In 2009, I was asked to take part of a Leadership Institute Program (LIP) at a synagogue I belonged to at the time. The synagogue staff had expressed that the membership dues revenue of the synagogue was down. This was not a shock as religious institutions have always had a difficult time sustaining themselves on membership dues alone. What was more troubling was when I asked how many members the synagogue had and the response was 750 families but only 200 pay annual dues (I was included in that number). Naturally the follow-up question was what about the other 550 families? As it turns out, those families were offered a one-time lifetime membership fee 10 years prior.
I don’t want to sugarcoat this but I will say that for member-driven organizations, LIFETIME (aka Perpetual Memberships) are rarely a good idea. In most cases (not all) it’s a money grab for organizations struggling with current year cash flow. Its an incentive to get members in one-time rate that will likely be equal to less than what they’d pay over a period of time. For the organization, the strategy is to take a large sum of money, reinvest and use for the future use or irresponsibly dump it into 1 big thing that is needed at that time. The problem is that organizations often don’t plan properly. It would require professional actuaries and complex calculations to figure the average member income over time. In other words, a young family assumingly should be charged more and not the same as an older family. The gamble is people die or move away and the organization has made out best in the deal.
Here is some arithmetic. Let’s say your annual membership is $100. You may say a lifetime is $1500 but what if said member outlives that membership? Better yet? In this hypothetical example, a member has more than 15 years of membership. What if the value of membership changes or organizational structure changes? There are always unforeseen circumstances that may occur. In the case of the synagogue, the potential of big checks were important ten years ago because there were capital improvements needed at the time. Remaining funds were indeed properly invested but in the end they did not project out well. There has not been little change in membership growth. Retention has been great because of the Lifetime Membership purchases. In almost all cases, Lifetime Memberships is a risky proposition and it may not have an immediate impact on the current operations but will ultimately effect the future of the organization.
If cash is a concern, I suggest two alternatives to Lifetime Memberships. The first is a one-time Capital/Endowment Campaign. It is a way to allocate extra monies for present needs of the organization. There is no shame in saying money is needed to fund a new building wing or a valuable program that benefits the association. There is a specific focus and purpose. A more standard practice may be tiered- memberships. For example: Gold, Silver and Bronze. Each of these offers different privileges and benefits based on cost of membership.
Finally, there may be a compromise. Although it’s hard to amortize and calculate the cost of a Lifetime Membership. I can see a value in multi-year memberships. In this scenario it is easier to project for 2-3 years than perpetually. The benefit is renewal efficiency. This means less time in retaining and more time to build value. It’s also easier to see the strategic vision and structure of the organization 2-3 years down the road as opposed to 10 years plus.