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ASSOCIATION

IN THIS ISSUE: A BONUS PLAN TO RETAIN KEY EMPLOYEES MSAE.ORG | ISSUE #2 | 2018

®

THE

QUESTION IS BACK

A NEW CHALLENGE FOR YOU

DO YOU KNOW THE IMPORTANT TAX UPDATES

CHANGE IN STAFF LEADERSHIP FOR MSAE

THE TOP12 MARCOM & MEMBERSHIP

MICHIGAN SOCIETY OF ASSOCIATION EXECUTIVES

MSAE 1350 Haslett Road East Lansing, MI 48823


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A BONUS PLAN TO RETAIN KEY EMPLOYEES

P R E S I D E N T ' S M E S S AG E 4

A NEW CHALLENGE FOR YOU Cheryl issues a 100 percent member challenge in the last months of her tenure.

A S S O C I AT I O N KNOWLEDGE

P E R S O N A L AWA R E N E S S

BETTER TOGETHER PROFILES 21

Sarah Miller, Ara Topouzian and Shonda Hightower answer MSAE’s Better Together Questionnaire.

THE QUESTION 6

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Question of month where members help other members. This month’s question: What are the new ways to engage members through government affairs?

CHANGE IN STAFF LEADERSHIP FOR MSAE Mike Wenkel, CAE, chair of the MSAE Search Committee, provides an update onthe process.

THE NEW TAX BILL IMPACT ON ASSOCIATIONS The issue of tax royalty income was removed, but there are other important updates as well.

GRANT MANAGEMENT SOFTWARE CAN INCREASE GRANT FUNDING An overview of grant management challenges and software solutions.

SPONSORSHIP MARKETING: THE CHALLENGES FACING ASSOCIATIONS First of a three-part series, based on the book, “Secrets and Techniques of Sponsorship Marketing.”

Cover photos provided by: Evan Lindman / Blue House Media

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COVER STORY: THE TOP 12— MARCOM & MEMBERSHIP

Pictured above (l to r): Carey Goryl, MSW, CAE, executive director of the Association of Staff Physician Recruiters. and Ronald G. Burg, PE, executive vice president of the American Concrete Institute


P R E S I D E N T ’ S M E S S AG E

Cheryl Ronk, CAE, CMP

(cheryl@msae.org) is the president of MSAE. President's Message is a regular feature in Association IMPACT magazine. If you’d like to stay up to date between issues, follow her blog posts on LinkedIn at http://bit.ly/2nrYCGX.

Refer a Member

Please contact info@msae.org or 517-332-6723 for more information, including sample referral e-mails.

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4 ASSOCIATION IMPACT ® < VOLUME 35 > 2018

ORGPRO 2017 Emerging Professionals Reception

A New Challenge for You T

he search for my replacement is in full swing. I am confident we’ll have a smooth transition and that MSAE members will be left in capable hands. However, before I pass the baton to my successor, I am issuing a challenge to the association community — refer one prospective member to help MSAE move from representing about 90 percent of associations with a staff of six or more to representing 100 percent. Who do you know that is not a member? Can you help us achieve the 100 percent challenge in my last few months as MSAE president? When I began my journey at MSAE, it was my goal to ensure the organization became the main resource for associations in Michigan. I was determined to make MSAE an educational and networking powerhouse. I knew that we would only be as successful and progressive as the members we have. You’re the ones who help push the organization to anticipate the needs our community and execute the necessary programming and events. When a problem or trend is identified,

Can you help us achieve the 100 percent challenge in my last few months as MSAE president?

it is the association sector that rises to strategically address the situation and set goals, objectives, strategies, and tactics to move to a solution. So it only makes sense to try and expand the boundaries of our collective knowledge and influence by encouraging nonmember associations in Michigan to join MSAE. Please ask the nonmembers you know to join today. Let’s be even stronger for the new executive. P.S. I won’t be coming into the MSAE office anymore when I retire. But I am not dying, and I hope to help MSAE and the new executive as needed. I want to spend time making more choices of the things I want to do. The skating world has always been a part of my story, and I am hopeful I can do more there. 


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A S S O C I AT I O N KNOWLEDGE

Question The

Government Affairs Academy is Back

Has your organization ever contributed to a political action committee? When are your IRS disclosures due? What happens if you miss a deadline? Compliance and regulation can be difficult to navigate in Michigan’s ever-changing political landscape. Ensure your organization’s safety and lawful practices by attending MSAE’s Government Affairs Academy on June 7 and June 14. Contact Taylor Benavente at benavente@msae.org. for more details.

What would you like to learn from peers? MSAE will feature a question of the month and you can submit your question to info@msae.org. Our first question comes from Summer Minnick, director of policy initiatives and federal affairs for the Michigan Municipal League, pictured left.

WHAT ARE THE NEW WAYS TO ENGAGE MEMBERS THROUGH GOVERNMENT AFFAIRS?

Keep Learning in Third Thought®

Search for these resources in the digital library on www.thirdthought.msae.org.

Shane Berry Read

“Building Member Commitment For a Governmental Affairs Program” “Measuring Government Affairs Program Results” “Selling the Value of Lobbying to the Membership”

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SENIOR DIRECTOR OF GOVERNMENT RELATIONS Michigan Association of CPAs MICPA has invested time and resources into an advocacy-based video series, In an Instant. This show has engaged a variety of members, the intent being to attract those who previously were unaware of our efforts in advocacy. Our most recent teaser video on social media has over 8,600 views, and we’re reaching a much wider audience than we ever have before in advocacy. View In an Instant at https://bit.ly/2vyEGe9.

Mariam Robinson

DIRECTOR OF STRATEGIC AFFAIRS Michigan Infrastructure and Transportation Association MITA is utilizing a platform called Phone2Action, where one can create and run specific campaigns to raise awareness and spread information on certain issues and topics to generate public interest and support through social media. Phone2Action allows you to create a campaign and engage not only your members, but also the general public to reach out to their legislators on a state or national level through text, email, Facebook, or Twitter. This is a great way to increase and encourage member engagement, so they don’t feel a lot of extra pressure to engage in ways they may not be as comfortable with. For MITA in particular, this is extremely effective because we are trying to educate the public on Michigan’s massive unmet infrastructure needs. We’re trying to get the legislature to pay attention to it, as well. In the association world, we know how effective it can be when hundreds or thousands of constituents contact their legislators regarding a specific topic. It is hard to ignore the voices of many, as opposed to the voices of a few. 


A S S O C I AT I O N K N OW L E D G E

Change in Staff Leadership for MSAE By Mike Wenkel, CAE

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ichigan Society of Association Executives president and CEO Cheryl Ronk, CAE, announced her decision to retire to association staff, friends, and the MSAE board of directors in the fall of 2017. “Thirty years at the MSAE helm has been a tremendous experience. I look forward to starting my next chapter in life, which will include volunteering at figure skating competitions, spending more time with family, and even a little consulting,” Ronk says. “I consider it an honor and privilege to be part of the success of association CAE professionals and organizations in Michigan and across the nation. I look forward to supporting the Search Committee and board of directors as they determine the best candidate to lead MSAE into its next phase.” I have the honor of chairing the MSAE Search Committee. We have been preparing since November and are now moving forward to begin the search process. The position was posted and resumes were due atW the end of April. Interviews will be conducted through August with the new president and CEO intended to start on October 1, 2018. “Cheryl made her decision known over a year ago, and the board has been preparing,” says Barry Cargill, MSAE board chairman. “I am proud the board has been proactive

through this process and reviewed MSAE’s strategic direction in March. The search committee is using the MSAE executive search process and has its selection criteria and timeline in place. We are also discussing ways to recognize Cheryl Ronk for her successful tenure and we will keep members abreast of those ideas. I anticipate a smooth transition,” Cargill says. The MSAE board decided to not have any specific overlap in senior staff. Ronk will hold the position until September 30, the end of MSAE’s fiscal year, and the new executive will start October 1. We expect to have the announcement of the new executive by September 1, and Ronk is willing to mentor the new executive to the degree needed over the fall to ensure the transition is successful. The Search Committee was involved in the strategic planning lead by Aaron Wolowiec, CAE, CMP, and Amy L. Smith, CAE, in March. Staff was also part of the setting strategic goals. The new plan steers MSAE into member mapping. We are analyzing data to better understand our members by analyzing segmentation to determine where our products and services best align to support a career journey in association management. MSAE has a successful search process. For over a decade, it has helped more than 50 associations in Michigan locate their next chief staff executive with over 90 percent of all individuals retaining their positions to this day. As such, we determined that the MSAE Search Committee should utilize this same process. The timeline is complete, and we are moving along nicely on it. I met with staff to hear about their concerns. MSAE is a progressive, future-focused organization that attracts members. We want MSAE to be the one organization no association employee can afford to be without. This will be our mantra as we are reviewing candidates. Ronk adds, “MSAE has always worked to have a strong board that continues to make MSAE progressive. We implement the leading CAE training program in the nation. We have the easiest-to-use association resource library through Third Thought®. We see members collaborating in Third

Thought® with Communities of Practice. The professional development model that was created with ACADEMY of Association Management through to certification is still seen as a leading model. We are the only organization that has a self-assessment of the top 100 competencies needed for success in the profession. This is a great job to create and work with amazing leaders.” The new strategic plan will be the focus on recruiting the new executive. The search committee will personally review resumes and interview the top candidates before making a recommendation to the board. We welcome all qualified candidates. Details on the position and application instructions can be found at: www.msae.org/MSAESearch/. Mike Wenkel, CAE, is chairman of the MSAE Search Committee and executive director of the Michigan Potato Industry Commission. He can be reached at mike@mipotato.com. 

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THE TOP 12 TRENDS — MarCom & Membership Continuing our look at the top 12 trends for associations, two MSAE member leaders explore how communications and marketing are part of the member experience and how membership models are reflecting customer feedback more than ever before. By Carla Kalogeridis

T T

his year in Association IMPACT, we are diving into two trends in each issue — the top 12 trends identified by MSAE President Cheryl Ronk, CAE, CMP, who is retiring later this year. Ronk’s role was to call attention to the trends, but we will rely on key MSAE members to lead the discussion. Next up on the trends list: communication and marketing are a bigger part of the member experience and new dues models evaluate what the customer wants. To help with these, Association IMPACT calls on Ronald G. Burg, PE, executive vice president of the American Concrete Institute (ACI), and Carey Goryl, MSW, CAE, executive director of the Association of Staff Physician Recruiters (ASPR).

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TREND #3: Communications and marketing are a bigger part of the member experience. Both Burg and Goryl note that communications and marketing are no longer things you push out to your members; rather, they are part of the members’ engagement experience with your organization. “ACI definitely has a more cohesive and defined communications and marketing strategy,” says Burg. “In fact, we’ve defined membership as a product line, with its own specific objectives and personas. And every ACI product has a marketing strategy.” Burg says that communications and marketing should be a very positive part of the member experience. “We try to send targeted messages that resonate with each membership group,” he says. “For example, for communicating with students, we use a lot of social media posts — mostly Facebook, Twitter, and Snapchat. For the more mature, professional group, we use LinkedIn.” ACI is also finding great success with short, targeted videos — so much so that it created its own in-house video department. “We put videos on the website and on our YouTube channel, and send them out through emails,” he says. “We try to tie the communication channel to the demographic we are targeting.” Burg reflects on how much association marketing and communications have changed. “If you look back 20 to 30 years

ago, the only way to affiliate yourself with ACI was to become a member,” he notes. “Now, you can connect with ACI through a Facebook group — where we have 200,000 followers — or via our LinkedIn group, where we have 60,000 followers. You don’t have to join ACI to engage with the association. The question becomes: Are we talking about members or are we talking about a community?” ACI doesn’t conduct its marketing and communications strategy on gut feel — the association is big on research and data. It recently hired an outside expert to conduct a discrete choice analysis so that ACI leadership could look at what drives the member decision to pay money for membership, products, services, events, etc. The study found that the number-one driver for the ACI customer is access to technical content. To that end, the association offers a collection of more than 14,000 pages of information. “Our information is vital to our members,” Burg says. “ACI codes have been adopted into law in all 50 states. We actually write the law.” Goryl’s association also went through some soul searching a couple of years ago when tackling its new strategic plan, and the exercise has impacted the way ASPR communicates with members. The board asked some tough questions: Is our name


Cheryl’s Top 12 Trends still accurate of who we represent? Do we even have the right audience anymore? With 1,700 members, the association has been on a slow, steady growth path and has what Goryl calls a “pretty decent” retention rate of 82 percent. “As we thought about rebranding, we realized that it’s not about the logo or whether we keep the same acronym,” she says. “It’s more about what we call ourselves based on what we do now. Those kinds of branding elements are just a tool, the glitter on top of the story. When we communicate our story, it has to resonate with our audience.” Goryl’s association now emphasizes storytelling in its marketing and communications. “As organizations, what we all have is a story to tell,” she says. “Storytelling is a key element in how we communicate because it’s an important part of how people listen to messages.” She says that associations have to make information part of the member experience so that the association can find out what members need. “The purchase of a product or service is not the end,” she says. “They find the tool, and then that helps them improve or meet their goals. How they do that is part of the association’s story as well. We look at marketing as part of telling our story, instead of being a transactional, one-off communication.” Sometimes, the communications challenge is rewriting the story that’s out there. “We want the leadership in the healthcare industry to understand that inhouse recruiters affect their bottom line,”

“Storytelling is a key element in how we communicate because it’s an important part of how people listen to messages.” — Carey Goryl, MSW, CAE

Goryl says, “and that they are a strategic piece of the puzzle. But the current story is that they just post a job online, send out a few emails, and the applicants come in. There’s a great deal more to this profession than that. You can’t just post on Craig’s List that you’re looking for a neurosurgeon.” The story for most associations, she continues, can be found in who you are, how you serve, and what you do for your industry. “But when you go through the exercise of answering these questions, make sure it’s not through siloed communications,” she says. Goryl says most associations realize that they need to segment their communications. “Not every member needs to know the first step of achieving certification,” she says. “Know who your members are and their personas because that drives member communications. You don’t need to tell every member the same story. Or, at least, you need to tell the story differently.”

Marketing and Communication Track at ORGPRO 2018 ORGPRO has a marketing and communications track. Here are the sessions: • Share and Share a Like: 29 Tech Tools to Create Cool Content for Social Media • Developing Personas to Enhance Member Recruitment, Engagement and Retention • Marketing Strategies That Strengthen the Brand • New Market Research Automation Tools • An Effective Communication Plan • Maximizing Google Ad Words Visit msae.org/orgpro to view the session description.

1. Engagement models contain thoughtful strategy regarding experiences. 2. Associations are more proactive and educational with legislators and regulatory officials. 3. Associations treat members as owners rather than customers. 4. Volunteers want valuable experiences. 5. New dues models evaluate what the customer wants. 6. Communication and marketing are a bigger part of the experience. 7. Millennials are expecting career path training. 8. Professional development models are adding badging. 9. Knowledge management is utilizing artificial intelligence. 10. Conferences and trade shows are here to stay. 11. Risk assessment and counsel is collectively generated by associations. 12. Increased partnerships and integration to reduce duplication and blaming.

Photo on page 8: Carey Goryl, MSW, CAE, executive director of the Association of Staff Physician Recruiters and Ronald G. Burg, PE, executive vice president of the American Concrete Institute Photos provided by: Evan Lindman / Blue House Media 9


“We stepped back and asked what drives members to join, as well as why we want members in the first place.” — Ronald G. Burg

TREND #4: New dues models evaluate what the customer wants. ACI has a number of different types of membership, says Burg. “We realized some time ago that our 30,000 members don’t only come in one flavor.” While ACI has always had the traditional individual paid membership category, about 20 years ago, the association launched organizational memberships for groups looking for discounts on products and services. It also offers a category called sustaining members, who are members that pay more than the traditional membership because they want to give back to the industry. Finally, there are the student members — a group that used to receive a reduced fee but now is a dues-free category. Burg says ACI’s membership model has to reflect industry feedback because the association has robust goals. ‘We have 5,000 student members now, and our goal is 100,000 student members within five years,” he says. Most of the association’s growth, he adds, is coming

from outside the United States through the 100 ACI chapters worldwide. The chapter dues structure is a good example of ACI listening to its customer base. An individual can be a local member as long as the chapter provides the individual’s name and contact information to ACI. This membership category is particularly popular in the international chapters because it allows the dues — which stay with the chapter — to be in line with the local economy. “International members find prestige in being an ACI member,” says Burg. “The local chapter membership model allows us to collect their contact info and market to them. And it allows them to afford ACI membership.” Burg says ACI’s focused attention on customers is driven by a decline in traditional paid memberships over the last 20 years — from 18,000 to 12,000. “But we’ve had an increase in active volunteers,” he says, “and that’s extremely

Evaluating Dues Models at ORGPRO 2018 ORGPRO will have a session covering dues structures. • Rethinking Your Dues Model Visit msae.org/orgpro to view the session description.

10 ASSOCIATION IMPACT ® < VOLUME 35 > 2018

important because the volunteers do the work of writing the standards and codes, among many other things. So, do we want more members or more volunteers?” The answer may be found in this statistic: “Membership isn’t even in the top three of our revenue sources,” he says. Burg says that because the volunteers produce the information, ACI bundles some of its core documents in with membership dues. The organization hired an expert to conduct a discrete choice analysis, which helped ACI understand the value of various things to individual members. “We stepped back and asked what drives members to join, as well as why we want members in the first place,” he says. “If you aren’t lobbying, if you don’t need to say, ‘We represent x number of people,’ then these are good questions to ask. “Our members are customers, and our members are volunteers that produce the information that customers want,” he continues. “Why do we want members? We really need and rely more on our volunteers. They are the essence of what allows ACI to do what it does. The balance of our members are customers.” Burg says ACI will continue to have a fluid membership model to reflect what the customer wants. “If membership keeps falling, we could try something new like offering a lower membership rate to volunteers,” he says. “But we don’t need to try that yet.” One strategy that helps keep the ACI membership model relevant is its reliance on surveys and focus groups — in the United States as well as in the Middle East — and with everyone from students to contractors to academics. Burg says ACI “does them when we need them.” An example of just how much


COVERSTORY

the association goes to customers for feedback: ACI has conducted five focus groups in the Middle East in the last six months. Focus groups, he adds, even helped the association re-brand. “It’s important to take any findings back to the board because every board member or active volunteer thinks they are representative of everyone else — but they are not,” he says. “The focus groups help us to step beyond ourselves and our personal biases, opinions, and perspectives.” ASPR also believes in a fluid membership model. “When we founded the association in 1990, we were exactly what the members needed at that time, but we haven’t changed,” Goryl says. “So, the question is: Does this homogenous group still represent the members?” ASPR’s member model is geared toward individual professionals, but the health entity (employer) usually pays for the membership. The association offers discounts for organizations that sign up five or more members, and whole teams can get up to 30 percent off their membership dues. “In the group membership model, we encourage them to appoint one contact person who is in charge of renewing the whole group every year,” she explains. “It’s easier for us and it’s easier for them.” This group model, which Goryl shared evolved from member feedback, has been in place about four years. One thing that’s different about ASPR’s membership model is that the association is selective regarding who it accepts. “Most associations, if you want to be involved and you’re willing to write a check, you can be a member,” she says. “But this group has a very active membership committee that considers eligibility for membership to be quite strict. They are trying to protect the profession of in-house physician recruiters. Whether that membership model is sustainable or not remains to be seen.” Another interesting characteristic of the ASPR membership model is that its products, events, and information are only for members — non-members cannot access the member benefits, even at a higher price. “Right now, we’re focused on assessing who we are,” says Goryl. “As a result, the membership model will probably

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change in the next 18 months — and I’m not sure what that model will be.” However the model adapts, Goryl is pretty sure at least one thing will remain the same. “They want a safe place to talk about their struggles,” she says. “They are all competitors in a very competitive market, but ASPR is the place where they talk to

2/8/18 12:07 PM

each other and work through things. “If I had to predict, I’d say that we will eventually cast our net wider,” she says. “But we will also protect the integrity of who the community is for.” Carla Kalogeridis (carlak@arion-media.com) is editor of Association IMPACT.

ASSOCIATION IMPACT ® <ISSUE 2> 2018 11

BLEED

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A

Bonus Plan to Retain Key Employees

F E A T U R E STO R Y

Offer a benefit that helps you recruit, reward, and keep your top talent.

A

ssociation boards and chief staff executives have a tool available to help them retain quality staff. MSAE learned more about this over the past year when the Michigan Credit Union League shared some of their practices. They have installed a nonqualified deferred compensation plan as a retention tool to keep top talent. A nonqualified deferred compensation (NQDC) plan is an elective or non-elective plan, agreement, method, or arrangement between an employer and an employee (or service recipient and service provider) to pay the employee or independent contractor compensation in the future. Because of the significant tax benefits offered under qualified plans, such plans are subject to stringent nondiscrimination rules that often make it difficult to target key employees with benefits greater than those given to other employees. When that is the case, the employer should consider using nonqualified deferred compensation to attract and retain key employees. Unlike qualified retirement plans,

12 ASSOCIATION IMPACT ® < VOLUME 35 > 2018

nonqualified plans do not offer the employer a current deduction for amounts contributed to the plan. Moreover, assets in a nonqualified plan do not grow tax deferred. However, one major benefit of adopting a nonqualified plan is that benefits can be targeted toward a select group of management or key employees without running afoul of any of the nondiscrimination rules applicable to qualified plans. The other major benefit is that the key employees who accrue benefits under these plans are not taxed on those benefits until they are distributed. Because nonqualified deferred compensation plans are not subject to the same qualification rules as qualified plans, employers are free to include certain features within these plans that would otherwise be impermissible in the qualified plan arena. For example, many nonqualified deferred compensation plans provide that the key employees who benefit under the plan will lose all benefits if they compete with the employer upon termination of employment.

Others provide for long vesting schedules that exceed the maximum vesting schedule permitted under qualified plans. Still others provide that benefits will be forfeited if the key employee engages in misconduct that is considered harmful to the employer. Nonqualified deferred compensation plans technically must remain “unfunded” and “unsecured” in order for the key employees to avoid current taxation of the promised benefits. However, most nonqualified plans are “informally funded” by the employer so that the accrued liability on the company’s books is offset by a corresponding asset. Unlike qualified plans, any amounts that are contributed by an employer to informally fund a nonqualified plan must remain assets of the employer, subject to the employer’s general creditors. The key to designing an effective and efficient retirement program is to understand the limitations and benefits of each plan design, and then implement the design most suited for your needs.


F E AT U R E STO RY

How do these types of plans work?

A nonqualified deferred compensation plan is a contractual obligation between the employer and employee to defer the receipt of compensation until a time in the future. IRS code section 409A governs these plans. They should be in writing and entered into before any services are performed that the compensation is based upon. Under a non-elective plan, the company offers X dollars in the future in addition to the employee’s salary. It can be tied to performance criteria or remaining with the company for a certain time period. The company decides which plan type to offer, often with employee input. It’s critical, however, to have good advisers discussing and planning out strategically what you want to put into the plan, what you want to accomplish, and what it can and cannot do. See chart 1 for a visual description. It’s also important to pay attention to the Social Security tax. The government imposes Social Security taxes on deferred compensation when there’s no longer a substantial risk of forfeiture or when a benefit vests. Although income taxes are not imposed on the deferred amount until paid, the benefits may become taxable for

Social Security with certain non-elective plans. Therefore, it’s better for both the employer and employee if the benefits vest in periods when the employee is making more than the Social Security wage limit, which is $128,400 in 2018. Many companies use an informal funding method, such as a rabbi trust or an insurance product such as the Principal Executive Bonus PlanSM connected to a life insurance product. Even with the risks, more executives today are asking companies to look at nonqualified deferred compensation plans, which are an incentive to retain and attract talent in today’s tax environment. Sources: Carey, John, CPA, J.D. SS&G. “How Employers and Employees can use nonqualified deferred compensation”

Talent Retention & Recruitment at ORGPRO 2018 ORGPRO will have several sessions covering retaining and recruiting top talent. • Millennial Engagement: Creating Connection in an Era of Disconnect • 10 Practical Tools to Build a Talent Pipeline • Dare to Be Distinct: Achieving Diversity in Associations • Design a Workplace People Will Love Visit msae.org/orgpro to view the session description.

Smart Business, March 31, 2014. Cook, Randy, Partner Saalfeld Griggs PC. “Using Nonqualified Deferred Compensation to Attract and Retain Key Employees,” March 19, 2015. Principal National Life Insurance Company, “A Bonus that Does So Much More,” 2016. 

Keep Learning in Third Thought®

Search for these resources in the digital library on www.thirdthought.msae.org.

Read

“Employee Benefit Plan Endorsements: Understanding Fiduciary Liability” “The Importance of a Well-Written Employee Handbook” “Employee or Independent Contractor”

Listen

“Inspiring Employees and Leaders”

ASSOCIATION IMPACT ® < ISSUE 2> 2018 13


A S S O C I AT I O N KNOWLEDGE

The New Tax Bill Impact on Associations The issue of tax royalty income was removed, but there are other important updates as well. By MSAE & Johnson Lambert

D

ecember 22, 2017, the Tax Cuts and Jobs Act (https://bit.ly/2zoRHEC) was signed into law. It provides changes that impact all associations and other exempt organizations. Most of the changes were effective beginning December 31, 2017. As MSAE has reported in UPDATE, the Senate removed the original provision to tax royalty income. This was the most impactful issue under discussion. The following are the changes that all association directors should be aware of and consider its impact on your organization.

Local Lobbying Expenses

The bill eliminates the deduction for lobbying expenses regarding legislation before local government bodies, including Indian tribal governments. As a result, these expenses will be included in the calculation of nondeductible membership dues or proxy tax liability. Associations that are involved only in local lobbying, such as local homebuilder or Realtor® associations, will now have to report the portion of dues that is nondeductible to their members. Since 1993, the tax code has required 501(c)6 organizations to either: ++ Calculate the portion of dues spent on lobbying and remove that from the amount reported as deductible by the members on their

14 ASSOCIATION IMPACT ® < VOLUME 35 > 2018

tax forms as a business expense. — Or — ++ Pay the proxy tax to the federal government for that amount the association spends on lobby. Local legislative efforts were exempt. Those organizations that pay the proxy tax will see a positive effect. The flat proxy tax decreased from 35 percent to 21 percent this year. Organizations that lobby at the local level will need to become accustomed to capturing staff time, expenses, and fees for contract consultants and reporting these as a percentage of their dues to members. This does not impact 501(c)3 organizations, which are generally prohibited from devoting a substantial part of their activities to influencing legislation. The rules on deductibility of lobbying are unrelated to the lobby disclosure rules. The requirement to register and report lobby at the state and federal level did not change.

Maximum Tax Rate

Organizations with large for-profit subsidiaries could pay a lower tax rate, since the law lowers the maximum corporate income tax rate from 35 percent to 21

percent. This new 21 percent rate is a flat tax rate. This decreased tax rate also applies to the proxy tax on exempt organizations for lobbying and political expenditures incurred, as well as for Form 1120-POL. This change in the tax rate structure may affect your organization’s estimated tax calculations. Your overall tax liability may decrease, or it may increase, based on your organization’s pre-2018 incremental tax rate. For financial statement purposes, organizations should consider this new rate in valuing their deferred tax assets and liabilities, for tax years beginning after December 31, 2017.

Unrelated Business Income

The bill requires exempt organizations carrying on more than one unrelated trade or business to calculate UBTI separately for each trade or business. This practice effectively prohibits using losses relating to one trade or business to offset income from another trade or business.

Non-Deductible Fringe Benefits

The bill increases UBTI by the amount of certain fringe benefits for which deductions are disallowed. These fringe benefits


A S S O C I AT I O N K N OW L E D G E

include qualified mass transit and parking benefits paid by the employer. However, the provision for amounts paid by an employee through elective salary deferral via a qualified transportation fringe plan appears to be unchanged and would not be subject to tax.

Net Operating Losses

The bill eliminates carrybacks of net operating losses (NOL), and it allows unused NOLs to be carried forward indefinitely. The bill also limits the NOL deduction to 80 percent of a taxpayer’s taxable income. These changes to the application of NOLs are effective for losses arising in tax years beginning after December 31, 2017.

Executive Compensation

The bill imposes a 21 percent excise tax on compensation over $1 million for executives of nonprofit organizations.

Compiled with assistance from Venable Law, Johnson Lambert, Association Trends, and Tate & Tryon.

The excise tax is imposed on the organization and not on the employee.

Provisions Not Included

Certain provisions affecting nonprofits from drafts of the tax bill that did not make it in to final version include the repeal of the Johnson Amendment, prohibiting Section 501(c) 3 organizations from engaging in political activity; the inclusion of name and logo royalties in UBIT, and changes to the methods for determining reasonable compensation for the purposes of the intermediate sanctions excise tax. In addition, income from research will not be subject to UBIT. Of course, we recommend you discuss any of these issues with your tax advisor. These issues will be examined in future Finance and Accounting Roundtables. These free sessions are open to all MSAE members. 

Keep Learning in Third Thought®

Search for these resources in the digital library on www.thirdthought.msae.org.

Read

“Final Regulations of Corporate Sponsorships” “Association Endorsements: The Current State Of The Tax Law” “Use Of For Profit Subsidiaries to Preserve Tax Exempt Status” “Ask an Expert: Sales Tax Update for Associations”

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ASSOCIATION IMPACT ® < ISSUE 2> 2018 15


A S S O C I AT I O N KNOWLEDGE

Grant Management Software Can Increase Grant Funding By Ann Csongei

I

f you’ve ever awarded, administered, pursued, or even received grants using a manual process, then to simply call that process frustrating may seem like a bit of an understatement. Manually managing grants, whether as a grantor, grantee, or both, commonly presents a number of challenges:

Managing Grant Awards and Grantee Reporting Difficulty in measuring, recording, and tying grant-related activities to grantor performance requirements.

Finding Grant Opportunities Difficulty in identifying or potentially overlooking grants applicable to your city, county, state, special district, school, or non-profit organization.

Forfeiting Funds Failing to meet grant requirements and/or submit required reporting completely or in full, thereby not qualifying for additional drawdowns.

Responding to Grant Opportunities Inefficiencies in developing and submitting responses to identified opportunities, including repurposing content previously developed for similar grant applications.

Failing Audits Failing to ensure the proper recording of grant data for audit purposes.

Receiving and Scoring Grant Applications Managing the influx of high volumes of grant applications and facilitating the work of numerous individuals who are involved in the scoring process and are often in different physical locations. Notifying Applicants of Grant Awards Ensuring that all grant applicants are accurately notified of the status of their applications and documenting those communications for audit purposes. Reporting Against Grant Metrics Difficulty in measuring, recording, and tying grant-related activities to grantor performance requirements.

16 ASSOCIATION IMPACT ® < VOLUME 35 > 2018

Aggregating Grantee Reporting Assembling grant-related data easily and in one place to consolidate all grant-related data and reporting for internal and external purposes. This already frustrating and timeconsuming process became even more complicated with the passage of the federal Digital Accountability and Transparency Act (DATA Act) in 2014. The DATA Act requires federal spending data (including grant dollars awarded) to be aggregated, reconciled, and published to create greater fiscal accountability and transparency of how taxpayer dollars are being spent at the national level.

Growing Complexities

As grant requirements become more complex, organizations need help

managing the entire grant cycle. Grant management software can help by automating myriad interrelated activities in the lifecycle of a grant-funded project. According to Kevin French of StreamLink Software, the leading grant management SaaS technology provider for nonprofit and public-sector organizations, “Organizations with fewer resources may have a small staff dedicated to grant management, which may limit their funding options if grantor requirements are daunting. Other organizations are large and segmented and unable to react nimbly to changes that could positively impact programs. It’s often the case that one team will use tools that are incompatible with those used by others. And it’s also common for individuals and teams to become very protective of everything from the processes they use to the data they collect…. This approach often results in missed deadlines, ineffective communication, lack of a streamlined process, and even the loss of funding opportunities or money left on the table due to mismanagement.” Whether your internal system includes spreadsheets and emails, or you’ve developed a custom software solution, most internally developed systems will eventually fall short in some aspect. It’s best to use a reputable grant management software that was thoughtfully designed and tested to address the needs of grant funders and recipients,


A S S O C I AT I O N K N OW L E D G E

Fundraising at ORGPRO 2018 ORGPRO 2018 will feature a breakout session on successful fundraising. Visit msae.org/ orgpro to view the session description.

To break down communication and technology silos and to maximize efficiency in your organization overall, find a tool that integrates with your existing enterprise resource planning (ERP) system, financial system, and other major software platforms in use by your organization. There are affordable options for small organizations. Look for a grant management software provider that bases its pricing on your grant revenue, rather than the number of user licenses. This can make the investment more feasible for early-stage companies.

While it may require an investment of time and money, a good grant management software product will pay for itself in a relatively short period of time. Once you’re up to speed with your grant management software, you’ll be able to standardize complex tasks, increase efficiency, ensure compliance with federal funding requirements, and secure additional revenue. Ann Csongei is the marketing manager at Sourcing Alliance. She can be reached at ann.csongei@sourcingalliance.org. 

and that continues to be updated based on user feedback, technology changes, etc.

Grow Together

Good grant management software can streamline internal processes and improve every single stage of the grant lifecycle. Small organizations often think they are too small to justify a grant management tool. According to the experts at StreamLink Software, making the shift early is a great strategy. “Small organizations are actually better poised to take advantage of some of the features available in grant management software,” said French. “Starting small means it’s easier to input information and users. As the organization grows, it will be easier to get new team members up to speed since the resources they need will be right at their fingertips. And built-in research tools can help organizations discover new funding sources that can help the organization grow and expand their reach.”

Keep Learning in Third Thought®

Search for these resources in the digital library on www.thirdthought.msae.org.

Read

“Individual Fundraising Accounts”

SIGNS & GRAPHICS From the Event Sign Professionals

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ASSOCIATION IMPACT ® < ISSUE 2> 2018 17


A S S O C I AT I O N KNOWLEDGE

Sponsorship Marketing: The Challenges Facing Associations First of a three-part series, based on the book, “Secrets and Techniques of Sponsorship Marketing: What every association, conference, convention, and seminar planner needs to know to effectively sell and grow their sponsorships.”

Building Relationships at ORGPRO 2018 Besides numerous networking events, ORGPRO will have two sessions covering relationship building: • The Difference of Quality Partnership • Networking Evolution: Building Stronger Relationships Visit msae.org/orgpro to view session descriptions.

18 ASSOCIATION IMPACT ® < VOLUME 35 > 2018

By James M. Personius

J

ust about every association executive says that increasing nondues revenue is important for their association’s longterm success. Almost every association executive wants more sponsors and sponsorship revenue. Yet, every association we interviewed when conducting research this past year finds it difficult to meet and sign new sponsors. We found that these executives want better, more cost-effective ways of selling sponsorships — but, on the whole, they don’t know what they don’t know and don’t know whom to ask. There is a huge need for help, but it certainly is not coming from the sponsor side. Why do associations struggle with sponsorship marketing? Our research shows that less than 1-2 percent of all associations use professional contractors or full-time dedicated staff for sponsorship marketing and sales. The other 98-99 percent of associations rely on employees or volunteers to sell sponsorships. We found that virtually none of these employees or volunteers has received any sales training. Moreover, these people are

usually charged with other association and event tasks, such as event planning, logistics, registration, communications, housing, speakers, and even answering the phone. This one-hat-among-many model for sponsorship marketing is practically an association industry standard. We also found that most staff and volunteers do not like selling sponsorships; they prefer doing other association tasks and think that selling is or should be somebody else’s job. Worse, many staff and volunteers think sponsorship selling is drudgework or demeaning charity calling/dialing for dollars/begging. Finally, a huge percentage of staff and volunteers do not understand the importance of nondues revenues to the association and cannot explain the business value of sponsoring; they often think the main objective of sponsorship marketing is to get “free stuff ” for attendees’ bags. So, why do associations struggle with sponsorship marketing? In short, using untrained, unfocused people to do lowpriority tasks that they dislike, who do not understand the point or value of what they are selling, and who cannot communicate that value to potential sponsors is not


A S S O C I AT I O N K N OW L E D G E

a recipe for sponsorship marketing success. Naturally, associations relying upon this model are going to struggle. Associations need to learn new thinking and approaches to make selling more comfortable and create a cost-effective, repeatable process for sponsorship marketing. It is time to alter the current power dynamics between associations and sponsors by helping to train and strengthen associations and their staff on the unique and value proposition of sponsorship. Here are some quick tips from the book to change the “selling conversation” and shift the dynamics to the favor of the association:

Association executives must understand and define the business value of their association membership and event attendees. Collect and analyze audience demographics. Define the core audience and understand why the association/ events benefit them. Make sure everybody in an association role understands and can recite the core mission and membership value. Drill this into the team. Successful associations solve member problems. Recognize that the audience has problems, challenges, and unfilled desires. They join the association and attend the events to achieve common goals. Many businesses make their living and exist solely to help people like these association members resolve those exact same problems or fulfill those exact same desires. These businesses are the association’s natural allies in helping solve their members’ problems. They are ideal sponsors. Association executives, nonexecutive staff, and volunteers need to learn to speak the language of business when talking with sponsors. Talk about access, ROI, and value — not

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just price tags and costs. When businesses buy a sponsorship, they are making an investment; they want a return on that investment.

Understand and embrace the “benefit triangle.” The right sponsorships help members solve problems, benefit the sponsors through increased sales, and

ASSOCIATION IMPACT ® < ISSUE 2> 2018 19


A S S O C I AT I O N KNOWLEDGE

benefit the association through profitable revenues. If one or more of these groups does not gain from the sponsorship, the sponsorship is failing. Successful sponsorships benefit the association, members/attendees, and the sponsor. The sponsorship relationship is much more than just cashing sponsor checks. Association focus should not be selling sponsorships; instead, focus on helping members resolve problems by introducing them to sponsors’ solutions. Helping does not feel like selling. For most people, helping is much easier and more positive. Think of it as a match-making exercise — members have problems and desires; sponsors

have solutions. The association is doing everyone a favor by setting the stage for introductions. The right sponsors are willing to pay a profitable price for the right access and introductions.

Keep Learning in Third Thought®

Search for these resources in the digital library on www.thirdthought.msae.org.

Read

“Latest Rules on Sponsorship Guidelines” “Sponsor Quiz - How Prepared Are You for Your Next Event” “Sponsors Look for Different Benefits”

This is part one of a three part series. Next: Sponsorship Marketing: The Critical Association Roles for Success James M. Personius is the owner of Personius & Company and Smart-Promos. com, a boutique management consultancy and promotional products distributorship. He is also the author of “Secrets and Techniques of Sponsorship Marketing: What every association, conference, convention, and seminar needs to know to effectively sell and grow their sponsorships.” He can be reached at 954-529-7117. 

Invest in Yourself and Your Team. Come for inspiring keynotes, must-attend education and industry networking. Leave with a notebook of ideas and an expanded contact list. Visit www.msae.org/orgpro for more information about this year’s convention.

37

11

Speakers

Networking Events

14.5

28

CEs/CEUs

Educational Sessions

20 ASSOCIATION IMPACT ® < VOLUME 35 > 2018

MICHIGAN SOCIETY OF ASSOCIATION EXECUTIVES


Better Together Profiles A S S O C I AT I O N K N OW L E D G E

The Better Together Profiles is a regular series showcasing association professional pride.

Sarah Miller

VP Marketing & Strategic Communications Small Business Association of Michigan @millersarah | @SBAM

Ara Topouzian

Shonda Hightower

Troy Chamber of Commerce @atopouzian

Michigan Association of School Boards @ShondaKnowsVino

President / CEO

Chief Operations Officer

Years in association management

Over 10 years

Collectively for over 18 years.

15 years

Describe your job in one sentence

I get to share the amazing work our team does to support Michigan small businesses.

I oversee and manage the entire operations of Troy Chamber of Commerce

This work is rewarding because I see how the mission of our organization directly impacts the children in Michigan.

Most proud of as an association professional

I am so proud to be part of a team that gets up and comes to work every day to serve our members and help make a difference in their businesses.

There are so many, but I am proud of my team and the work they do, and I am very proud of our finished product, our brand, and how we have grown the reputation of being a great and effective chamber for our members.

Hands down, the dedication of my team and peers.

Best career advice received

Go with your gut. Know your own strengths. It’s okay to delegate.

The best advice given to me is that it isn’t about you, but about the organization you serve. Give the members what they are looking for, not what you think they want.

“No one comes to work to do a bad job.” This was spoken to me by the chief executive officer emeritus of the National Association of Realtors®, Dale Stinton. Profound in the sense that it helped develop my approach to management.

If I had magical powers in the association sector, I would...

Ooh, tough one! I think sometimes it would be nice to have the ability to be a little more nimble in executing decisions.

Change perceptions. Most do not realize this is a fulltime, paid position.

I’d magically provide unlimited resources to support each cause. Associations are doing some phenomenal work. They should have access to the resources that facilitate success.

It’s not a superhero power, but I could use a time turner like Hermione Granger had in Harry Potter & The Prisoner of Azkaban. Then I could be in more than one place at one time!

Need to get more done in less time. I need to be The Flash!

To foresee the future, I could then make better predictive decisions.

“Eye of the Tiger” by Survivor

“We Will Rock You” by Queen

“You Raise Me Up” by Josh Groban

First-choice superhero power for accomplishing goals

Association theme song

ASSOCIATION IMPACT ® < ISSUE 2> 2018 21


A S S O C I AT I O N KNOWLEDGE

BOARD OF DIRECTORS MSAE STAFF Barry Cargill, CAE, Chairman Executive Director Michigan HomeCare & Hospice Association

Cheryl O. Ronk, CAE, CMP, FASAE President/CEO

Denise E. Amburgey Chief Financial Officer of Denise McGinn, CAE MSAE & General Manager of Chairman-Elect MSAE Service Corporation

President Association Guidance Maryanne F. Greketis, CMP

®

Career Enrichment Manager

Lorraine Goodrich Treasurer Shawnna Henderson CFO Strategic Marketing Manager Automotive Industry Action Group Angela DeVries Cynthia H. Maher, CAE Secretary Executive Director Michigan Plumbing & Mechanical Contractors Association

Association Community Manager

Kelly Chase, CMP Member Service Coordinator Kristy Carlson, CMP

Mike Wenkel, CAE, Certification Manager Past-Chairman Executive Director Taylor Benavente Michigan Potato Industry Commission Association Industry Advocate

Jared Burkhart, CAE Peter Terry Executive Director Sales Representative Michigan Chapter – American Academy of Pediatrics ASSOCIATION IMPACT® Steve Carey, CAE Carla Kalogeridis Executive Director Editor National Truck Equipment Association

Shawnna Henderson

Scott T. Ellis Graphic Design Executive Director Michigan Licensed Beverage Association Peter Terry

Advertising Sales

Paul A. Long President & CEO BRD Printing Michigan Catholic Conference Printing

Michael Moss, CAE Association IMPACT® is published President bimonthly by the Michigan Society Society for College & University Planning of Association Executives, 1350 Andi Osters Haslett Road, East Lansing, Assistant Director MI 48823, (517) 332-6723. Michigan High School Athletic Subscribers should direct all Association inquiries, address changes, and subscription orders to that Kimberly R Pontius, CAE address. Articles written by Executive Vice President outside authors do not necessarily Traverse Area Association of reflect the view or position of the REALTORS® Michigan Society of Association Jack Schripsema, CTA Executives (MSAE). MSAE’s position on key issues will be President & CEO clearly stated. Manuscripts are Greater Lansing Convention accepted at the approval of MSAE, & Visitors Bureau which reserves the right to reject Richard P. Seely, CAE or edit. Appearance in Association ® Account Executive /Medicare Advisor IMPACT does not constitute endorsement of the advertiser, Member Insurance Solutions, Michigan Dental Association its products or services, nor does Association IMPACT® make Bob Thomas, IOM, CAE, CMP any claims or guarantees as to Vice President of Operations the accuracy or validity of the and Executive Director, Michigan advertiser’s offer and reserves Chamber Foundation the right to reject any advertising deemed unsuitable. Advertising Ara Topouzian rates available at www.msae.org. President/CEO Troy Chamber of Commerce © MSAE 2018

22 ASSOCIATION IMPACT ® < VOLUME 35 > 2018

CONNECT WITH NEW PEOPLE THROUGH ASSOCIATION IMPACT MAGAZINE Did you know associations represent most industries, from homebuilders to healthcare? Take a second to think of an industry and we bet there’s an association for that! There’s even an association for associations — MSAE is proud to be Michigan’s. Our publications represent the most effective, inexpensive way to market to the association sector in Michigan. Contact sales@msae.org for a personalized quote or complete marketing plan.


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Association IMPACT 18: Issue 2  

Continuing our look at the top 12 trends for associations, two MSAE member leaders explore how communications and marketing are part of the...

Association IMPACT 18: Issue 2  

Continuing our look at the top 12 trends for associations, two MSAE member leaders explore how communications and marketing are part of the...

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