reviewed the results at a subsequent meeting, the discussion shifted from debating numbers to asking productive questions about sustainability and future budgeting. That clarity ultimately helped leadership develop a constructive plan to build operating reserves to a defined target over a multi-year horizon.

The Context Your Numbers Are Missing

Working with boards as an advisor from the outside looking in, you see the similar patterns develop. Boards ask the right questions but lack specific comparable baselines or context. ASAE’s new “Association Finance & Operations Navigator: Operating Ratio Metrics to Evaluate Organizational Health, Spring 2026 Edition,” formerly named “Association Operating Ratio Report,” helps leaders including C-suite, boards/volunteers (not just finance specialists) answer: Are we under-investing? Over-relying? Over-stretched? The data that is used to support this deeper level of understanding is derived from more than 6,000 associations’ IRS Form 990s with over $1 million revenue. The association-specific scope and sheer size of this data offers credible insights.

Several factors, including stock market performance, reduced spending during the pandemic era, and reduced headcount support the notion that associations are doing more with less. There also appears to be a more intentional focus on reserve building. These factors have enabled associations to substantially strengthen their balance sheets. As a result, the median reserve ratio now sits at around 85 percent of annual expenses, which is considerably higher than pre-pandemic levels. This demonstrates a strong emphasis on financial sustainability and points to an emerging risk management trend.

Rethinking Revenue Beyond Dues

Associations are going back to the basics, revisiting their value proposition, and determining whether the menu of products and services create member stickiness, increasing retention. The data indicates a persistent, long-term decline in reliance on dues, which now account for only 32 percent of total revenue. This clearly shows that associations are actively seeking out alternative revenue streams, such as meetings, credentials, advertising, and other nondues sources. It’s a significant shift in strategy, and it’s interesting to see how organizations are adapting to new financial realities.

The Association Finance & Operations Navigator is a redesigned benchmarking instrument with helpful new data sets added since the 16th edition of the “Association Operating Ratio Report” was published in 2021. The new metrics include the following:

• Five-year trend view (2019–2023) enabling year-over-year analysis and scenario-building
• Utilizes medians (not averages) and percentiles to reduce distortion from outliers
• Adds or emphasizes newer perspectives on key measures such as reserve metric, dues deductibility, international presence, executive perks, board size, details on highly compensated employees, and more

Three Metrics That Matter Most

Don’t know where to start? Below are our top three metrics—and don’t forget to look at the five-year trend for each metric. Which way are you trending?

• Dues reliance. Get answers to important questions on how your association stacks up in terms of revenue diversification.
• Meeting expense. Is our conference spend too high? It’s hard to say unless you have something to compare it to. Now you can see how your meetings expenses measure up to your peers.
• Reserves. The key to sustainability lies in association reserves. Measure how you are managing reserves compared to the benchmark.

Risk Signals to Watch

As nonprofit association auditors, we inherently view the world through a risk lens. That is why we encourage our clients to use trusted operating ratio benchmarks. They provide key insights into risks because ratios can surface important questions about controls, forecasts, revenue recognition, allocation methods, going concern considerations, etc. Here are a few watch list items you can glean from the report:

• Board size and agility
• Staffing productivity signals (revenue/employees)
• Reserve levels and trajectory
• Surplus or deficit versus your peers

Turning Benchmarks Into Boardroom Action

From a practical standpoint, you can use the report before your next board meeting. Here is what you need to do:

• Start by pulling out your latest 990 and calculate key ratios.
• Compare your ratio with the ratio from the most relevant segment.
• Discuss the significance of the differences to determine what is causing the variances. Are we talking about timing differences or more fundamental challenges?
• Repeat periodically to identify trends and drive decisions.

Good decision-making is driven by asking the right questions, supported by sound data. Benchmarks from the “Association Finance & Operations Navigator” will give you the tools to make impactful data-driven decisions for your organization.