How Do You Create an Association?

Associations offer benefits to their members and the groups that they support. Centered around a common cause, this type of organization helps groups of people grow and adapt within their field with the support of similarly-focused individuals. But what if there isn’t an association that’s focused on your specific interests or cause? 

For those looking to create an association, here’s what you’ll need to be prepared for what lies ahead. 

What Is an Association?

In the simplest terms, an association is an organization that is formed to meet an unmet need. This might focus on social services or the arts, or it may address the business community. Some associations are small and local (think associations to support local library systems), while others are international, with thousands of members (like the Institution of Civil Engineers).

Association Corporation vs. Incorporation

These terms are similar and closely related, but there are some significant differences.

• Corporation: This is the group that’s formed to run the association. Corporations have a charter, and they pay taxes while they are in operation. 
• Incorporation: Incorporation is a legal status that protects the founders of the association from personal liability. The regulations for incorporation can vary from state to state and country to country. 

Incorporation is an extra step for your association that comes with significant benefits. 

• It's easier to change leaders or transfer ownership.
• The association is not tied to one founder. 
• Incorporated associations are eligible for grants and funding.
• Tax rates may be lower (or nonexistent).

Business vs. Nonprofit Associations

Before you even start to create an association, you need to decide whether you will be a business or a non-profit association.

Business associations provide services and benefits to trade groups or professionals. Boards are nominated and elected from among the members. Business associations are not tax-exempt and are bound by the Internal Revenue Code (IRC) Tax Designation 501(c) 4 or 501(c) 6.

Nonprofit associations are charitable organizations with a mission to support community members in need. The Board of Directors is appointed, and officers on the Board are elected by that body. As a charitable nonprofit organization, this type of association is tax-exempt.

Six Steps to Create an Association

Your journey in building an association is unique to your goals and purpose, but most follow six steps.

Step 1: Planning

You cannot get where you're going without determining the route. The first step in creating an association is to set the mission and vision. 

A mission statement outlines in clear terms what your association's goals are and how it will reach them. It provides a structure to guide decision-making and helps determine the actual step you’ll take to reach your objectives.

Vision statements are loftier and often designed before the mission statement. They are aspirational and set the overarching ideals of your association. 

In addition to vision and mission statements, you’ll need a business plan. The business plan needs to be comprehensive but easy enough for potential members to read and understand.

Your business plan should include:

• Executive summary: Your mission, vision, and basic information about leadership and memories: this can be a brief one-page pitch.
• Outline: Create a basic structure for your plan that includes sections on things like marketing, fundraising, membership requirements, and budgets.
• What you offer: Lay out what products and services you offer and how they benefit the membership and the community (and support your mission).
• Operational details: Explain how your association will be formed and run and by whom.
• Fundraising: If fundraising and grant writing is part of your association, include details on how that will occur as well.
• Marketing: Marketing plans are a critical part of an association's success. Add details about that here. This might also include fundraising materials.
• Impact statement: This is the final piece of the association business plan that lays out the impact you intend to have.

Step 2: Build the foundation

The foundation of your association is its Board. This group of high-impact, respected individuals helps to shape and focus the association's mission while working towards its vision.

You need to:

• Create a system for Board member recruitment.
• Develop a job description for Board members and officer positions.
• Schedule and conduct board member interviews.

Step 3: Fundraise

Nonprofit associations are eligible for charitable donations and grants from local, state, and federal organizations. Because it can take a long time to receive these funds, fundraising should be an active and early part of creating an association. 

Identify and solicit donations from individuals (including Board members and their professional organizations), but work towards identifying other funding opportunities within private and governmental entities.

Step 4: Incorporate your association

Incorporation is a step that occurs early in the process as well. In fact, it may be easier to recruit Board members to an incorporated organization, as they will not be personally liable for any missteps the association might take. File to become a tax-exempt incorporated association through the Secretary of State, but pay attention to your state’s laws and requirements, too. If you have recruited a lawyer to your Board, this is a great place to enlist their services.

Step 5: Apply for tax-exempt status

Becoming incorporated does not mean your association is automatically tax-exempt. This process can take a year or more, but it's post-dated to the date of the application. It's best to get started on this immediately.

Start by heading to the Internal Revenue Service (IRS) website and applying for a Recognition of Exemption. You’ll pay your fee, get confirmation of your application, and settle down to wait.

Once granted, part of the tax-exempt status process is compliance. Designate a specific officer to handle any paperwork the IRS requires to maintain your tax-exempt status. 

Step 6: Recruit members

You've done all the paperwork, started the fundraising process, and are well on your way to tax-exempt status. Now comes the fun part: recruiting members.

Revisit the marketing part of your business plan and reach out to anyone who is interested in the benefits your association has to offer. This might be a good time to schedule an initial conference or meeting. You might also look towards other organizations with similar interests. These community partnerships can bear fruit well past the founding of your association. 

The Journey Starts Here

If you are inspired to start your own association, following the guidelines above can help ensure success. Associations can have a major impact both on the industries they represent and the members they serve. As such, ensuring you have the right foundation for your organization can ensure long-term success and growth.