How to Start a State Association

The first step in forming an association is to identify a group of companies or individuals that share a common business interest. Once identified, the key leaders of these companies should be contacted and a meeting arranged (typically by conference call at first) to discuss the formation of an organization to represent the interests of the courier industry. For the purpose of this meeting, the individual responsible for the group’s organization should serve as chair. Open discussion should be encouraged on the need for an association and its primary purpose and objective.

Next temporary officers and a board of directors should be nominated and elected by a majority of those present. These temporary officers and directors will form the decision-making arm of the new association and serve until such time as permanent officers and directors are elected in accordance with the provisions of the group’s constitution and by-laws.

The next item of business will be to discuss the level and source of initial funding for the new association. It has been our experience that a minimum of $5,000 should be allocated to pay start-up cost that always accompany such ventures. The source of financing is, of course, up to those present to decide, but a common practice is to assess the charter members according to company size, that is the largest companies pay more than smaller companies. It is important that all present agree on the need for an association and commit themselves to paying the necessary costs for formation regardless of how these costs are assessed to the members.

The next item to be considered during the initial meeting is the formation of a committee charged with the responsibility of drafting the By-Laws for the new organization. The committee or individual will be responsible for drafting a document that will govern all future activities of the new association and should include as broad a cross-section of the industry as possible to assure that the interests of all members are reflected in the document. CLDA has created a template state association By-Laws and you are free to use this document as a starting point.

Next should be deciding on the scope of membership. Those in the core group should agree on the scope of membership such as will the association include only include couriers or will it include vendor and/or shippers and whether or not they can serve on the Board, etc. Ideally, the association should seek to include any membership category that serves its purposes and objective as stated in the By-Laws. Such categories of membership are often good sources of funding through the additional dues revenue they generate.

Of great importance in the determination of organizational activity is the written foundation upon which the organization stands and Bylaws define the scope, objectives, functions and responsibilities of the organization as well as provide a framework for implementation of policies and procedures.

The name and purpose of the association should be contained in the Bylaws and should be stated in general terms, yet be specific enough to keep the organization focused on its primary objectives. One of the most important requirements for the Bylaws is to provide for membership eligibility. Association membership must be representative if the association is to be effective. All who qualify should be eligible with no restrictions on reputable firms or individuals other than financial responsibility and integrity. Membership should be voluntary with no pressures, economic or otherwise. Most associations maintain the principle of “one member, one vote” regardless of size, income, volume of business of contribution to the financing of the organization. Such a system is highly recommended for its fairness to association members. Another important issue that the Bylaws must address is that of dues. Dues are the life-blood of any association and the Bylaws should assign responsibility for developing a dues structure. Typically, the governing body will determine the level of funding needed to adequately perform the tasks required to fulfill the scope and objectives of the association. Dues are then determined for each category of membership and each member within that category. Often, dues are based on the volume of business that each member does with the largest companies paying the most dues. If the association provides for associate (or non-voting) membership categories, these members are usually on the fringe of the association’s scope and objectives. Companies that sell to the courier industry have a vested interest in the industry but are not the primary interest of the organization. Dues should be set to allow the association to fulfill its mandate but should take into consideration the financial ability of its members to pay them.

The Bylaws should contain provisions for the election of a governing board, generally known as the Board of Directors, as well as individual officers. It should specify the number of officers and size of the governing board, eligibility requirements for holding office, length of term and succession, and powers and duties. The size of governing boards vary widely in general, the larger the association, the larger the board. Importantly, the board should be large enough to provide for adequate representation of the organization’s complete membership.

Bylaws should include instructions on how the documents may be amended when and if the future need arises. For most organizations, amendments may be proposed by any member in good standing then submitted for consideration to the governing board, then forwarded for consideration and approval to the full membership. The sample Bylaws provided by CLDA should be a great start but feel free to alter to fit your circumstances. This is your association and you have the ability to shape it based on the desires of couriers in your state.

After your preliminary meeting, where all present have agreed on the need for a new association and its scope, and after Bylaws have been drafted and approved, the next step is to make your Association a legal entity complete with tax-exempt status. In most cases, the services of competent legal counsel will be of immeasurable assistance in facilitating the filing process.

You will want to establish your state association as a tax exempt 501(c) 6 organization as established by the Internal Revenue Service. In order to qualify for tax-exempt status, the association must be formed to promote a common business interest; be non-profit; have no income that inures to the benefit of individual members; and comply with existing tax-exempt requirements as specified by law. Once the association meets these requirements and submits an application for tax-exempt status with the IRS, the application is subject to review and approval. Once approved, the association is recognized as a tax-exempt organization and may legally conduct business as such.

The next item to be considered is that of whether or not to incorporate. Many associations are incorporated, however, this recommended step is chiefly a legal question and is governed by the desires of the group. The advantages of incorporation are setting limits on the liability of members, providing legal continuity of the association and simplifying the negotiation and enforcement of contracts. Applications for incorporation are filed with the Secretary of State for that state in which the association is to be incorporated. As a legal business entity, associations are subject to the same requirements as other businesses in the area of tax filings for employees, workers’ compensation, etc.

As we stated before, the filing of applications for incorporation, tax-exempt status, etc. are best done by, and after consultation with, legal counsel.

To limit the liability of individual Board members who have a fiduciary responsibility to the organization, CLDA very strongly recommends that before operations begin that Directors and Officers as well as General Liability coverage be obtained for the organization.

Primarily, the focus for any association can be broken down into four areas – government affairs; public relations and information; membership development and retention; and internal communications. Committees can be established that deal with each of these four basic areas. To begin with, most of these functions can be handled by the new Board but as you grow make plans to divest many of these responsibilities down to the committee level.

1. Government Affairs

Every industry or interest group is affected by actions of federal, state and local governments. In this regard, one of the most important roles that associations play is to represent the views of their members on issues and problems.

If there is one clear message in recent studies, it is that association lobbying and government affairs activities are of increasing significance to members. Government is reaching more deeply into affairs of industry and associations must respond with legislators and other government officials. The proper role of a Government Affairs Committee is to identify problem areas, formulate appropriate responses and communicate those responses to both government and their members. 

2. Public Relations and Information

A consistently important area that an association must concern itself with is that of Public Relations. Associations are charged by their members with the responsibility of communicating their message to the public at large in both a general sense and in response to a particular “crisis” or issue. Many PR programs don’t focus on the general public.

3. Membership Retention and Development

Membership development is vital to the well-being and growth of any association. As such, special attention must be paid to attracting new members and providing a range and quality of services sufficient to retain existing members. Membership development should be a consistent, on-going program in all associations and a dedicated committee should be established for the purpose of organizing programs to benefit individual and corporate members.

It is important to recognize what motivates companies or individuals to join associations. Of course the desire to see the interests of a particular industry protected and promoted is important but studies indicate that this alone is not sufficient to attract and retain members. In fact, sizable numbers of members join with a “what’s in it for me” attitude and, to be successful, and association must recognize this and provide appropriate programs and benefits accordingly. The association’s effectiveness depends on five factors – its annual budget, the size of its membership, its volunteer workers, the skill of its administrative staff and the aggressiveness of its programs. All depend directly on the membership; development and retention policies implemented by the association’s governing body.

4. Internal Communications

This important area goes almost hand and hand with that of membership development and retention but because of its importance we have included it as a separate category of management concerns. As we stated above, members will only belong to an organization so long as it serves their purpose. Studies have shown that one of the primary reasons for joining an association is to keep abreast of developments within the industry. Towards this end it is extremely important to develop good avenues of communication with your members. Such avenues may include newsletters, educational seminars, annual meetings and periodic updates on special issues of particular concern.

The well-managed association will act as a clearinghouse for information about its related industry and provide such information to their members. Such materials may include statistical reports, directories of firms and key personnel, certification and standards programs, etc. In short, the more information an association is in a position to provide to a member, the better its position to retain that member or attract new members.

It’s been said that a chain is only as strong as its weakest link, and associations can only be as strong as its membership allows it to be. No matter the level of competence and expertise of outside staff, it is the members themselves that are most familiar with the problems facing an industry and the required solutions.

These volunteer members, serving on various committees, provide the basis for any association to address its most vexing issues and problems. Committees generally fall into four categories: administrative, project, problem and liaison. Overlapping of functional responsibilities is the rule rather than the exception and some committees will be involved in portions of all four functions. We will examine, briefly, each of the four below.

1. Administrative

Administrative committees are concerned with organizational and operating procedures of the association. Examples include executive, nominating, policy, finance, budget, by-laws interpretation, membership, etc.

2. Project

Project committees study and recommend policy and action of particular association programs or services. They review problems and needs in terms of the organization’s function and objectives and recommend and implement solutions. Examples are public information, government affairs, education, statistics, etc.

3. Problem

Problem committees are generally ad-hoc committees established by the Board of Directors to investigate and propose solutions to special problem areas as they occur. They are also used to study the feasibility of developing new association activities of services. The value of these special committees lies in their ability to examine and review issues as they come up and offer suitable recommendations for their resolution.

4. Liaison

Liaison committees serve the purpose of promoting cooperative relations with other associations, government agencies, etc. to explore issues of mutual concern. The work of these committees is increasing in importance and value as associations become more and more involved in working with other organizations to solve mutual problems.

In every association, large or small, problems of coordination, control and continuity must be resolved through the development and application of financial policies. Financial procedures and policies may be established in one of three ways: by adhering to the By-laws provisions in this area; by action of the board of directors; or by application of additional practices on the part of the staff. The goal, however, is always the same, to smooth out financial wrinkles and maintain continuity regarding budgets and finances over time and through turnover of officers and board members.

It is the responsibility of the board of directors to make sure that the financial policies of the association are formally reviewed to keep them adjusted to changing conditions. It is equally important that procedures be established to provide for proper control on the collection of dues, the status of accounts and the provision of timely and accurate information on such accounts to those who direct association affairs.

Of importance to any organization is the adoption and adherence to a proper budget that allows an association to work within its financial limitations yet maintain the provision of essential services on behalf of the industry and individual members.

It goes without saying that one of the primary goals of any association is to anticipate and plan for the future needs of its members. Simple to say, but surprisingly enough, long range and strategic planning is sorely neglected by many associations large and small.

CLDA recommends that a component be established in any new state association to identify trends and future problem areas within an industry to better enable the association to address such concerns when appropriate.

Long range planning is a primary task of management. Planning makes things happen that might not happen otherwise and enables management to identify and address problem areas before they occur. Coping with change and rapid advancements in technology requires a special vigilance on the part of any association. Those that incorporate strategic and long range planning practices will be in a position to best serve their members.

Of course no paper such as this one will address every concern of the new association, but it is our hope that the information provided will assist you in organizing an association that is best able to serve your particular needs and those of the industry you seek to represent