Revenue: Why monthly membership models work

Associations that develop member strategies early on and encourage their members to make monthly contributions, have a greater chance of being successful.

There is one fundamental reason for this – a regular source of revenue enables the organisation to plan ahead, run campaigns and, if needs be, employ professional services in order to be more effective.

With subscribed members your membership is likely to be committed, attend meetings and willing to volunteer.

A membership model is a type of business plan where individuals pay a recurring fee to access the value an organization creates. It provides the design for different membership levels, revenue sources, marketing activities, events and conferences, and finances.. Source: Wild Apricot

Top 8 benefits of the Membership Model

  1. Regular income – a stronger cash flow makes planning easier.
  2. Engaged membership – an engaged membership can help you achieve your goals;
  3. Reduced marketing costs – once you have onboarded a new member, you do not have to spend money marketing to them.
  4. Networking – member organisations provide ideal environments for people to network.
  5. New revenue opportunities – your organisation can fund events, seminars and other revenue-driving projects.
  6. Meeting your members’ needs – an association with an engaged membership can adapt to meet its members’ changing needs.
  7. The ability to bring real change – increased cash flow and engaged membership increases the possibilities of bringing positive change to your community.
  8. One voice – speaking as one organisation, you will be able to put your issues firmly on the local agenda. 

Why Membership Models beat traditional fundraising efforts

We’ve said this before, but we will say it again – cash flow.

Membership dues allow an organisation to focus on its mandate rather than having to spend money, time and resources seeking out sources of income.

Studies have found that it can cost an organisation up to 25% more to find new members, as opposed to keeping existing members.

Non-profit organisations that don’t have a membership model use staff, time, and resources to look for funding.

From sending a proposal to getting the funding from any local or international grant agency can take up to a year to finalise, and requires dedicated personnel who must, once the funding is obtained, start looking for funding again in anticipation of the current grant coming to an end.

Non-profit organisations with no members need to constantly seek out sponsors, private and government grants and other fund-raising initiatives such as canvassing in busy town squares, or holding events. Over and above this challenge, fundraising is cyclical in nature.

It costs R25 in marketing materials to find one new member. It then costs you R1 a month (25 times less) in engagement activities to keep that member. To keep one member in their first year will cost R37.

Revenue example:

Now imagine you charge that member R10 in monthly dues to be a part of your organisation. That member will pay you R120 for the first year of their membership.

Therefore, your total profit is R83 (R120 fees minus R37 costs).

In the second year and beyond the profit improves as you no longer need to fork out R25 on marketing to find that member. All organisations should keep this mind at all times and work hard on member retention. 

Ricardo Wyngaard discusses membership within nonprofit organizations. What are the reasons and benefits for having general members within non-profit organizations? Source: Ricardo Wyngaard Attorneys