Determining fair dues policies in times of corporate consolidation.

Jim Spaeth, president of the Advertising Research Foundation, Inc., New York City ([e-mail]), needed ideas on how to determine equitable dues policies for corporate members undergoing mergers and consolidations, so he posed the following question on ASAE's Executive Section e-mail exchange.

Question: As our corporate members buy or merge with each other, we suffer the loss of members. This is somewhat ameliorated by our dues scale - larger companies pay more. However, since the dues scale is not linear, larger members get a very significant discount. Combining two companies into one larger one still reduces our dues income, since the larger company pays less relative to its size, even though it pays more in absolute terms. We have attempted to institute a policy requiring all separately incorporated companies to be members in their own right. If an acquired member company continues to operate independently, even though it is still owned by another member, we are asking it to pay its own dues. This has proven to be a very contentious issue. Has anyone come up with a solution to this problem?

Answers:

* Our association also has a corporate membership base. We have just adopted a "multioffice member" structure that states that any member with two or more offices under the same ownership can qualify for a discount (see the following sliding scale), but they must hold membership for a minimum of 50 percent of their locations/offices with a minimum of two:

2-5 offices           10% discount
6-10 offices          20% discount
11-15 offices         30% discount
16-25 offices         40% discount
26-plus offices       50% discount

Our board just approved this program, so we don't know yet if it will be seen as a benefit with our multioffice members, but we have picked up eight new memberships as a result in the past six weeks.

Our industry is also experiencing considerable consolidation due to mergers and acquisitions. We believed we had to do something to accommodate the larger offices because losing them was a double loss for us - not only in terms of membership but also in our for-profit programs. By retaining their membership, we hope to break even by maintaining, and, hopefully, increasing their use of our other programs.

- Toni J. Nuernberg, CAE, chief operating officer, American Collectors Association, Minneapolis: [e-mail]

* We have tried to get the parent company to pay the new dues amount resulting from a merger and asked that the other company pay the minimum dues amount if it continues to exist as a subsidiary. In some instances we have been successful. However, some members have not been willing to pay even the minimum. I am not sure there is a fixed solution.

- Paul Dubrachek, CAE, director of finance, administration and operations, UTC, The Telecommunications Association, Washington, D.C.: [e-mail]

* Why not consider basing dues on sales volume combined with a "per branch" figure? This policy can be explained as "due to the same amount of servicing" going to a branch as to a headquarters location. Or, as one of my peers has done, charge a third add-on for the number of employees (this is because the association also helps negotiate with unions).

- Cy Farver, CAE, administrator, ESOP Association Southwest Chapter, Richardson, Texas: [e-mail]

* Our dues committee has agreed to increase dues somewhat for larger organizations [in response to consolidation] and has established new classes of membership for the very largest organizations. Staff also wants AWWA to maintain separate dues for "branch" companies as well as structured benefits, such as catalog and directory listings, that make it beneficial for them to maintain separate memberships.

- Jon DeBoer, director, technical and information services, American Water Works Association, Denver: [e-mail]

* We have a consolidating industry, so we currently base our dues on a company's gross revenues, and the big guys pay much more ($1,000-$17,500). In addition to the company fee, they pay $65 per facility. We are proposing going to a flat rate ($1,000) for all companies, with a rate of $250 per facility. This will mean that the big guys will pay more, but the facility rate will be more in line with the cost of serving them.

- Robert T. Van Hook, CAE, executive director, American Orthotic and Prosthetic Association, Alexandria, Virginia: [e-mail]