Business Associations

SIC 8611

Companies in this industry

Industry report:

This industry classification includes membership organizations engaged in promoting the business interests of their members. Associations owned by their members but organized to perform a specific business function, such as common marketing of crops or joint advertising, are classified according to the function performed.

Industry Snapshot

The term "trade association" has been broadly used to describe most business associations. Trade associations are nonprofit organizations representing a group of businesses within a particular segment of industry. The membership of these associations is composed primarily of individual company representatives. There were approximately 7,600 trade associations operating at the national level in the United States in 2011 and thousands more operating at the regional, state, and local level. The oldest trade association in the United States is the New York Chamber of Commerce, which was founded in 1768. The U.S. Chamber of Commerce, headquartered in Washington, D.C., is the country's largest trade association.

Trade association staff members perform activities that are too costly or time-consuming for an individual company to perform on its own. These activities include monitoring government regulations, conducting industry research, collecting statistical information, and producing educational programs and materials. Businesses and government depend heavily on associations for their statistical information, which is often not available elsewhere. This type of in-depth research has been spurred on by advances in computer technology, which have allowed trade associations to collect and disseminate industry information on a more timely basis and to a more targeted audience. Associations also publish newsletters, periodicals, and directories.

Organization and Structure

Included under the classification of business association are boards of trade, other than security and commodity exchanges; business associations, other than civic and social; chambers of commerce; contractors associations; growers associations, not engaged in contract buying or selling; growers marketing advisory services; industrial standards committees; junior chambers of commerce; manufacturers institutes; merchants associations, not engaged in credit investigations; public utility associations; real estate boards; shipping and steamboat company associations; and trade associations.

Business or trade associations can be organized at the local, state, regional, national, or international level. Groups with similar interests also can belong to a federation or a collection of associations under centralized leadership, such as the National Retail Federation. Most business associations, depending upon the nature of their membership, fall under one of the following tax-exempt categories defined by the Internal Revenue Service (IRS): Section 501(c)(3) includes religious, charitable, scientific, public safety testing, literacy, and educational organizations; Section 501(c)(4) covers civic or social welfare organizations and local associations of employees; Section 501(c)(5) includes labor, agricultural, and horticultural groups; Section 501(c)(6) includes business leagues, chambers of commerce, real estate boards, and boards of trade.

The structure of an association depends upon the size of its membership and its budget. A large national organization may include hundreds of people on its staff. Usually a board of directors sets the policies of an association, and the executives and staff members are responsible for the implementation of these policies. Divisions within an association include the legislative staff, meeting planners, publications executives, public relations personnel, information and research executives, membership services personnel, and fundraisers.

The primary goal of all trade associations has been to improve the business of its members. In pursuit of this goal, trade associations have conducted research, set industry standards, and represented their members' interests before legislative and regulatory bodies. Trade associations also have provided information to many audiences, including the general public, association members, and government officials.

Background and Development

The origins of modern trade associations can be traced to the Middle Ages, when laborers and merchants formed guilds to ensure proper wages and maintain work standards. Associations in the United States began to grow during the Industrial Revolution. Due to the social and economic hardships caused by the Revolutionary War, local organizations developed more quickly than national groups. The rapid industrial growth experienced in the United States after the Civil War created numerous new trade associations and local chambers of commerce. Several prominent organizations were formed during this period, including the American Bankers Association (1878), the National Association of Life Underwriters (1890), and the National Association of Manufacturers (1890).

By 1900, 100 national associations existed in the United States, and by the end of World War I, that number had reached 1,000. World War II provided an opportunity for government and trade associations to work together to help meet wartime demands. Beginning in 1945, many associations changed to reflect the country's evolving work environment. Those representing declining industries or technologies often merged with other organizations, became inactive, or formally dissolved.

According to Dun & Bradstreet Market Reports, in 2009 nearly 27,750 business associations were in operation in the United States. The largest category within the industry was the unspecified designation of business association, which included 12,230 associations, accounting for 44 percent of the industry's establishments, 73,436 employees, and $7.38 billion in revenues. Chambers of Commerce were the largest subsector within the industry, with 5,299 organizations, accounting for 19 percent of the industry, 25,831 employees, and $1.93 billion in revenues. Trade associations accounted for 15 percent of the industry with 4,147 associations, 37,167 employees, and $5.67 billion in revenues. Other, smaller subsectors of the industry included community affairs and services, contractors' associations, and manufacturers' institutes.

Current Conditions

The American Society of Association Executives (ASAE) & The Center for Association Leadership represents mostly trade associations but also has members from professional societies, charities, and other nonprofit associations. In 2012, the ASAE & The Center had nearly 21,000 association CEOs, staff professionals, industry partners, and consultant members, representing 10,000 associations and serving some 280 million people in the United States and 50 other countries. Forty-eight percent of members were CEOs; 35 percent, staff professionals; and 17 percent, industry partners. According to ASAE & The Center, 7 of 10 associations conducted research or engaged in statistical gathering, covering nearly all areas of public interest, including the environment, employment, and product safety. This work enabled businesses to improve their performance by comparing output to costs.

Membership education was also a primary trade association activity. Trade associations also contributed greatly to setting, certifying, and meeting product safety and quality standards. Both the American Society for Testing and Materials (ASTM), and the American National Standards Institute (ANSI) have been devoted exclusively to standards testing. Other issues relevant to trade associations included the environment, energy conservation, health care costs, shifting values and attitudes in the workplace, technological innovations, declines in quality education, and a growing global economy.

Industry Leaders

The largest trade association in the country, the United States Chamber of Commerce, is a national federation of business organizations and companies. Founded in 1912, the U.S. Chamber of Commerce maintained its headquarters in Washington, D.C. and had a $163 million budget in 2008. Its membership in the early 2010s included about 3,000 local chambers, 830 trade and professional associations, and 3 million private and public companies. More than 96 percent of its members, according to the U.S. Chamber of Commerce, were small businesses with 100 or fewer employees, but almost all the largest U.S. companies were members as well. A Harris Interactive poll, conducted in December 2008, found the U.S. respondents ranked the U.S. Chamber of Commerce among the top five best known and most respected organizations in Washington, D.C.

The Chamber of Commerce represents a broad range of political interests for the U.S. business community on national issues regarding the economy, including taxation, energy, and environmental policy. In the late 2000s, the future of health care reform was at the forefront of its political agenda, as well as the state of the economy. The Chamber also informs and trains its members to participate in policymaking at the state and local levels and in legislative and political action at the national level.

The Chamber produces numerous publications and reports, available to its members and the public. Free Enterprise, a monthly newsletter, provides members news, analysis, and opinion. In addition, the Chamber publishes an annual evaluation of worker compensation laws and an employee benefits study. In 2009, the Chamber released a comprehensive study entitled "How They Voted," which ranked the key votes of members of the 110th Congress in the second session of 2008. Other endeavors the Chamber undertook in the late 2000s and early 2010s included establishment of Friends of the U.S. Chamber, "a grassroots program for people who want to make a difference and are committed to ensuring the strength of our economy"; support of the American Recovery and Reinvestment Act of 2009; and the launch of U.S. Chamber Small Business Nation, "a community founded on the open exchange of information and ideas while creating the opportunity for small businesses to speak with a unified voice." According to the Chamber, 75 percent of all U.S. jobs and 96 percent of the association's membership came from small business. The Chamber failed in 2010, however, when it lobbied to stop the Patient Protection and Affordable Care Act, instead promoting private market-based approaches to health care reform.

The National Retail Federation (NRF) was formed in 1990 with the merger of the American Retail Federation and the National Retail Merchants Association. The largest retail trade association, in 2010 the NRF represented more than 1.6 million retail establishments, including department, chain, mass merchandise, and specialty stores that sell men's, women's, and children's apparel, and home furnishings. According to the NRF, retailers accounted for more than 12 percent of all the businesses in the United States and 20 percent of the GDP in 2010. NRF, as an umbrella organization, represented more than 100 state, national, and international retail associations. The NRF conducted conferences and workshops and provided an extensive collection of manuals, bulletins, and promotional materials. This business association offered advisory services regarding all aspects of retailing, such as financial planning, shortage control, electronic data processing, telecommunications, merchandise management, traffic, security, store planning and construction, personnel administration, recruitment and training, and advertising.

In the late 2000s, NRF published Stores, a print and digital publication covering current trends, concepts, and promotional activities of the retail industry, as well as association news. NRF also produced three email newsletters--two monthly and one semi-monthly--to keep its membership informed about specific issues. Headquartered in New York, the National Retail Federation had a staff of about 100 and held its annual meeting every January in New York City.

The National Restaurant Association (NRA), headquartered in Washington, D.C., is a trade association for restaurants, cafeterias, clubs, contract foodservice management, drive-ins, caterers, institutional food services, and other members of the foodservice industry. The group's annual convention has become the largest association gathering in the United States. The NRA supported foodservice education and research in several educational institutions and conducted traveling management courses and seminars for restaurant personnel. This trade association also sponsored the Educational Foundation of the NRA, which provides training and education for food and equipment operators, manufacturers, and distributors. Founded in 1919, the NRA had a membership of 380,000 food service group affiliations worldwide by 2010. According to the NRA, the U.S. restaurant business employed 12.9 million Americans and generated $632 billion in annual sales.

The National Association of Manufacturers (NAM), also headquartered in Washington, D.C., represents manufacturers and non-manufacturers and voices the industry's political views on national and international problems. Founded in 1895, this trade association also maintained the NAM National Division in Maryland, a field headquarters in Chicago, and eight regional offices throughout the United States. The NAM reviews current and proposed legislation, administrative rulings and interpretations, judicial decisions, and legal matters affecting the manufacturing industry. The organization maintained numerous policy groups, including Government Regulation and Competition, Industrial Relations, International Economic Affairs, Resources and Technology, and Taxation and Fiscal Policy. In the late 2000s, NAM's radio show "America's Business with Mike Hambrick" was transmitted via national syndication to more than 60 markets in 22 states. Its Manufacturing Leadership magazine is distributed to 32,000 executives. In the early 2010s, manufacturing employed almost 12 million workers and contributed more than $1.6 trillion to the U.S. economy annually.

The Council of Better Business Bureaus (CBBB), located in Arlington, Virginia, has a mutually supportive relationship with 200 corporate partners and 116 Better Business Bureaus (BBB) across the United States and Canada. The CBBB acted as a mouthpiece for business to consumers, assisted in expanding and upgrading local bureau capabilities, helped establish voluntary self-regulation of national advertising, provided pre-purchase information to consumers, strengthened consumer education programs, and settled consumer complaints through arbitration. Although its inception dates back to the BBB system (founded in 1912), the CBBB was created in 1970 with the merger of the National Better Business Bureau and the Association of Better Business Bureaus. Beginning in 2007, the BBB began offering BBB accreditation to businesses who met their guidelines for business practices. In the early 2010s, there were more than 300,000 BBB accredited companies.

Workforce

This industry employed 116,609 people in the United States in 2011, according to the U.S. Census Bureau. Staff size and responsibilities largely reflect the membership size and budget of each association. Employment positions within associations generally have been divided evenly between executive and staff positions. As associations continued to grow in size and strength, so did the possibilities for employment within these organizations. Because staff members are exposed to a wide variety of functions and responsibilities, association employment can offer tremendous advancement potential.

Based on figures from the U.S. Bureau of Labor Statistics, chief executive officers in this industry earned an average annual salary of $185,450 in 2011; public relations managers earned an average of $98,210; management analysts made an average of $110,300; and compensation, benefits; job analysis specialists earned a mean yearly salary of $101,890; and executive secretaries and secretaries earned an average of $49,620 and $34,170, respectively.

Entry-level employment at associations generally can be found in the positions of conference planning, public relations, or membership services. Most jobs required that employees have a liberal arts degree and strong interpersonal and communication skills. Additional education, such as an MBA, legal training, or fund-raising experience, was sometimes necessary for financial services or legislative positions. An association executive could be designated a Certified Association Executive (CAE) upon the successful completion of a day-long written test.

Although associations were located across the United States, many of the largest associations were found in metropolitan areas. Washington, D.C., served as headquarters for more associations than any other city, with Chicago in second place and New York in third. Many trade associations also were located in or near state capitals.

America and the World

The exchange of technology and the ability to generate business in new markets led many trade associations to venture into the international arena by developing new kinds of relationships. For example, some associations engaged in international networking by creating an umbrella organization incorporating trade associations of various countries. Other international formats include foreign partnerships and working with U.S. embassies overseas.

Some business organizations have been developed for the sole purpose of fostering international trade relations. For example, the U.S. Chamber of Commerce was the world's largest business federation. In the early 2010s, its membership included not only domestic (U.S.) chapters but also over 100 American Chambers of Commerce (AmChams) abroad. In addition to promoting business interests within the United States through the auspices of AmChams, the chamber helped its members learn about the business environment and the general culture of a particular country. Membership services included supplying tax and credit information; arranging informal gatherings for foreign executives and their U.S. counterparts; briefing U.S. employees new to the region; and counseling relocated families about schooling, housing, and health care. As the global market continues to expand, trade and business organizations were expected to continue to broaden their scope; however, because many were focused specifically on protecting the interests of U.S. businesses, international expansion of operations for some associations would be inherently limited by the scope of their mission.

Research and Technology

Effective information management has become a vital function for the successful business association and was the driving force for the computerization of their office operations. On an annual basis, associations spent millions of dollars on computer technology. Most large business associations purchased mainframe systems in the 1970s to automate their record keeping. They added personal computers during the 1980s, and by the 1990s, they had amassed a collection of computers unable to communicate or interact with one another. Therefore, many associations started using local area networks (LANs) to share information among their departments. During the 2000s, associations linked to the Internet and started an online presence.

By the late 2000s, associations were making heavy use of the Internet to keep in touch with their membership base, disseminate information, and provide services. Most print publications were also available online, and some associations even offered online training for its membership. Whereas associations formerly communicated with their members once a week or once a month via a newsletter, by 2010 communication was instant via blogs, email newsletters, and RSS feeds.

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