Chambers are uniquely tied to the communities they serve, even though the economic health of a region may not correlate with the fiscal condition of its chambers. One of the reasons for this occasional disparity is the wide range of revenue sources and funding mechanisms of chambers of commerce.
While some destination-focused entities generate significant cash (and some net revenue) from festivals and traveler advertising, those in other kinds of communities find more success in leading economic development initiatives or by conducting all-inclusive “asks” through a Total Resource Campaign. And, of course, the reliance on membership dues varies anywhere from 15 to 90 percent of budget.
To better understand current revenue trends, I surveyed 328 chambers across the U.S. and Canada about their revenue sources, their successes and their challenges in generating funding. Recognizing that ACCE already did substantial research on chamber operations, I tried to vary my questions to get a somewhat different flavor.
As in ACCE’s results, we found that total revenue increased over the last year, but membership size is flat. This was reinforced by evidence that event and sponsorship receipts have risen. Health insurance and office supplies remain the strongest sources for affinity income. The largest and smallest chambers I questioned were least likely to have seen revenue grow, year-to-year, with the mid-size chambers more likely to see budget expansion. Chamber revenue sources have not changed much over the last few years.
The data from the Hight and ACCE surveys only tell part of the story. Anecdotally, chamber leaders are reporting a need to constantly work on diversifying revenue streams. Several chambers in upstate New York now have staff members who are licensed and certified to sell health insurance under the state’s new exchange. While the ACCE Operations Survey indicates that most small and mid-size chambers rely heavily on dues, Laura Lane, president of the Livingston County (NY) Area Chamber of Commerce, reports that her organization has 40 percent of its budget coming from government funding for tourism and 15% from a health insurance program.
Canadian chambers have similar challenges with flat membership counts. Unlike chambers of similar size in the U.S., who often increase revenue opportunities through economic development and CVB activities, many Canadian chambers have seen a decrease in such sources. “In Ontario, the government has taken over much of the ED and tourism activities,” says Stuart Harrison, president of the Peterborough Chamber of Commerce. “So much of our revenue now comes from trade shows, travel programs, and leasing office space. Last year alone, leases brought us about $60,000.”
Walt Page, executive director of the Fentress County Chamber in rural Tennessee, says his chamber receives 80 percent of its funding from government sources for CVB activities and contracts tied to supporting a small pool of manufacturers. “We’ve figured out innovative ways to generate revenue from non-traditional sources like the internet,” says Page. “Year-to-date, we’ve earned $7,500 from Google AdSense for viewers’ clicks on our web banner that promotes Fentress County.”
The OnlineMBAPage.com rated the Oceanside Chamber of Commerce 13th in its 2013 Top 100 Social Media Friendly Chambers in the U.S. It’s the only California chamber in the top 20. This is no surprise to David Nydegger, president, an 18-year industry veteran. “While other chambers chased after affinity programs, our team ventured into publications and online advertising,” he said. “We were an early adopter of technology and started offering web banners and online advertising several years ago when we converted to WebLink. We continue to earn advertising revenue from online and print sources.”
Attendance revenue, whether for large events or small training opportunities, seldom generates net income for the chamber, especially after covering the cost of staff time related to the programs. Yes, many events offer genuine value for members, making them critical for membership retention. They also provide opportunities for sponsor support, which actually adds to a chambers’ bottom line.
Events vary so widely, from regional community-focused programs (festivals, home shows, etc.) to traditional membership centered gatherings (award dinners, business-after-hours, etc) that it is hard to quantify the value and financial impact they have on chambers as a whole. Computing averages or trends is an unproductive exercise, but sharing and identifying “winner” programs to emulate makes great sense. Virtually every chamber we spoke to and surveyed reported that events were a part of their funding stream.
Most chambers generate revenue from non-dues sources, but among them are some who attract revenue to support companies and the economy of the region. John Seymour, president of the Decatur-Morgan County Chamber of Commerce in Alabama, is a 30-year chamber boss who has seen a shift from generating money from community-wide events to a focus on economic development initiatives, education attainment and programming focused primarily on employers. “The most significant change I’ve seen since I’ve been in the industry is that we’re no longer afraid to focus on things that need to be done in our community, rather than on popular products,” Seymour says. “We take a leadership position on advocacy and ED and don’t really worry so much about funding sources. Our investors and members support us to get things done, and we don’t nickel and dime them.”
Larger metro chambers generate most of their non-dues revenue from economic development campaigns and investors who support their long-term initiatives. John Moore, president of the Memphis Chamber of Commerce, was inspired after reading the Coming Jobs War by Jim Clifton. He embarked on the creation of a “Committee of 100” to respond to the strategic question: What can we work on that will have the greatest impact on Memphis’ growth (workforce, entrepreneurship, etc.)? These investors (he’s already up to 92) were asked to kick in $25,000 above their fair-share dues level.
In the past, Moore said, “the government led economic development initiatives with private sector support. Now the initiatives are led by the private sector with public sector support. The chamber provides the opportunity for an influential group of change-makers to convene. The chamber is now a vehicle for transformational leadership and the staff executes on their plan.”
What conclusions can we draw from our research and ACCE’s? Although revenue sources haven’t changed dramatically over the last few years, chambers across North America continue to depend less and less on traditional fare-share dues checks. The trend in the present, and probably for the future, is a combination of non-dues revenue flowing from sources other than attendance. Many larger and mid-size chambers are moving more toward investor revenue tied closely to their missions as advocates for economic advancement. Smaller organizations may be moving in that direction as well, but they will probably continue to depend on funding derived from strong programming, valued affinity programs and government contracts related to tourism. For all chambers, the drive to new technology across all sectors of the economy will push them toward tech solutions of their own. The mission to serve communities and employers won’t change, but the methods and funding to do so will never stop changing.
Cathi Hight is president of Hight Performance Group and has more than 20 years of experience in performance improvement. She works with chambers of commerce to align their membership models, benefits and organizational structure with their strategic direction. Contact Cathi at (512) 354-7219 or e-mail: email@example.com.
Download this article: TRCs: Money for Your Mi$$ion (2)