Informal coordination - A series of mutual actions of associations. Not based on an agreement, but on information exchange.
(In)formal network - Collaboration of at least three associations, varying from a system of communication to a group with its own logo, letterhead and secretary. Also known as community, forum or platform.
Coalition - Temporary collaboration of two or more associations on a specific issue. The collaboration can be focused on a policy area, service provision or administrative issues.
(Strategic) alliance - An agreement of co-operation by two or more organizations to pursue common goals by sharing knowledge and resources. The alliance partners share the control and revenues of the alliance activities. Normally, one organization takes the lead, supported by the other alliance partners.
Board overlap - The collaborating associations have one or more board members in common and, thus, influence one another.
Joint venture / SSC - A separate organization, founded by the collaborating partners, in which risks, costs and (sometimes) revenues of substantial projects or innovations are shared. A shared service center is a typical joint venture, in which supporting services (such as ICT-support, facilities) are shared. The founding trade associations are owners of the joint venture.
Federations - Associations of associations. Typical forms are the regional and institutional federation. Federations are complex to manage because of their multi-level governance structure, which causes many internal tensions.
Merger - At least one of the collaborating partners ceases to be an independent entity. Merged associations have a common name, board, statutes, etc. Sometimes all partners are liquidated and a new organization is founded, sometimes one of the association’s partners takes over all assets and liabilities of the association to be liquidated.
Resources consist of financial resources, as well as the knowledge and membership base, networks and human resources (staff and volunteers) of the association. Apart from the annual turnover, the origins of income are also an important indicator. Trade associations with many different contributors are more independent, and thus more influential, than those who rely almost completely on the contributions of a small number of members. A third indicator of financial resources is the predictability of income. Staff and volunteers can be measured in numbers, but also in experience and abilities. Trade associations with more (experienced) staff and more volunteers can perform more functions and/or deliver higher quality, and thus express more influence. As for the members, what counts is their number, their economic and political ‘weight’, the internal cohesion, the heterogeneity and the level of organization. The last two factors should not be maximized, but optimized.
Finally, associations should have a diversified activity mix, representing the collective interests of the members as well as interests of specific member segments, combined with services for individual members. This encourages loyalty and participation, puts the association in a position where it can trade off interests (thus gaining influence) and makes free riding less attractive.
To assess and predict the outcomes of the collaboration, associations can use a model called ‘the pyramid of influence’. This model (figure 1) shows the factors that together determine the effectiveness of associations.
Strategy, as formulated by the management, is the central factor and defines which input (resources) is needed to generate the output (activities) desired by the members and stakeholders. Three interdependent entities together define the governance structure of a trade association: members, staff and board members, although different logics require different structures. In any case, member participation in policy making is beneficial for influence.
When associations (want to) collaborate, they can assess which changes will occur in the building blocks of the pyramid. The more changes, the more likely that the association will gain or loose influence due to the collaboration.
In general, informal coordination, coalitions and alliances mostly affect the activity mix, whereas joint ventures, networks and shared service centers affect the resources. Board overlap and federations primarily change the governance and mergers tend to alter all factors defining influence. Therefore a merger, the most ‘extreme’ execution strategy, has the largest impact on effectiveness, either positive or negative. In the short run, the impact will most likely be negative, due to increased costs and loss of members and staff (compared to the separate merging associations combined).
Associations can collaborate in the following ways, increasing in formality and complexity:
For a collaboration to succeed, especially the more structural forms, the following conditions must be met:
The partners need each other;
The partners complement each other;
The partners trust each other.
Tim van der Rijken
Managing Consultant
Berenschot
Still a student – economics and law – Tim was already fascinated by associations. His professional career started in 2002 at the Royal Dutch Hairdressers Association, where he realized VAT reduction for labor-intensive services. Since 2005, when he switched to Berenschot, Tim supported dozens of trade and professional associations in strategy development, organizational change and collaboration. One of his biggest achievements was the total redesign of the vocational training for lawyers at the Dutch Bar Association. In 2011, he finished his Phd thesis on strategies of trade associations. Tim is professor at the Academy of Association Management and wrote many publications on strategy, governance and funding of nonprofit and network organizations.