Thinking about starting or growing a private membership association (PMA)?
It’s a serious commitment with long-term effects that go far beyond day-to-day operations. A PMA has its perks, but it also comes with challenges. Being aware of those challenges can help with decision-making as well as shape your PMA for success.
Therefore, understanding the private membership association’s pros and cons is key to laying a solid foundation for your organization.
What is a private membership association?
PMA is an organization where individuals voluntarily come together, usually for mutual benefit, and operate outside of much of the public eye.
PMAs aren’t bound by the same regulatory frameworks that apply to public businesses, and their membership and activities are often private, which allows them to maintain more control over their internal operations.
If you’re after a bit more independence in how you run things, a PMA might seem like a solid choice. But, like most things, there are some caveats to keep in mind when considering the private membership association pros and cons.
Key characteristics of PMAs
- Self-governance: PMAs often set their own rules. They create and enforce their bylaws without much oversight from external authorities.
- Private contractual agreements: The relationship between PMA and its members is governed by private contracts. Essentially, members agree to follow the association’s rules and participate in its activities under the terms set by the organization.
Alt text: Business leaders brainstorming the pros and cons of starting a PMA
Private membership association pros and cons
If you’re already running a private membership association (PMA) or thinking about setting one up, understanding the private membership association’s pros and cons can help you make better decisions.
Pros of private membership associations
For those considering building a private membership association, the pros can be compelling.
Greater autonomy
One of the top reasons people choose to build a private membership association is the control it offers. You’re not tethered to public regulations in the same way traditional businesses are.
Privacy protection
Privacy protection is especially useful if your association deals with sensitive or specialized interests.
PMA provides a safe space for members to engage and collaborate without outside interference, making privacy protection a notable “pro” in the private membership association’s pros and cons.
Community bonds
PMAs are built around a shared interest or purpose, so they often foster stronger relationships among members.
These close-knit communities can lead to more engaged and committed members, who are likely to stay loyal to the association over the long term.
Cons of private membership associations
If you’re on the fence about forming a PMA, here are a few drawbacks to consider when weighing the private membership association’s pros and cons.
Legal complexities
PMAs are not entirely exempt from legal scrutiny. Operating in certain industries such as firearms-related associations or wellness practices such as herbal remedies or unlicensed therapies could land your association in a legal gray area.
Financial sustainability
PMAs are often reliant on their member base for revenue, unlike public organizations that can tap into broader markets or funding sources.
If membership numbers dwindle or if there’s an economic downturn, PMAs could face financial instability.
Limited outreach
Operating privately might be a strategic decision, but the reduced visibility can make it harder to attract new members or expand your influence beyond your current circle.
When considering the private membership association’s pros and cons, think about whether this trade-off aligns with your long-term objectives or not.
Alt text: Team discussing legal consideration and financial sustainability before structuring their PMA
Understanding the legality of private membership associations
Private membership associations are legal in the U.S., but their legality depends on how they operate and where they are established.
In most cases, PMAs operate under the 1st and 14th Amendments, allowing them to associate and contract privately. However, this doesn’t mean they’re immune to all regulations.
Legal status of PMAs in the U.S.
The specific legalities surrounding a PMA can vary depending on the state, the nature of the association’s activities, and how closely it adheres to its private status.
It’s crucial to understand that, while a private membership association can bypass some of the regulations imposed on public businesses, it isn’t a free pass to do whatever you want.
For instance, engaging in activities that violate criminal laws or public health regulations could land the association in trouble.
Weighing the private membership association’s pros and cons becomes critical when considering legal challenges, especially if your association operates in a gray area.
Legal protections and limitations
Another key legal factor to consider is that while PMAs can avoid some public disclosure requirements, they must maintain their private status to enjoy these legal protections.
If a PMA strays into public business activities, it may lose its private status, exposing it to greater regulation.
Navigating the private membership association’s pros and cons in terms of legality often requires professional legal advice to ensure compliance and avoid unintended consequences.
Taking the right call
Weighing the private membership association pros and cons is essential before making any decisions.
While the autonomy, privacy, and community aspects can be appealing, the legal complexities and financial sustainability challenges are just as important to consider.
A well-thought-out PMA requires serious brainstorming to ensure it aligns with your long-term goals.
But deciding to form a PMA is just the beginning. You’ll also need to think about the tools and support you’ll need to manage your association efficiently.
Aptaria’s association management services can make all the difference if you’re looking for expert guidance and tailored solutions.
Their Salesforce consulting services are designed to bring a shift in the way PMAs operate, enabling them to nurture and maintain a lasting impact and relationships with their members.
FAQs
What is a private membership association?
A private membership association (PMA) is an organization where individuals come together voluntarily to pursue mutual goals. Unlike public businesses, PMAs operate privately, often outside of many governmental regulations, and manage their own membership rules and internal governance.
Are private membership associations legal?
Yes, private membership associations are legal in the U.S. They operate under the 1st and 14th Amendments, allowing for freedom of association. However, PMAs must comply with state and federal laws, particularly in industries with stricter regulations, like health or firearms.
What are the key benefits of starting a private membership association?
The key benefits of starting a PMA include greater autonomy, privacy protection, and the ability to foster a strong community. PMAs offer flexibility in governance and are not bound by many of the public regulations that apply to traditional businesses or public organizations.
