Performing Due Diligence: How an Association Board of Directors Should Evaluate its Association Management Company

By Mike Dwyer, CAE, Association Headquarters & Paul Hanscom, CAE, Ewald Consulting

It’s not uncommon that an association board of directors will decide to take a harder look at its relationship with its association management company partner after a significant change has occurred. This could be a change in staff leadership, management fee adjustment, or shift in the scope of service. Some associations have governing documents that stipulate that a level of review is required on a given time cycle, e.g. every three years. And occasionally a particularly fastidious board member will ask when the board last performed such a review, claiming that it’s the board’s fiduciary duty to perform its “due diligence” to ensure the resources invested by the association in the services provided by its AMC are well spent.

Association boards should seek guidance on how best to fulfill their obligation of “fiduciary due diligence” to assess the association/AMC relationship.

For many board members, the first solution that comes to mind is to develop a request for proposal (RFP) for association management services. An RFP process feels like a natural solution and is a familiar business practice for vetting service providers in all sectors and industries. There are myriad resources and helpful tools to provide boards with guidance on how to successfully navigate an RFP; AMCI offers guidance on its website, including a well-structured and user-friendly RFP submission form.

However, the RFP process is a high-cost solution for a challenge that doesn’t need to be that difficult.

Many of those involved in crafting an RFP confess they’ve never done it before. Designing an RFP, distributing it, answering inquiries, reviewing submissions, and conducting follow-up and selection is not simple. Anyone who has been through the process before can tell you that it is resource-intensive; you need to dedicate well over 100 hours as the volunteer lead on the endeavor if you are to do it correctly.

On the other side of the equation, each candidate submitting a proposal for association management services experiences a significant demand on their time as well. Reviewing the RFP, identifying information gaps, assessing whether to pursue the business, submitting a proposal, responding to follow-up questions, and delivering a presentation can take hundreds of staff hours as well.

All of this time is invested by staff and volunteers without creating new value for members or the industry the association aims to serve.

There are better ways for boards to meet their responsibility of being good stewards of the members’ dollars. And the “best way” depends on the root cause of the board’s desire to perform its due diligence.

Contract Up for Renewal

Most if not all management contracts have a specific term of service at the conclusion of which there is an understanding that the contract either renews as stated or there is a negotiation of its terms. Contract renewal gives reason for pause, especially when the contract is for the association’s largest expense. Contract negotiations are best entered into as a discussion about how to advance the partnership, but when this discussion becomes adversarial, both parties look for leverage they can use to gain ground against the other. For a board of directors, the threat of going to RFP can be a tempting lever to pull.

Service Changes

When an association needs a change in service it can be a justifiable time to conduct due diligence to ensure the desired services are the best fit. Service changes can result from poorly-stated expectations in the association/AMC scope of work, an addition or deletion of services from the scope of work, or a change in staffing. Each of these concerns deserves to be addressed by the board and its AMC leadership. 

As in any good hiring exercise, when an association and an AMC begin a relationship they both put in strong efforts to establish clear expectations. This is usually done by crafting a scope of work that articulates what each party is committed to doing on behalf of the association. Tension can arise if the AMC or association leaders are perceived to be underperforming relative to this scope of work. If the scope of work and/ or corresponding performance measures are unclear to begin with, the likelihood increases that this void will be filled with a perceived sense of underperformance by one or both parties. An unclear scope of work can also lead to scope creep or uneven use of staff resources should the organization’s needs change over time.

Frequent staff turnover or promotions for staff working on a particular client that results in movement off of the existing client and on to another client with a larger role are very common occurrences in any business. As AMC’s, we may hear it frequently from our clients if it becomes a regular occurrence and it can lead to disappointment, loss of some institutional knowledge, and a loss of momentum in programs and projects on which staff has been working on behalf of the client. This can be particularly evident with different generations of workers. As an example, a recent Gallup report on the millennial generation reveals that 21% of millennials say they've changed jobs within the past year, which is more than three times the number of non-millennials who report the same. Gallup estimates that millennial turnover costs the U.S. economy $30.5 billion annually (source: It helps if the AMC has somebody ready to step into the role who has the level of experience necessary to ensure a smooth transition, but this may not always be the case. However, AMC’s are adept at building bench strength to ensure as little disruption as possible. The key is to be honest and transparent with a client organization, let them know the plan for filling any gaps, and remind them that the AMC is responsible for delivering on a scope of work and should be judged according to their ability to do so. 

Price Shopping

Certainly, an area of concern would be if the board is unsure of the value they’re receiving for the fees they’re paying. This could very likely be a case whereby the AMC is not doing a very good job of communicating the value they bring to managing the client’s operations and programs. We’ve all likely heard an argument from a client who went out to RFP that they are simply “seeing what’s out in the market”; translation: they are price shopping. Their position may be a bit more subtle, stating that the Board is seeking an understanding of the marketplace to understand how current value compares to alternatives. The volunteer leadership may be, or at least claim to be, satisfied with the services they are receiving from their AMC, but they want to leverage what they find in the marketplace to get their current AMC to reduce fees. There are several pitfalls to this approach. For one, it builds or exacerbates feelings of mistrust between the board and the AMC. It also negatively impacts AMC employee morale who see the potential threat of losing their jobs and may lead to significant staff turnover, making a bad situation worse.

One key to avoiding price shopping is to communicate early and often in the relationship about all the positive things the AMC is doing on behalf of the clients, stress the importance of the relationship, and gently remind the clients of all of the great accomplishments you have achieved together. AMC leaders or owners should attend at least one board meeting per year to remind the client of how much you value the partnership and update the client’s leadership about what’s going on within the AMC. Company newsletters filled with client accomplishments and circulated to volunteer leaders may spark an idea of how an AMC can translate one client’s success to another client. Remind the client that you would like the nature of the partnership to be just that, a true partnership, rather than a vendor/customer relationship. It is very likely that an AMC’s management fees are the single largest expense line item in the organization’s budget, making it imperative that the AMC frequently communicate what the client is getting for the fees paid. 


It is healthy for an association board of directors to regularly monitor its relationship with its association management company partner. Evaluating this important relationship can help both parties improve how they work together and advance the organization’s mission. Finding the right evaluation method and committing to use it consistently makes all the difference. 

Helpful Tools to Assess Your Management Support Services

a.       ASAE’s operating ratio report

i.         Provides staffing, management, and operational expenses as a % of expense/revenue so you can benchmark against organizations of a similar scale.

ii.      Objective 3rd party data

b.       Guidestar Form 990 comparisons to similar associations

iii.    Provides staffing, management, and operational expenses as a % of expense/revenue so you can benchmark against organizations of a similar scale.

iv.      Objective 3rd party data

c.       AMCI/ASAE Resources

 v.      Review AMCI resources

 vi.     Article: Shopping for Shopping Sake is not Prudent, Mike Deese,Esq. 

d.        Annual Client Partner Survey 

vii.    Conduct an annual feedback survey to measure the strength of the relationship.

viii.  Request detail from your AMC partner on how the company views the relationship and how your relationship compares with other AMC clients.

ix.    Engage in an open dialogue on an ongoing basis with the top-level leadership of your AMC to clearly articulate your long-term goals. Challenge your AMC partner to recommend strategies to pursue these goals. 

Other options available to AMC-managed associations

a.      Consider hiring an independent consultant to assess the partnership.

b.      If you think you may go ahead with an RFP, first conduct an RFI to qualify 1-3 strong candidates so you don’t demand, receive (and need to review) full proposals from a large number of AMCs that are clearly not the right fit for you. 

Want more resources? 
Find RFI and RFP forms, resources HERE

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