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Transitioning from a Membership Dues to a Corporate Investment Model Can Boost Funding for Economic Development Organizations

Historically, most economic development organizations that procured private sector funding did so by utilizing a membership-based model. Think chambers of commerce and other membership service organizations.

A recent private sector funding trend ? led by forward-thinking and successful economic development organizations ? has been to move from a membership model to an investor-based approach. In doing so, these leading organizations dramatically have increased funding levels, developed more engaged volunteer leadership, begun generating greater long-term benefits for their communities and, in general, become more focused, measurable and accountable.

The membership model typically charges annual dues at specified levels. Its implication is that the business will have ?joined? an organization, will receive ?services? in exchange for the dues and will be ?supporting? a worthwhile mission. Funding levels in this method are naturally limited; companies do not generally want to pay big money to belong to an organization, no matter how worthwhile it may be. Networking events, newsletters, and other perks are only worth so much and are typically provided by other organizations in the community.

Funding in a membership model does not only limit initial fundraising. Increasing funding this way can only be done in small increments. Most members will balk at paying a dues invoice that triples or even doubles their current rate. Organizations run into resistance when they attempt to boost total funding with large dues increases.

An investor-based model of funding is almost always more effective. Organizations taking this approach first develop a long-term, comprehensive program of work. They identify specific, measurable goals and then determine the projected economic impact of attaining those goals. As part of a well-planned, well-organized and professionally implemented funding campaign, an organization can offer businesses the opportunity to make substantial investments in the program. The businesses are able to hold the organization accountable for long-term goals and to reap the benefits of a tangible return-on-investment (ROI).

This paradigm resonates with business leaders. It produces a mentality conducive to more substantial funding. Business leaders become more engaged, taking ownership of the program as invested stakeholders. The program becomes more focused and better funded, ultimately resulting in greater community impact.

The transition from a membership model to an investor model is a major undertaking that, if done right, can produce impressive results.

I have seen for myself just how dramatic this transition can be. Under my direction a regional economic development organization in Florida netted unprecedented results.

The organization previously had been asking companies to pay annual dues ranging from a few hundred dollars to $12,500. I worked with the organization to develop a four-year strategic plan with a specified budget and measurable goals. We secured sufficient four-year funding to implement the program by making customized investment proposals to major businesses in the region and projecting individualized ROI. Previously, the most anyone had paid over a four-year period was $50,000 ($12,500 annual dues over four years). With this new model, we ended up with a couple dozen pledges between $100,000 and $500,000.

The result of this approach was that we substantially broadened the organization?s base of support, ultimately securing about $18 million in total four-year public and private sector funding.

Experience in many similar instances, with organizations and communities of all sizes, indicates that the business community is considerably more willing to provide substantial funding for a multi-year community initiative ? provided it is well-defined, bold, strategic, focused, relevant and measurable. Businesses find this kind of investment much more compelling than merely providing financial sustenance to yet another needy organization. Once an organization is able to position program investment as a good business decision, we find that it can tap into the much vaster resources. After all, corporate business development and marketing budgets are much larger than the membership and contributions ?buckets? that every community organization and cause has their eye on.

Transforming an organization can yield impressive results, even if it does seem a daunting task. That?s why they usually rely on the professional counsel of firms such as STELLAR Fundraising Executives. Organizations with vision and ambition recognize that enlisting help to launch a major funding initiative can secure large private sector investment and accomplish great things for their communities.

About Mark Bergethon

Mark Bergethon is recognized as one of the leading national experts in funding multi-year community-based economic development programs through major fundraising campaigns. He brings extensive private and nonprofit sector experience to his role as Chief Executive Officer of Conversion Non-Profit Solutions. Mark has provided fundraising campaign management and consulting services to a broad array of nonprofit organizations. He has directed and provided oversight for more than 50 feasibility studies and major fundraising campaigns for organizations nationwide.


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