— KEY TAKEAWAYS
Membership associations are nonprofits that use a member-based business model to foster community, advocate for change, and exchange knowledge within a specific industry.
- These organizations are incredibly effective at building loyal, engaged audiences; professional societies and associations boast the highest email open rate (38.31%) and the lowest unsubscribe rate (0.07%) in the nonprofit sector.
- Members don’t just pay dues—they actively participate. Nearly 27% of members also register for events, proving that a strong membership program drives deep community engagement.
- Starting an association involves defining your purpose, structuring dues, choosing the right legal designation (like 501(c)(3) vs. 501(c)(6)), and leveraging your network to launch and grow.
Membership associations are a popular type of nonprofit that use a member-based business model to advocate for change and foster community—usually within a specific industry or sector.
Want to know more about associations or thinking about starting an association of your own? This article’s got all your bases covered!
QUICK ANSWER
What is a membership association?
Membership associations are a popular type of nonprofit that use a member-based business model to advocate for change, exchange knowledge, and foster community—usually within a specific industry or sector. Membership in these organizations can be driven by individuals, businesses, or local chapters, but they all exist primarily to serve their members’ interests and advance their shared goals.
In return for paying membership dues, members gain access to exclusive benefits like professional development, networking opportunities, and industry-specific resources. Because of this value exchange, members are highly engaged supporters who are willing to show their generosity in other ways, like volunteering, making recurring pledges, or attending events.
Key distinction: While traditional nonprofits rely primarily on donors who give to support a cause without expecting direct perks, membership associations offer a reciprocal model where members pay dues in exchange for specific, tangible benefits like advocacy, education, and exclusive community access.
Understanding Associations
First things first: What are associations, exactly?
Associations are groups of individuals, businesses, or entities with a shared interest, mission, or profession. They play a pivotal role in fostering collaboration, advancing causes, and driving change across diverse industries and sectors.
Membership in associations can be driven by individuals, businesses, or by local chapters, but all associations exist, primarily, to serve their members’ interests and advance their goals. Members can also use associations to exchange knowledge, advocate for their shared causes, and swap valuable resources and services.
Examples of well-known associations abound, spanning pretty much any industry you can think of. Two well-known examples are the American Medical Association (AMA), which advocates for healthcare professionals and patient care and the American Bar Association (ABA), which represents the legal profession.
Have you heard of the Association of Fundraising Professionals, also known as AFP? The name doesn’t lie: They’re a member association that serves the nonprofit sector specifically.
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How Memberships Work for Associations
Membership lies at the heart of the association business model. Members set an association’s priorities and fuel their capacity to create change and drive progress.
When talking about memberships, there are three important topics to discuss: membership structures, membership benefits, and membership dues.
Membership Structures
Associations can be structured in a number of different ways. Depending on their members’ needs and the different stakeholders involved, memberships might be structured in one of the following ways:
- Individual Memberships: This is the most common type of membership structure, where individuals join associations to access benefits and contribute personally.
- Organizational Memberships: This structure is also quite common. It’s designed for businesses, institutions, or entities seeking to align with a particular association’s mission and values.
- Local Memberships: With this model, an individual or business joins a local chapter, which provides its own network, resources, and benefits. Those local chapters then work together to advocate for causes nationally.
Membership Benefits
In return for joining an association and paying their membership dues, members gain access to an array of benefits, which can include:
- Access to Resources: Members often gain access to a wealth of resources, including industry-specific research, publications, best practices, and educational materials.
- Networking Opportunities: Associations provide valuable networking opportunities through events, conferences, and online communities, allowing members to connect with peers, mentors, and industry experts.
- Professional Development: Many associations offer educational programs, workshops, and certifications to help members enhance their skills and advance their careers.
- Discounts & Savings: Members may enjoy discounts on products, services, insurance, and event registration fees, helping to offset the cost of membership.
- Exclusive Content & Publications: Some associations provide members with exclusive content, such as proprietary research, reports, or industry insights. Members often receive newsletters, journals, or magazines that feature industry updates, case studies, and member profiles.
- Access to Experts: Associations often have a network of subject-matter experts and mentors who can provide guidance and insights to members.
- Advancement Opportunities: Associations can help members explore career opportunities, find job listings, or connect with potential employers.
Membership Dues and Fees
Membership dues are fees paid by members in order to join the association and avail themselves of its many membership benefits.
They are the primary revenue stream for most associations—and they are also the component of membership structures that vary most widely from one organization to the next depending on the association’s size, scope, and offerings.
Some associations charge a flat annual fee, while others have tiered pricing based on different membership levels. Industry-specific associations often offer reduced rates for individuals or organizations with limited financial resources, ensuring inclusivity and accessibility.
If you want to know more about how membership levels work for nonprofit organizations, you should read our article below:
4 Common Challenges Facing Membership Associations
As nonprofit organizations, membership associations are always going to face challenges common to the field: financial stability, economic downturns, volunteer management, financial stability again, the list goes on (if you want the full rundown, just buy any nonprofit leader a drink and ask).
But memberships also face a number of challenges that are more specific to their membership-based model versus the donor and foundation-based nonprofit models. Some of those challenges include:
- Member Retention: Keeping members engaged and committed can be challenging. Any association sporting a low member retention rate risks unstable finances and will have a hard time achieving long-term goals.
- Attracting New Members: In a crowded landscape, it’s vital for associations to continuously recruit new members. This can be tough due to competition for members’ time, attention, and resources; changing demographics in a given industry; and evolving member expectations.
- Relevance and Member Benefits: Membership associations must continuously provide value to their members. Staying relevant and offering meaningful benefits that align with members’ needs and expectations is an ongoing challenge. And the better the benefits, the more time and effort it requires to make them happen.
- Communication and Engagement: Effectively communicating with members and maintaining high engagement levels can be challenging. Striking the right balance between frequency and content quality is key. Holding events can be a huge boon for member engagement, but events take a lot of hard work and planning to pull off!
Overcoming all of those hurdles requires hard work, smart strategic thinking, and the right tools at your staff’s disposal. That’s why choosing the best membership management software for your association could be the thing that unlocks your organization’s true potential.
Luckily, we wrote a mega-guide on just that topic! Check it out below:
Starting a Membership Association: Your 7-Step Guide
If you’re considering starting a nonprofit association, you probably have a lot of enthusiasm, but you might not know where to begin.
That’s where we can help! Here are seven essential steps that anyone starting a brand-new nonprofit association.
STEP BY STEP
How do you start a membership association?
- Define your purpose Articulate your association’s mission and the unique value it provides. This clarity of purpose will become your north star for all future decisions.
- Identify your target audience Determine exactly who your association will serve, considering specific industry niches, demographics, and whether your base will be individuals, businesses, or both.
- Develop a membership structure Create membership tiers that align with your mission. Decide whether you’ll offer a flat annual fee or tiered pricing with different benefits for students, nonprofits, or businesses.
- Handle legal and governance matters Establish your association as a legal entity and develop bylaws. Consult legal experts to choose between designations like 501(c)(3) (charitable) or 501(c)(6) (business leagues), which directly impact lobbying rules and tax deductibility.
- Finalize financial planning Develop a budget covering operations and member dues. Implement membership management software that links your membership forms to your CRM for seamless tracking and reporting.
- Build your marketing and promotion Craft a compelling value proposition and brand identity. Leverage your existing professional network and establish an online presence to spread the word.
- Launch and grow Kick off with a well-planned event or campaign. Continually engage your new members through resources and networking, and adapt your offerings based on their feedback to maximize retention.
Pro tip:Choose your legal designation carefully from the start! A 501(c)(6) gives you much more freedom to advocate and lobby for your industry’s interests, but unlike a 501(c)(3), member dues are generally not tax-deductible as charitable gifts.
Step 1: Define Your Purpose
Begin by articulating your association’s purpose and mission. What unique value will it provide to members and the community at large? This clarity of purpose will become the north star for your association, guiding all future decisions.
Need help coming up with your mission statement? Have a gander at the steps and examples we provide in the article below:
Step 2: Identify Your Target Audience
Determine who your association will serve. Most associations serve a specific industry niche, but you should consider demographics, interests, and needs. Will your target audience be individuals, businesses, institutions, or a combination thereof?
Understanding your audience is crucial for tailoring your offerings. After all, this target audience will form your membership base moving forward.
Step 3: Develop a Membership Structure
Create a membership structure that aligns with your mission and audience. Should you create different membership tiers, each with its own benefits and pricing? Or would a flat, annual membership fee for everyone offer the best path forward?
It’s not an either/or proposition. For example, you could have a single membership level but also offer discounted rates for students, nonprofits, or businesses under a certain revenue number.
Step 4: Legal and Governance Matters
Begin your organization’s legal journey (lucky you!) by establishing your association as a legal entity, such as a nonprofit corporation or association. Develop bylaws that outline governance, decision-making processes, and member rights.
501(c)(3) vs. 501(c)(6)) Designation
To prepare for getting established, we figured we’d mention a core distinction—will your association be a 501(c)(3) or a 501(c)(6)?
While they both fall under the nonprofit, they’re treated very differently by the IRS. Choosing the wrong one is a bit like wearing hiking boots to a gala—it’s technically footwear, but it’s not going to get you where you want to go.
501(c)(3) organizations are charitable organizations that exist for religious, educational, or scientific purposes. A pro is that donations are usually tax-deductible for the donor, but this designation means that you have very strict limits on how much you can lobby.
501(c)(6) organizations are things like Business Leagues or Chambers of Commerce. Most professional membership associations fall into this bucket. A perk is that you have much more freedom to advocate and lobby for your industry’s interests, but in trade-off membership dues are generally not tax-deductible as a charitable gift.
Make sure to consult legal experts to ensure you’re filing correctly and to make sure that you comply with local regulations. Now is also the time to begin assembling your nonprofit’s board. Begin tapping your professional network to find experienced and like-minded colleagues.
Step 5: Financial Planning
Determine your association’s financial strategy. Develop a budget that accounts for operational costs, membership dues, and potential revenue streams, such as events, sponsorships, or grants.
Make sure to consider how you’ll handle membership dues collection, tracking, and reporting. Take it from us: If you have membership management software that ties together your membership forms and your database, it’ll make the process much easier.
You can learn more about membership form best practices—and how we’ve built them into Neon CRM’s membership form builder tool—with this self-guided tour!
Make Every Member Feel Like A VIP
Ready to create membership forms that wow? In this quick, self-guided tour, you’ll see how easy it is to build and customize membership forms with Neon CRM’s drag-and-drop builder—no tech skills needed.
Step 6: Marketing and Promotion
Time to get out there and sell! Create a compelling brand for your association and a marketing strategy to attract members. Craft a compelling value proposition, communicate the benefits of joining, and establish an online presence through a website and social media.
Leverage your existing professional network to spread the word. Unlike a traditional nonprofit, which might have to rely on more traditional channels to raise general awareness, your connections in the industry your association is serving will be critical to your success.
Step 7: Launch and Grow
Launch your association program with a well-planned event or campaign. Encourage initial members from your network to join and become advocates. As you grow, continually engage members through events, resources, and networking opportunities. Listen to feedback and adapt to meet evolving needs.
Neon CRM Has All the Tools Your Association Needs
For all their complexities, membership associations rest on a charmingly simple premise: That when people come together to share expertise, pursue common goals, and foster a true sense of community, anything is possible.
But possible and probable are two totally different ball games. That’s why an association that’s serious about serving its members and advancing its mission needs a powerful set of tools at its disposal. Otherwise, even the possible will seem impossible.
That’s where Neon CRM comes in! It’s got all the great features of Neon CRM, from email, forms, events, and volunteers, automated workflows, and powerful reporting, plus membership tools like member management, member portals, custom member directories, and more.
Neon CRM has everything you need, all within a single cutting-edge platform. Want to learn more? Schedule a personal demo today. We look forward to hearing from you!
Membership Association FAQs for Beginners
In short, no. There is no membership requirement from the IRS, but we’d recommend having a founding circle of at least 5 to 10 dedicated people. These are the folks who will help you refine your mission and, more importantly, help you spread the word. Starting with a small, passionate group is much more sustainable than trying to do it all alone.
Most likely yes, but there will be caveats and specific rules that relate to donations depending on your tax exemption status. If you are a 501(c)(6), people can give you money, but they can’t claim it as a charitable deduction on their taxes. If you are a 501(c)(3), those gifts are deductible. Either way, you’ll probably want to double check with a legal expert (as we are definitely not legal experts) to make sure you’re clear on what is allowed for your specific association.
Starting a new association can feel overwhelming, which makes it easy to try and do too much at once. One common mistake that we see is trying to offer too many benefits at once. It’s tempting to promise a monthly gala, a weekly newsletter, and a 50-page research report, but that’s a fast track to burnout. Start with one high-value benefit—like a really great online community or a monthly expert webinar—and do it really well. Once you’re up and running you can always add more layers, but it’s better to start by doing smaller things really well and then grow from there.
