Fiscal despair uncovers value of associations
Despite some advances in the job market, the past few months of 2012 were charged with economic pessimism. As the fiscal cliff loomed ever larger in people’s minds, hope for the economy retreated. In early November, 47 percent of Americans thought the country’s economic prospects were worsening. By about the same time in December, that number was 55 percent.
The Wells Fargo/Gallup Investment and Retirement Optimism Index, a broad measure of investor confidence, sunk from positive double digit numbers in early 2012 to -8 in November.
But while all these indications point to widespread gloom, there is reason to believe associations were outliers. At least according to Melanie Herman, executive director of the Nonprofit Risk Management Center. Herman thinks associations might have been insulated from last year’s despair. “With all of the country’s fiscal challenges, there’s one bright spot: business leaders are increasingly seeing the need to come together, thereby reinforcing the value of associations,” she said. Coming together is, of course, the central activity of associations, so there’s certainly merit in the notion. But is there evidence to support it?
There is. TRENDS conducts the semiannual PULSE survey (see November 2012) that measures association executives’ confidence in their organizations and the U.S. economy. The most recent results (October 2012), exhibit a striking anomaly. Whereas executives’ confidence in their associations’ members remained high, virtually unchanged from the previous spring, faith in the economy plummeted. This derailed a three-year trend in which the two have waxed and waned in near tandem, revealing two important facts about associations.
Firstly, the results confirm that faith in associations’ prospects isn’t totally tethered to broad economic sentiment. Even while the two fluctuated at roughly the same pace for the past three years, confidence in associations was consistently higher, with the most recent divergence bolstering this fact. Secondly, and in the same vein, the results highlight a pattern last seen during the recession: optimism for associations is impervious to surges of pessimism for the economy.
In 2008-09, when good-feeling was near its nadir for the economy, assurance for associations reached its peak. Similarly, confidence in associations for this last period remained comfortably above its five-year average, even as economic despondence swelled.
Herman’s theory might find a footing in reality. Associations, by their very nature, might prove to be immune to economic distress. But this, like anything, would have its limits. The only data available indicate that association executives are almost unshakably optimistic, but certainly something can rattle them. It’s likely in everyone’s best interests that this remains unknown.
