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Rethinking Necessity, Small Boards Prosper

January 1, 2012

Because the housing market has ebbed more than it has flowed in the past few years—causing reservoirs of new members, reserves, and assets to evaporate—the most American of things has occurred within REALTOR® associations: We’ve been forced to innovate.

Circumstances vary, but each board has been hard pressed to embrace the new need to do more with less, or, at least, the same with less.

In the Quad Cities, the number of REALTORS® has dropped like Midwest thermometers in January, from 940 in 2005 to the current 730, with an additional 10 percent dip expected in 2012. The local market has not experienced the huge appreciation and depreciation swings of other areas, but losing one in four members is still tough. Yet the association is now experiencing a recovery due to new business practices.

I joined the QC as the AE in October 2010 and discovered we were heading for a red-end. The director of finance estimated we would finish the year $15,000 to $20,000 in the negative unless we changed course. Immediately tightening the belt, we ended the year operationally dead even. This year we will end the year $180,000 in the black.

How did we do it? First, we adopted a scarcity mindset, basing purchasing decisions only on need throughout the year. For instance, I’d been using my personal laptop at work even though the budget allowed for a new one. Next, we used what McHenry County Association CEO Jim Haisler calls the “we’re only a tiny little not-for-profit and have no budget for this” plea with vendors, and it worked to get new discounts. We also eliminated one full-time staff position, reduced by half the association’s portion of health insurance premium payments, and added a new assessment to cover the cost of administering our lockbox service.

These measures, coupled with conservative revenue estimates and an ongoing effort throughout the year to make a bit of money off each event or education class, filled the revenue pitcher to overflowing. None of our approaches was new, but they proved effective.

Polling a number of experienced colleagues, I found many using a similar formula. Cindy Pelz, EO for the Des Moines Area Association of REALTORS®, and Bob Reisinger from the Waterloo/Cedar Falls Board of REALTORS® took the belt-tightening approach further, cutting travel, donations, and committee funding.
Some associations have cut to the quick to maintain financial viability. “The board of directors cut seven paid holidays and took away some vacation days. To say our budget is tight is an understatement,” says Barbara Kerr, EO of the Burlington Association of REALTORS®, Iowa.

Raising money and increasing value proposition

If you walk into the Three Rivers Association of REALTORS®, Ill., and ask the man vacuuming the office if you can talk to the CEO, you’ll find you already are. “We reduced staff and on Friday afternoons we take care of cleaning chores instead of hiring a service,” explains CEO David McClintock.

Gerri Keating, CEO of the Oak Park Area Association of REALTORS®, Ill., has done the same thing, and trimmed additional expenses by reusing paper and plastic, in addition to canceling all subscriptions.

Dallas Hancock, CEO of the Peoria Area Association, says she eliminated a social event and focused resources instead on growing an annual donation drive. “The annual holiday party held at the country club was canceled in favor of members contributing to our annual turkey drive. We knew it would be tough to do both, and we didn’t want the food pantries to suffer.” So instead of the holiday gala, the association used affiliate sponsorship money to host a more casual free holiday open house at the office. The open house was so well received, Hancock plans a repeat in 2012.

Aside from cutting, think about what you can offer to add more business value or more personal value to association membership and involvement. For example, a week before Christmas, a member and I were delivering food to a soup kitchen. As the member unloaded the last bag of potatoes into the kitchen’s storage room, she dusted off her hands and said, “That’s the best thing I’ve done with the association since I joined.” We’d spent the morning with a group of members, picking up groceries from Save-A-Lot, stacking them into cars, and delivering them to the Salvation Army.

Everywhere you look there’s an opportunity to reduce costs and increase value. Now is the time to innovate.

Extreme Cost-Cutting!

Dan Sale, CEO of the Capital Area Association of REALTORS®, Springfield, Ill., has tried almost everything to cut expenses and boost revenue at his association. Here, he gives us a peek at the extreme ideas still on the drawing board:

  1. Install parking meters in our parking lot.
  2. Require staff to purchase a parking tag, but make it very easy for them and deduct it directly from their check.
  3. Cancel all but one of our phone lines, which would transfer to the Illinois Association of REALTORS®.
  4. Open up a currency exchange and pawn shop in the REALTORS® store.
  5. Produce a “Men of CAAR” calendar! (Should be a best seller in our store.)
  6. Stop using detergent in the dishwasher.
  7. In the summer months, require staff to work one hour a day in CAAR’s vegetable garden pulling weeds and harvesting vegetables, which are sold at the local farmers’ market.
  8. No longer pay CE instructors to sleep in a hotel. Instead, purchase a roll-away that would fit nicely in the spare office.
  9. During the holidays, have staff stand out front with a big red donation kettle while ringing a bell.
  10. No longer buy double-ply toilet paper—only single ply. Next year maybe start charging to use the rest rooms.

All kidding aside, financial viability today means considering every option and getting very creative.

 

Shane Johnson, CEO of the Quad City Area REALTOR® Association, Bettendorf, Iowa. He can be reached at 563-355-6655 or sjohnson@qcarealtors.com.