Given shut down orders, social distancing, and travel restrictions, trade associations are facing extraordinary financial losses due to in-person event cancellations.
Further losses are being experienced in dues revenue as members look for ways to reduce their own expenses. According to the Professional Convention Management Association, conferences and events account for an estimated 35 percent of total annual revenue for associations.
Indeed, meeting cancellations alone have dealt an astounding setback to associations.
According to a recent survey conducted by the American Society of Association Executives (ASAE) Research Foundation, the impact of COVID-19 on trade associations has been profound:
- 29% of respondents face $100,001-$500,000 in current and projected losses due to cancellations.
- 16% face $501,000-$1,000,000 in current and projected losses.
- 10% face more than $1,000,000 in current and projected losses.
- 12% have partial insurance coverage for cancellations.
- 52% have zero insurance coverage for cancellations.
In response to the crisis, organizations and associations who successfully reduce their losses reported taking the following actions:
- 71% reported a reduction in services/available operations.
- 67% have furloughed employees (not working but still provide benefits).
- 55% have closed offices
- 51% have laid-off employees
- 30% have reduced employee pay and benefits
It is evident that associations are significantly and uniquely challenged to continuously deliver the services on which their members depend.
COVID-19 and Trade Associations Seek Other Sources of Income
Many associations are now considering other sources of income, some of which qualifies as “unrelated business income (UBI).” UBI is any income derived from an activity that is unrelated to the tax-exempt purpose of the organization.
While the Paycheck Protection Program (PPP) portion of the CARES Act was not made available to trade and professional associations, other provisions around UBI and the carry-back of losses do apply to professional and trade associations.
To discover how these provisions of the CARES Act can benefit your professional or trade association, download our free eBook below.