Managing a professional membership association can require you to wear many hats, some of which may seem overwhelming at first. Being able to understand financial budgets is a crucial skill to help to drive the association’s mission, support member benefits, and ensure long-term stability within the organisation.
While budgeting is a central aspect of organising events such as conferences, financial planning applies to all operations within the association. A structured budget can help associations reach their goals while also increasing the number of resources available to the membership.
Importance of Budgeting
A comprehensive budget is essential for any association activity, it helps to:
Control Costs – Careful financial planning prevents overspending, ensuring resources are allocated where they can bring the most value to members.
Create Accountability – Budgets create a transparent financial outline that the management team can review, helping to build trust and develop oversight within the organisation.
Set Priorities – Budgets help to identify core expenses and distinguish between what can be considered a “must-have” vs a “nice-to-have” expenditure. From analysing these budgets, priorities can be set accordingly.
Monitor Financial Health – A concise budget provides an overview of financial performance, helping management to track the association’s progress and make the needed adjustments to stay on course.
Building a Budget
Professional membership associations rely on income from various sources. A successful budget considers each potential revenue stream in order to assess financial feasibility and expected returns.
Membership Fees – Associations rely on annual membership dues. It’s important to keep a close eye on the number of members usually retained once the renewal period comes around. Using last year’s figures will allow you to project future income from membership renewals.
Training Revenue – Professional membership associations often offer industry specific training courses for their members. Once yearly training dates are planned, you can calculate the expenses vs income for that year and incorporate this into your overall budget.
Partnerships – It’s not uncommon for associations to partner with other companies or organisations who can offer financial support. This could be done through partnerships in conferences, specialist training, or smaller events.
Sales – Not all professional membership associations sell products, but many provide specialised resources, training materials or use event tickets to build an income.
Review & Adjust
Once a budget is established, it is vital to conduct regular reviews throughout the financial year. Monitoring actual income and expenses against estimates will help establish realistic figures and will allow you to make adjustments.
For example, an increase in member numbers may offset lower than expected ticket sales for an event. Budget adjustment based on solid data will help keep the association’s financial outlook accurate.
Historical Data
Using data from previous budgets is always a good place to start when working from scratch. Using figures from the association’s recurring events, such as regular training courses or annual conferences, will help to set a realistic budget. This data allows for better predictions and will more than likely need less adjustments.
Reserves
Unexpected expenses are common, and with proper financial planning, shouldn’t cause a panic. It’s vital that organisations have a contingency fund which will help to address unforeseen circumstances, such as a last-minute venue change for an event, or increase in the number of delegates attending. A contingency fund allows peace of mind and flexibility for the association’s management.
If you need help creating budgets, or you’re not sure where to start, get in touch with us and we can help!