''Administration'' Makes Biggest Gain as Outsourced Function; Nonprofit Associations Mirror Outsourcing Trend by Turning to Association Management Companies

Business Wire, Nov 14, 2005

ATLANTA -- As organizations seek to accomplish more with fewer resources, vital functions such as administration are increasingly becoming part of the outsourcing mix. In the Outsourcing Institute's 7th Annual Outsourcing Index, "administration" is the second most mentioned function (information technology is the first) and, as a category, made the biggest percentage gain compared with the previous year's study. Compared with only 36 percent cited in the previous year, now 50 percent of organizations surveyed mention administration as an outsourced function.

"There is an increased willingness for organizations to place administrative functions, in addition to areas such as information technology, in the expert hands of outsourcing partners," says John Ruffin, president of the International Association of Association Management Companies (IAAMC), "and it's a trend that has certainly benefited the association management company industry."

Especially in the case of volunteer-run operations, managing large trade associations, professional societies and charitable organizations can be challenging for even the most dedicated individuals. Lack of volunteer time sometimes creates a tipping point. As Holly Koenig, Executive Director of the National Alliance of Medicare Set Aside Professionals (NAMSAP), explains: "With all the functions involved in administration of an association - from structuring operations and governance to buying insurance and accounting services - NAMSAP's volunteer board realized the huge time requirements necessary and decided to tap into an association management company."

Another probable catalyst for the use of association management companies (AMCs) - for-profit firms managing nonprofit organizations - is sheer volume: nine of ten Americans belong to at least one association. The association population in the United States, coupled with the growing acceptance toward outsourcing, has helped the AMC industry double in size since 1990 according to the AMCinstitute, the marketing and research arm of the International Association of Association Management Companies (IAAMC). "With volunteer leaders of associations devoting more time to their work and family, time commitments to associations have diminished. More and more, association staffs are being stretched thin. As a result, the trend of increased outsourcing to AMCs is expected to continue," notes Rick Church, chair of the AMCinstitute.

AMCs are well positioned to gain most from associations. According to a recent outsourcing survey of association professionals from the American Society of Association Executives (ASAE), "gaining access to expertise" was quoted as the most important reason for outsourcing (at 61 percent), followed by the desire to "focus on core activities" (44 percent). On average, AMCs manage five to ten organizations under one roof - each organization with its own board of directors, committees and membership - and have developed an expertise in best administrative practices for associations, allowing clients to focus on strategic issues while the AMC manages day-to-day operations. "From membership recruitment and dues collection to mailing and fulfillment, administration is becoming a mainstay of the AMC service offering," says Sue Pine, AMCinstitute Executive Vice President.

The Outsourcing Institute (OI) is a professional association recognized worldwide for its intellectual capital, outsourcing practice expertise and unbiased thought leadership. OI tracks and forecasts the rapid evolution of outsourcing.

About Associations and Association Management Companies

The estimated impact on the economy represented by non-profit organizations including trade associations and professional societies is 10-12 percent of the Gross Domestic Product.

Association Management Companies (AMCs) are professional service firms that provide association management and other association services through experienced staff, proven practices and shared resources. AMCs in the United States now manage non-profit budgets exceeding $2 billion collectively. For more information, visit www.amcinstitute.org.