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Best Professional Practices for Association Management Companies

Preamble

By developing these best professional practices for association management companies (AMCs), the International Association of Association Management Companies (IAAMC) and the American Society of Association Executives (ASAE) and its Association Management Company Section are providing management tools for use within firms as the standards of industry practice. These best professional practices signify the commitments of both organizations to enhancing the professionalism of the association management industry. The reliance of association leaders on the leadership and counsel of association management companies imposes on the industry an obligation to maintain high standards of competence and integrity.

Volunteer and staff leadership

Background: One role of staff leadership is to serve as a valuable resource to the volunteers. Staff members should assist their volunteers in being mission-driven by developing a clear vision of success and implementing activities to ensure that stated goals and objectives are achieved. Communication and recognition are key to successful relationships and positive outcomes for volunteers. The AMC should also support client volunteer leaders in being mission-driven and should serve as a resource in volunteer leadership development. The level of volunteer involvement will determine the frequency of contact needed.

Professional standards: The following practices are important to supporting a strong relationship between the AMC, its staff, and the client-volunteer:

• The chief elected officer of each client association should be contacted by the AMC owner or by an AMC executive other than the account executive at least monthly, or as otherwise agreed upon with the client.
• In addition to the account executive, the AMC owner or an AMC executive should attend a board meeting of each client association at least once each year, or as otherwise agreed upon with the client.
• The AMC owner (or an AMC executive), the account executive, and the officers of each client association should follow a mutually agreed upon schedule for regular review of the terms of the management contract.
• Each client association should have a formal program of assessing AMC performance annually or as otherwise agreed upon with the client.
• A leadership development program with a board of directors orientation, including training sessions and/or reading materials, should be provided for the current and incoming elected officers and directors of each client association.
• Significant policies and procedures established by the client association's governing body should be collected in a single location, such as a policy manual, and be approved and regularly reviewed by that body. Any of a variety of formats, ranging from a simple file to a sophisticated publication, may be appropriate, depending on the association's mission and resources.

Contractual arrangements

Background: All parties are best served by a written contract or agreement that explicitly defines the responsibilities of each. This clarifies what the respective parties can expect from each other and is especially beneficial for clients, who typically have less experience with management issues than do AMCs.

Professional standards: In the interest of developing a solid relationship of trust between the AMC and the client association, the specifics of performance should conform to the spirit of the following guidelines:

• The AMC and client association should create a written agreement that defines the scope of work to be performed, the fees and charges associated with that work, and other obligations and responsibilities of both parties.
• The agreement between the AMC and the client association should clarify ownership of all intellectual property and include provisions assigning to the client all copyrights, trademarks, trade secrets, or other intellectual property developed for the client.
• The AMC and the client association should agree to an ongoing relationship that can be amended or terminated by either party with agreed-upon notice. An acceptable alternative is to provide a specific period of time after which the relationship will end unless otherwise renegotiated.
• The AMC and client association should agree on the time frame and method for notification of termination without cause as well as the definition of "breach" and the procedure for its reparation should it occur.
• The period of notice stated in the agreement should not excessively bind the client to the AMC and it should allow the client sufficient time to make alternative management arrangements. The period of notice should also provide the AMC reasonable time to adjust its business.
• Both parties should have a reasonable expectation that neither will hire employees of the other. In addition, AMCs should be protected from direct solicitation of its clients by its employees.
• As laws and enforcement differ across jurisdictions, AMCs should understand the laws of their state as well as those of the client? state. The written agreement should identify the jurisdiction? laws under which the agreement will be enforced.
• To avoid any activity that might be considered in restraint of trade, AMCs should be familiar with antitrust issues. They should also be familiar with all other Federal and state laws affecting their companies and their clients, including laws applicable to copyright, trademark, tax, and employment.

Financial management

Background: Finance and accounting can be viewed as processes with defined protocols, management tools, and mechanisms of memorializing financial transactions and activities. The role of financial management is more important now than ever before. Sound financial decisions and appropriate financial planning are critical to the survival of any organization and are essential to maintaining the trust of involved parties and the public. Professional standards and company policies must be communicated to staff in a way that gives them a clear understanding of the importance of the AMC's role in the management of clients' funds.

Professional standards: Following are the key financial management functions of AMCs:

• Serving as financial interface between the management firm and client.
• Serving as broker/procurer of goods and/or services of third-party vendors to the client association.
• Documenting and organizing corporate records and advising clients to prepare appropriate and timely reports to local, state, or federal agencies and the fiscal condition or obligations due such entities.
• Providing a thorough articulation of the financial principals upon which the client-AMC relationship is based, particularly as they affect the financial position or viability of the client. This disclosure should include all facets of the relationship, billing, and charges for goods and services, as well as full disclosure of commissions received by the firm or purchases made on behalf of the client.
• Ensuring that the accounting function is staffed by competent and bonded or insured individuals trained to carry out their assigned fiscal responsibilities.
• Implementing a process for the maintenance and presentation of timely, understandable financial reports that meet the client's organizational and operational needs.
• Implementing a financial system with formal accounting policies and procedures based on the appropriate "generally accepted accounting principles" that have been ratified by the client association's boards of directors.
• Implementing management plans and practices that ensure the integrity of the AMC? and the clients' financial assets; specifically, prohibiting the commingling of funds between the AMC and any client, or among clients.
• Devising 1) a strategy to assist the boards of directors of clients' associations in the development and administration of a budget, and 2) a budget-setting process that is fiscally responsible and ensures genuine fiscal accountability to the client associations' boards of directors, memberships, and appropriate governmental agencies, while meeting the client associations?organizational goals and objectives.
• Establishing an effective cash-flow management program that includes a reasonable return on the investment of clients' funds.

Office and technology systems

Background: A primary responsibility of an AMC is to provide a professional office appropriately suited to meeting the needs of every client served. This imposes a duty on the AMC to provide high-quality office and technical systems for its clients.

Professional standards: To further the professionalism of and foster a positive image for the AMC industry, the AMC should accomplish the following:

• Establish a professional office suitable for office-related business functions to serve as the headquarters location for each association client.
• Establish, within reasonable budget constraints, an office environment with a general appearance comparable to other professional businesses. Both the exterior and interior should provide visitors with an image of a professional operation and atmosphere.
• Maintain, at a minimum, standard business hours of operation during which the office is open for personal visitation.
• Provide, within reasonable budget constraints, office furnishings and fixtures that project an image of professionalism at least comparable to those that may be expected within the offices of other professional businesses.
• Maintain in proper working condition and in a manner consistent with current business practices all equipment necessary for the efficient delivery of AMC services for which the AMC has contractually obligated itself.
• Maintain a planned equipment replacement schedule, with funding plans, for those pieces of equipment critical to the delivery of professional AMC services.
• Make available all racks and storage space, both internally and off-site, necessary to meet contractual obligations for the storage and/or availability of all materials, records, and other storage items.
• Segregate all property of one association from that of all others, so that the property of each client association remains easily identifiable in the event of separation and/or any other request for the prompt return of any or all association property. Under no circumstances should the property of one association be co-mingled with that of another to the extent that rightful ownership of such property may become questionable.
• Segregate each client's files within the established written office filing procedures and provide general ongoing maintenance of the association's current and historical files in a manner consistent with each association's file retention policies currently in effect. Procedures should include, at a minimum, a disaster restoration plan for the safeguarding of files, off-site storage of computer back-ups, and appropriate insurance.
• In the event that no written file retention policy is in effect, recommend the development of a policy recognizing long-term administrative and legal considerations.
• Maintain all files in an orderly fashion so that the identification of both the general file location and individual file contents can be determined by anyone, including members of the association and staff members not directly involved with the association.
• Clearly state in association service agreements 1) that all physical property purchased by the association, including furniture, cabinets, computers, and other office equipment, merchandise, files, and supplies, will remain the property of the association in the event of separation, and 2) that the AMC will in no way retain any such property following separation unless otherwise agreed to by the association.
• Provide the computer and communication technology necessary for effective and efficient delivery of contracted association services. Computer technology should include software applications commonly used in business for word processing, database management, and accounting. Network storage and PC file structures should be maintained in a manner in which the word processing files, database records, accounting, and other computer-related property of one association will remain segregated at all times from those of the others.
• Remain proficient in current and emerging technologies, enabling the AMC staff to provide professional guidance to each association client about anticipated changes and improvements in commonly used computer and communication technology.
• Maintain written policies and procedures for internal office operations in a manner consistent with the professional nature of the AMC and the industry.
• Make provisions, on an ongoing basis, to have the necessary executive and support staff available to handle additional work responsibilities while at the same time delivering services in a quality manner to associations with which the firm has already contracted prior to accepting new association clients. Adequate staffing resources should be maintained at all times during the course of the agreement as may reasonably be expected by the client associations for the delivery of contracted services. The management company should brief and train its staff for new work assignments required to accomplish contracted services prior to, and on an ongoing basis during, the term of the agreement.

Client termination and transition

Background: Transition can often be a confusing and irritating time for both the AMC and the client. Professional AMC staff members know the importance of ensuring smooth transitions conducive to undisturbed, uninterrupted management continuity.

Professional standards: The following guidelines are important to ensuring a well-planned and well-organized transition in which neither party (i.e., neither the AMC nor the association client) is harmed in any way:

• The AMC should develop a transition plan defining all steps in the transition process. Once the AMC is notified that the client is terminating the relationship, that AMC should develop an agreement with the client that clearly establishes the specific details, deadlines, and final payment terms (if any) associated with the transition. The agreement should set forth the responsibilities of both the current AMC and volunteers and the new AMC or directly employed staff.
• The AMC should meet all of its obligations to its outgoing clients, especially during the final few months of the relationship. Management agreements between an AMC and its clients require the AMC to perform specific tasks and provide specific services.
• The AMC should extend full professional courtesy and cooperation to the newly selected AMC or directly employed staff. The AMC should transfer to the client any and all association-owned property including data and "intellectual property."
• For the mutual protection of both the AMC and the client, the client should have an independent CPA firm perform a review or audit of client financial statements as of the date of termination.
• Prior to the transition of a client, any contracts with vendors that extend beyond the date of termination should be reworked and signed by an authorized client officer, thereby eliminating any further obligation by the AMC.
• The AMC should maintain a good relationship with vendors after a client leaves and ensure that the outbound client meet all its financial obligations to the vendors. Prior arrangement for a financial transition will eliminate the need for a vendor to pursue either the former client or the AMC for bills in arrears, thereby eliminating any friction among the three parties.
• The AMC should advise all appropriate vendors of a client? intention to leave the AMC and should provide the client's new address in the event that a vendor wants to continue doing business with that client.
• The AMC and the outbound client should establish guidelines as well as fees and charges (if any) for consulting services that will likely be rendered after the date of termination as a result of the transfer of information from the old AMC to the new one.

Disclaimer

The International Association of Association Management Companies and the American Society of Association Executives (and its Association Management Company Section) disclaim any warranties, expressed or implied, and shall not be responsible for liability or damages of any kind in connection with the information set forth in these best professional practices. In issuing these practices, IAAMC and ASAE (and its AMC Section) are not engaged in rendering legal, accounting, or other professional services. These best professional practices are intended to assist and guide in developing, maintaining, and terminating relationships between AMCs and their clients. Reference to these practices is completely voluntary, and the practices shall not be used to replace, modify, or interpret a legally binding relationship between an AMC and its client.