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Performing Due Diligence: How an Association Board of Directors Should Evaluate its Association Management Company
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By Mike Dwyer, CAE, Association Headquarters & Paul Hanscom, CAE, Ewald Consulting
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It's not uncommon that an association board of directors will decide to take a harder look at its relationship with its association management company partner after a significant change has occurred. This could be a change in staff leadership, management fee adjustment, or shift in the scope of service. Some associations have governing documents that stipulate that a level of review is required on a given time cycle, e.g. every three years. And occasionally a particularly fastidious board member will ask when the board last performed such a review, claiming that it's the board's fiduciary duty to perform its "due diligence" to ensure the resources invested by the association in the services provided by its AMC are well spent.
Association boards should seek guidance on how best to fulfill their obligation of "fiduciary due diligence" to assess the association/AMC relationship.
For many board members, the first solution that comes to mind is to develop a request for proposal (RFP) for association management services. An RFP process feels like a natural solution and is a familiar business practice for vetting service providers in all sectors and industries. There are myriad resources and helpful tools to provide boards with guidance on how to successfully navigate an RFP; AMCI offers guidance on its website, including a well-structured and user-friendly RFP submission form.
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