Dues are not Taxes

Ben Martin recently compared membership dues to taxes. Acknowledging that Ben is engaging in a thought experiment/debate, I do think this a horribly damaging analogy.

If your members think of paying dues to you like paying a tax, you are dead meat.

If your staff consider dues income to be a tithe from the industry or field, you are also dead meat.

If everyone involved considers paying dues as exchanging money for value, then you have a healthy economic relationship, creating incentives for value-producing behavior on both sides.

Thinking of dues as taxes is a poisonous idea. Just don’t do it.

Comments

Matt Baehr
As a member I would be happy if my association sent me a rebate each year though!

January 28th, 2008 at 12:20 pm
David Gammel
I doubt it!

January 28th, 2008 at 12:28 pm
Virgil Carter
David makes an important point. To carry this issue a bit further, many associations including mine have a substantial non-dues revenue program so that the mission of our Society may be expanded, keeping dues low and providing resources for many, many things not possible if dues were a large segment (or only segment)our revenue. For us, dues comprises about 10%-12% of annual revenues, depending on the year.

We benchmark our dues annually with sister organizations, as well as the percentage dues equals of total revenues. It’s a good message to demonstrate good value for members.

Learning points?
–Non-dues revenues must be carefully derived from mission-focused activities, in order to avoid become Walmart;
–Non-dues revenues means that customers have to be considered in the value equation;
–Nothing stops some members from saying dues are too high–nothing!
–It’s much better to increase dues annually using the CPI or other reasonable index, than waiting 10 years and having to make up in a huge and painful step. Avoid this if at all possible.

January 28th, 2008 at 3:00 pm
wes trochlil
Couldn’t agree more with both David and Virgil.

wes

January 28th, 2008 at 6:43 pm
Ben Martin, CAE
Thanks for the link, David. But what is so wrong with entertaining thoughts of how dues and taxes are similar? Maybe I could concede that the exercise is not for the faint of heart. But if thinking of dues as taxes is poisonous, I submit that confronting the brutal facts is the antidote. The bottom line is that because they are both expenses, rightly or wrongly, members will compare dues with taxes, if only subconsciously. Therefore, association executives should consider in what ways their dues collection and communications processes resemble those of the tax collectors. They may learn what not to do, or as in my case, they may find something they’d consider emulating.

January 28th, 2008 at 6:52 pm
David Gammel
> The bottom line is that because they are both expenses, rightly or wrongly,
> members will compare dues with taxes, if only subconsciously.

What is your evidence that they do so?

If members do consider dues as a tax imposed upon them, I think the association is certainly due for some brutal honesty about the perception of its value. It is a valid concept to raise, I just think it should not be held up as a model to emulate.

January 28th, 2008 at 7:04 pm
Ben Martin, CAE
> What is your evidence that they do so?
I’m not a psychologist, but as I understand the human mind, when things are perceived to be of a like kind (i.e. expenses) the human brain will group them into a category. Dues and taxes both are expenses. Both require a payment. Therefore, they get categorized together and are comparable — not the same. Just comparable.

> If members do consider dues as a tax imposed upon them, I think the association is certainly due for some brutal honesty about the perception of its value.

I believe members compare their association dues to taxes, so yes, in my view every exec should have an enlightened paranoia about the association’s perceived value.

> it should not be held up as a model to emulate

I guess we will have to agree to disagree on whether or not there are any association learnings to be gleaned from taxation. I admittedly find inspiration in the strangest places. Like on tax assessments. :-)

January 28th, 2008 at 10:35 pm
Tony Rossell
Great debate. Virgil, you may want to take a look at the dues increase research we did before concluding the best way to raise dues. You can find it on the Membership Marketing Blog for January 15th. I am happy to send you an actual copy of the research. Actually, I think this was the start of the great tax debate.

Also, I did a post today that might help shed some light on the “TAX” debate. There are some associations that require membership to be certified and you must be certified to practice. Is this a tax? Many of them think so, but they renew at 96%. Tony

January 29th, 2008 at 3:02 pm
Jeffrey Cufaude
I actually think of dues many times as a philanthropic donation with the hope (but not the guarantee) that my contribution will be amplified with others’ funds for the greater good and that I as well might receive some value for my donation.

If association finances were scrutinized as intensely as charitable organizations are for their return on investment and administrative overhead ration, I think members would get far more than we currently do.

February 13th, 2008 at 10:11 am