3 ways associations can accelerate innovation and stay relevant
The trend is clear: Many associations are reevaluating their value proposition to members and their aligned professions and industries. As part of this process, nonprofit financial management has become a crucial aspect of maintaining relevance and sustainability. This includes developing robust financial policies, conducting regular audits and working to ensure IRS compliance.
As a disruptive solution, associations are turning to innovation to show that they understand their constituents and can address the evolving challenges their membership faces. This focus on association innovation often requires the sort of organizationwide change that’s difficult to enact within an association structure. It also demands a keen eye on financial sustainability, effective resource allocation and meticulous grants management.
For a successful transformation, association executives are operationalizing innovation and developing the right people, vision and mindset. This approach often involves rethinking budgeting processes, exploring new revenue streams to support innovative initiatives and implementing sophisticated fund accounting systems.
A successful innovation plan
The Independent Community Bankers of America (ICBA) is one association that was able to successfully adapt its offerings through strategic financial planning and risk management. This included a comprehensive review of its financial statements and key financial ratios.
Traditionally, the ICBA was focused on two main pillars: a legislative one to help lobby for its membership’s interest and an educational one to provide them support. However, community banks began facing the same increased technology needs that continue to cause struggles across industries.
The ICBA knew that if it wanted its members to thrive, it was going to have to figure out new ways to help them transform. This realization led to a comprehensive review of the organization’s financial health, including a thorough reserve assessment, and a renewed focus on data-driven decision-making.
By filling the venture capitalism vacuum in fintech companies, the ICBA was able to enable growth for both the association and its membership. This move required careful cash flow management, a thorough assessment of potential risks and rewards and a well-structured chart of accounts to track new financial activities.
The association’s members gained a trusted partner to help them keep pace with the latest technology and disruptions in the banking sphere. And the ICBA gained a way to increase member engagement and maintain relevance, all while adhering to ethical standards, demonstrating good stewardship of resources and maintaining a favorable expense ratio.
How your association can start innovating
The ICBA’s journey demonstrates successful strategies that can be applied to innovation efforts in any industry. If your association is looking to implement its own transformation, here are three things you may need to develop:
1. The right people
Before you begin, take a step back and consider whether your association has the people needed to make innovations happen. This assessment should include evaluating your team’s skills in nonprofit financial management and their ability to drive professional development initiatives. It’s also crucial to have clear policies on executive compensation and a robust conflict of interest policy.
The ICBA chose Charles Potts because it knew he was an innovator who closely monitored the needs of the industry and the latest technology. Its leaders understood that not everyone is a visionary or capable of maintaining a forward-thinking momentum, and that there was a gap present in their staff.
By putting the right people in the right seats, your association can help encourage transformation both internally and within membership. This process may involve investing in professional development programs to enhance your team’s capabilities in areas such as financial planning, innovation management and accounting procedures.
2. The right vision
Major decisions for associations require feedback and approval from a wide range of stakeholders, making it difficult to advocate for or enact change. To help your efforts, you need to create a strong, unifying vision of where you want changes to take your association. And the key to creating that vision lies in the value you’re bringing to your membership, which includes maintaining financial transparency through regular audits and working to ensure the association’s overall financial health.
Associations operate in an ecosystem that includes multiple layers of support. You support your members, who in turn support their clients or customers. At the association level, providing substantive value to membership means considering what end users at all layers really need. This often involves reassessing your resource allocation to help ensure it aligns with your members’ evolving needs, including the effective management of donated goods and services.
One of the reasons the ICBA’s ThinkTECH Accelerator program remains effective is that it keeps a narrow focus on solutions that address real-world problems. There were over 300 applicants to its most recent program, but the organization ultimately chose only 10. Those 10 represented companies that were addressing top-of-mind issues for banks, such as managing liquidity and securing deposits.
In the same way, your vision needs to speak to the heart of your members’ concerns. If innovations don’t solve the challenges faced by your members or the people they serve, your association may lose relevance regardless of how it evolves. This vision should also encompass a commitment to financial sustainability and responsible nonprofit financial management, including passing the public support test.
3. The right mindset
With the right vision comes creating the right mindset in your association. This mindset should embrace innovation while also maintaining a focus on sound financial practices and ethical standards.
Innovation involves looking at things with a new perspective, whether that’s combining things in a new way or being open to different approaches. Unfortunately, that often leads to resistance from internal and external sources who are comfortable with their current routines and expectations.
The right vision can help you ease people out of that hesitancy by providing them with a story about the change you’re making. A clear vision or mission helps them understand how you expect changes to impact the association and how those changes can add value to everyone’s experience. This narrative should include how the proposed changes will contribute to the association’s financial sustainability and improve its ability to serve members.
Once people understand the reason for change, it’s easier to shift their mindset from seeing innovation as upsetting their sense of stability to innovation as a positive step forward.
In many cases, change is an evolutionary process that requires careful monitoring and direction. Be willing to expose members and stakeholders to fresh ideas slowly, so that they’re not overwhelmed. And continue to gather feedback and communicate about the process regularly. This approach should include transparent discussions about the financial implications of proposed changes and how they align with the association’s budgeting and financial planning processes.
When needed, you can engage change management services to help increase adoption and ensure a smoother transition.
You can also help encourage a mindset shift in your association by:
- Creating recognition for innovation and creativity: Associations can build a culture of innovation through establishing awards to showcase the innovative work of their members. This recognition can extend to initiatives that demonstrate excellent financial stewardship or creative approaches to revenue generation.
- Thinking like a startup or entrepreneur: Association teams at all levels in the organization can benefit from futuristic thinking and continually gaining insights around emerging trends, disruptive technologies and innovative business models. This entrepreneurial mindset should be balanced with a solid understanding of nonprofit financial management principles and the development of comprehensive financial policies.
- Embracing technology: By leveraging emerging tech, such as artificial intelligence and augmented reality, associations can streamline their operations and spark innovation. These technological advancements can also enhance data-driven decision-making processes, particularly in areas related to financial planning and risk management.
How Wipfli LLP can help
Wipfli’s knowledgeable and experienced team is here to help your organization overcome your training, strategic and financial challenges so that you can prioritize your mission. Our organizational performance services work with you to realign your culture and apply strategies suited to your unique needs and goals, including improving your approach to nonprofit financial management and association innovation.
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