Chapters Are Starting to Write Their Own Books

More and more, it looks like many national chapter-based organizations across the country are breaking up or reorganizing. They may be called chapters, affiliates or federated organizations, but, more and more, these small groups are growing up and demanding more respect, independence and control over the dollars they are raising.

The national-level motherships of these organizations that often see these chapters as not much more than local fundraising operations are—more often than not—demanding, not asking, that the chapters send as much as 40 percent of their revenues to the national level. If you include the local chapters' overhead costs and the “membership dues” chapters must pay, they are lucky to spend 30 percent of each dollar they raise on local mission-related programming.

For example, the Los Angeles Daily News reported on the fact that Alzheimer’s Association, California Southland Chapter, chose to disaffiliate from the national Alzheimer’s Association because, as board member Susan Disney Lord wrote:

"When our board looked at the public 990 reports, which the national office filed from 2005 through 2013, to our dismay we saw that national’s payroll went up 143 percent, from $18 million to $45 million. Rent went up 178 percent, from $2.5 million to almost $7 million, and travel expenses went up an astounding 347 percent, from $1.5 million to $6.9 million. Meanwhile research grants went down from $21 million to just over $13 million, a drop of 38 percent.

Rather than continue to send 40 percent of our locally raised funds to support a national office, which is not accountable to us in any way, we prefer to take control of 100 percent of our funds and direct them more effectively. We do not agree with the national organization’s plan to provide local support through a centralized 800 phone number and online resources. We believe that supporting families affected by this disease requires person-to-person contact and connections."

Local chapters also are affected when their national leadership does something that hurts the reputation of the organization as a whole. For example, when the Susan G. Komen foundation made a decision at the national level to defund Planned Parenthood, it all but crippled many local chapters that were not a part of the decision-making process. These actions at the national level quickly reverberate down to the local chapters—which are forced to clean up the mess.

Other times, the national organization may shut down, leaving the smaller local chapters to figure out their own ways to survive. Luckily, it is getting easier and easier for small organizations, even with all-volunteer leadership, to strike out on their own. While leaving a national organization means walking away from a well-known brand name, it also means more control over how the dollars you raise are spent.

Like what is happening in many industries, technology and new business models are allowing groups to go independent—you no longer need a national umbrella. Almost every support service a national chapter might be providing at 40 percent—like 501(c)(3) status, bookkeeping, insurance, audit, human resources support and benefits—can be found through a local fiscal sponsor that, on average, only will charge an organization 10 to 15 percent. If you truly are a grassroots operation with less than $50,000 in revenue, getting your own 501(c)(3) with the Form 1023-EZ is a great, fast and cheap solution for gaining your independence.

National groups should see this as a clear sign that they need to work on better managing their chapter relationships by giving local chapters a bigger say on how the money they raise is spent, and, possibly, board positions at the national level to give local chapters a voice and increase the transparency of their relationships. If national organizations don’t, just like in the music and publishing industries, more and more groups will go independent.