It is crucial for membership associations to form strong relationships with their current and prospective members. During a webinar hosted by Abila, the presenter gave advice on new ways associations can approach their membership pricing and packaging strategies. The specialist proposed taking Costco’s effective marketing template and applying it to membership organizations that provide their members with services, such as continuing education classes. At first glance, Costco may seem very different from membership associations. However, the company’s basic pricing and packaging concepts can be applicable to organizations across industries and may even spark fresh marketing ideas for your own association.
Similar to associations and other nonprofit organizations, Costco strives for continued customer loyalty. They achieve this by tapping into the psychological aspect of shopping for the best perceived value. Costco’s pricing strategy can be broken down into four main categories:
Costco markets their products knowing that there is an increased perception of value over cost. Essentially, the idea of “Buy 2, Get 1 Free“ works best because the customer sees more benefits to acquiring more products for their dollar than spending less money.
As an association, it is important to remember that you are building and maintaining relationships over time. Members should see value in your association that encourages them to renew their membership and remain loyal.
To learn more pricing strategy tips from Abila, view their session, “The Costco Effect Part 2: Professional Development Pricing and Packaging Strategies” and download the Member Professional Development Study.
On April 5, 2017, the U.S. Government Accountability Office (GAO) released an exposure draft of the Yellow Book with proposed updates to Generally Accepted Government Auditing Standards (GAGAS). The Yellow Book contains guidance for auditors who perform Single Audits for organizations that have federal grants. It includes professional qualifications, audit firm quality control standards, ethics, and independence of the auditor, and continuing education requirements for the auditor. Furthermore, auditors of federal, state, and local government programs use these standards to perform their audits.
“The Yellow Book helps auditors hold the organizations they audit accountable,” states the WatchBlog of the GAO in their post about the exposure draft. The GAO believes the updates will modernize the standards that have not been revised since 2011.
Proposed changes include but are not limited to the following:
Currently, auditors are required to achieve 80 credit hours of total CPE over a two-year reporting cycle; 24 hours must be Yellow Book oriented. This requirement ensures that an auditor is well versed in GAGAS. These requirements did not change in the exposure draft; however, the update includes a new 4-hour CPE requirement for GAGAS topics each time the Comptroller General issues a revision of GAGAS. The exposure draft adds guidance on the topics that qualify as Yellow Book CPE but qualifying CPE is still a matter of auditor judgement.
The draft is open for consideration of all public comment. If you want to write in a comment or suggestion, you can send an email to YellowBookComments@gao.gov no later than July 6, 2017. All comment emails will be posted to the GAO’s Yellow Book webpage as they’re received and reviewed.
For a copy of the exposure draft visit the GAO’s website here.
“It is highly misleading to suggest that most nonprofits will not need to worry about the revised [overtime] rule. Nonprofit tax status has no bearing on whether an employer is required to pay its employees overtime,” states Michael Eastman, an attorney with NT Lakis in Washington, D.C. Eastman also is counsel to the Society for Human Resource Management (SHRM).
SHRM reports, “Nonprofit organizations that think the overtime rule doesn’t apply to them need to think twice, and may have to either redouble their fundraising efforts or brace for possible cuts in the services they provide. Despite the fact that these businesses engage in charitable activities, which would exempt them from overtime pay requirements as enterprises, individual employees may still be eligible for overtime pay.”
The Department of Labor released a fact sheet to further clarify when nonprofits are impacted by the Fair Labor Standards Act (FLSA). Under the FLSA there are two types of coverage: enterprise coverage (which is limited for nonprofits) or individual coverage.
Enterprise coverage applies to businesses with annual sales of at least $500,000. For a nonprofit, this applies only to the organization’s activities performed for a business purpose beyond their mission function, such as merchandise sales or other unrelated business income. Income from contributions and membership fees are not counted toward the $500,000 threshold.
Individual coverage applies to employees engaged in interstate commerce activities. This includes employees that make out-of-state phone calls, receive out-of-state emails or mail, purchase or receive goods from an out-of-state vendor, or handle credit card transactions including the accounting and bookkeeping to record the transactions.
The main impact of the FLSA is the increase in the exempt threshold. The overtime rule increases the exempt salary level from $455 a week ($23,660 a year) to $913 a week ($47,476 a year) which many nonprofits cannot afford that jump in pay or the sudden addition of overtime. SHRM points out the main concern is that the offset will be a reduction in services that a nonprofit can provide.
More than two dozen local, state and national nonprofit agencies are being sued for the return of $2.1 million in donations in a Waco, Texas based lawsuit. A trustee for Life Partners Holdings claims the donations were made by the CEO from funds he fraudulently received from the company before it filed for bankruptcy last year. The alleged scheme appears to have been going on for seven years according to the claim.
The suit claims that donations from the CEO were fraudulent because the funds were obtained through an excessive fee structure that bilked investors out of returns.
Life Partners Holdings was recently investigated by the U.S. Securities and Exchange Commission for their practices involving the sale of investment contracts. According to the suit, Life Partners hid the amount it charged in fees and that only about 20% of the proceeds from investors were actually used to acquire policies while the remaining 80% was divided between future premiums and commissions to licensees and Life Partners. The Texas financial firm is accused of defrauding investors out of $1.3 billion according to the bankruptcy trustee representing creditors.
The attorney that filed the suit notes that no one believes the defendants were involved in the fraud, however, the CEO stands accused of evading taxes and steering millions of dollars to his alleged mistress, the founder of one of the local animal welfare groups in the list of defendants. A lawyer for the CEO said the suits filed by the bankruptcy trustee have “little, if any, validity” according to the Chronicle of Philanthropy. The suit is seeking to recover as much of the funds as possible.
Several of the recipients are animal welfare organizations but funds were also donated to renovate a building on a college campus in East Waco. The issue, of course, is that the majority of the funds received have been spent and many of the organizations are not in a position to be able to pay back the donation.
The Cancer Fund of America and Cancer Support Services raised approximately $75 million in donations for the fight against cancer, the problem was that less than 5% was actually being used for the intended mission while the remaining funds went to the charities’ organizers and their friends. According to articles in the Washington Post and the Chronicle of Philanthropy, the Federal Trade Commission announced a major victory on March 30, 2016 in its crack down of the sham organizations. As part of a settlement with the FTC, the charities agreed to be permanently dissolved and all of their remaining assets liquidated. Unfortunately, about 85% of the funds raised were already spent, mostly on keeping the scam going through ongoing fundraising efforts. The leader of the alleged nonprofits, James Reynolds Sr. will also have to surrender an unspecified amount of his personal assets and be banned for life from managing a charitable organization’s assets or being part of any charity’s board of directors.
According to the Washington Post, the director of the FTC’s Bureau of Consumer Protection, Jessica Rich, called the scam “a pernicious charity fraud” and continued in a statement to note that the groups “syphoned hundreds of millions of dollars away from well-meaning consumers, legitimate charities, and people with cancer who needed the services the defendants falsely promised.” The charities’ remaining assets will first go to repay states’ litigation fees and, after that, to legitimate charities that the states select.
According to the Chronicle of Philanthropy, “two other charities in the largely family-operated network, the Children’s Fund of America the Breast Cancer Society, agreed to close last year after federal and state authorities charged the four groups with collectively bilking some $187 million from donors.”