Staffing an APA division: Independent contractor vs. association management company

Division leaders sometimes express interest in engaging help with administrative duties so that elected and appointed leaders may focus on strategic goals. Over time the number of divisions has grown to 16 that have engaged an independent contractor and 5 that have engaged an association management company (AMC). Let’s explore their similarities and differences and considerations for each option.

Two important notes that apply to both:

• APA asks divisions to use its Independent Contractor Agreement template (DOC, 94KB)opens in new window.
• Association Rule 100-1.7opens in new window requires legal review for all contracts of more than $10,000, and APA staff recommend review for all contracts.

Independent contractors are self-employed individuals who provide specific services—usually project based-- to an organization. They operate independently and are not considered regular employees.

Advantages

• Flexibility: Independent contractors offer flexibility in staffing. You may engage them for short-term projects without long-term commitments or complex terminations.
• Expertise: Contractors bring specialized skills and knowledge, allowing your organization to tap into expertise as needed.
• Cost control: You pay for services rendered, avoiding additional costs like benefits, payroll taxes, and insurance.
• Compliance: Generally, there are many fewer laws that hiring organizations need to follow when retaining contractors—so compliance challenges and legal expenses are minimal. 

Challenges

• Loyalty: Contractors may not have the same loyalty as permanent staff (although most APA division-administrator relationships have been in place a long time and an agreement helps ensure a certain period of work).
• Legal risks: Misclassifying contractors may lead to legal penalties. Ensure compliance with IRS guidelinesopens in new window and DOL Rulesopens in new window. If you believe that the help you need would likely be classified as an employment relationship (rather than a vendor/contractor relationship), you may want to consider contracting with a temp agency to fulfill your short-term or part-time needs, these agencies will take on the burdens of employment relationships but may charge a higher rate for the worker. Please consult with APA’s Office of General Counsel if you have any questions. If you believe that the help you need would likely be classified as an employment relationship (rather than a vendor/contractor relationship), you may want to consider contracting with a temporary agency to fulfill your short-term or part-time needs. Such agencies will assume the burdens of employment relationships, although they may also charge a higher rate for the worker. Please consult with APA’s Office of General Counsel if you have any questions.
• Limited supervision: Contractors work independently and that limits your control over their processes, including the hours they work, unless there is an agreed upon expectation for supervision and review.

AMCs are professional services firms specializing in managing nonprofit organizations. They provide comprehensive or select services, including operations, marketing, communications, event planning, and membership support.

Advantages

• Expertise and efficiency: AMCs bring a team of experts across various domains, ensuring efficient operations.
• Cost-efficiency: Shared resources reduce costs compared to maintaining an in-house team.
• Continuity: With multiple staff, an AMC may offer back-up if a regular administrator is not available or leaves.

Challenges

• Cost: AMCs charge fees that may be higher than hiring individual contractors.
• Limited supervision: Outsourcing to an AMC means relinquishing some control over daily operations.
• Compatibility: Finding the right AMC that aligns with your organization’s values and culture is crucial and some divisions have had difficulty finding the right fit.

Assess your needs

• Consider the scope of work, duration, and r expertise needed.
• For short-term projects or specialized tasks, independent contractors may be ideal.
• For comprehensive management, AMCs offer a holistic solution.

Evaluate costs

• Compare the costs of hiring contractors versus engaging an AMC.
• Factor in not only financial costs but also the impact on organizational efficiency and effectiveness.

Mitigate risk

• Ensure proper classification of workers to avoid legal risks.
• Consult legal and financial experts to make informed decisions.
• Determine whether the AMC assumes legal responsibility for the obligations it undertakes for the division, such as financial matters and tax payments.

• Put out a call among members. “Our division put out a call among division members for the position and received applications. The executive committee reviewed the applicants, interviewed, and engaged them.”
• Provide leaders with a wealth of knowledge. “Having an executive director is invaluable. The person in this role possesses a wealth of historical knowledge, which is beneficial when discussing bylaws or changes. This is the one person whose position is stable throughout the years. Therefore, this person can help new executive committee members understand the thought processes of their predecessors.”
• Find someone who knows the division and APA. “My advice is to hire someone who has previously served on the executive committee and understands the division's inner workings. This person should also be knowledgeable about the APA's organizational structure.”
• Be patient. “The main thing we've learned is that it can be hard to find someone. Our first two administrators lasted less than a month each. Then we engaged someone I had known who did some work for another organization, and they have been a gem. So be prepared for a bumpy road, and hope you get lucky, as we did!”
• Think about funding. One division officer noted that even when finances have been tough, they’ve recognized that a contractor's support is invaluable and worth the allocation of funds.
• Find someone who will work with you. Their contractor has been exceptional in working with them, noted one division officer, to keep both parties content. “They’ve raised their rates—which is expected—but they have worked with us to help cut things we don't need. The best advice is to find someone you can have difficult conversations with and who is responsive to communication, including drawing boundaries based on their contract.”
• Orient incoming leaders. A long-time administrator said they begin meeting with the new president a few months early to assist with transition. They add the new president-elect to emails. “Tracking deadlines with a master calendar helps. Expecting all leaders to follow through in the same way doesn’t work as there are individual differences. Individualizing works best. I remind leaders to copy me on emails so I can support them.”
• Communicate regularly. “The board manages the ED. An agenda is set at a yearly retreat. Our ED has been good at memorializing all the tasks during the year. If a transition is necessary, the list would be available for our new ED. The president connects with our ED at least once a week. That regular contact is helpful in increasing the efficacy of our operations.”
• Make being a volunteer easier. “I realize that other people in my position are on their own. Because of our administrator, I don’t do any heavy lifting. They do a lot. For volunteers, it makes it more digestible. You’ve got support.”
• Think about the future. Reflecting on changes, one officer said, “We’ve had one person a long time. She knows and does so much. She encouraged us to think about where the division is going. We have an assistant because our division has grown, and we needed someone else to take on some tasks. Our admin trained the new person and decided who did what. The new person did well, so we moved more from our admin.”

One division officer who works with an AMC said the process took about 3 months and included the following steps:

• Inquire on the DIVTRIO listserv about which divisions have a division manager.
• Get three leads and reach out to them.
• Go to the executive committee with the project.
• Meet with the president of the AMC to discuss the division’s needs.
• Ask the AMC president to draft an agreement (use the APA template).
• Send to APA for legal review.
• Share the feedback with the AMC and executive committee.
• Sign the AMC agreement. 

They noted, “An AMC may look expensive, but it saves money because we secured our own office address and we have the flexibility to get help from other AMC resources, such as marketing, if needed. After discussing with the AMC, don’t be afraid to negotiate the final fee. One issue we’ve had is that sometimes things get sent to the manager when they should not be, so it is helpful to be clear about who does what.”

The division shared the draft agreement with the division treasurer for input especially because someone would need to supervise the work of the AMC staff person, get reports of their work, and ensure payment. It made sense for the treasurer to do that and get support for some of their work.

The division officer listed some of the benefits of the division’s work with an AMC as:

• If the manager is not available for some reason, someone else from the AMC can fill in.
• They have more people who can be helpful resources in other areas, such as marketing.
• It helps provide continuity over officer changes but can take some time to learn how to work together (important to remind incoming officers to copy the manager on administrative emails).
• Their headquarters gives the division a central address (besides APA).
• Before, when the President left office, things got forgotten about, but now there is someone to hold onto that information over time and look back as needed.
• Be sure to require a review at the end of each year’s agreement so there is an opportunity to discuss what did and did not work.

Both independent contractors and AMCs have merits. The key lies in aligning your staffing strategy with your organization’s goals, resources, and mission. Whatever route you choose, remember that your support plays a pivotal role in advancing your division’s impact.

By making informed choices, you’ll build a strong team that drives positive change and fulfills your organization’s purpose.

This article provides general guidance, based on the experiences of your peers. Be sure to consult with your division engagement liaison on this topic. They can help connect you, if necessary, with the APA Office of General Counsel for legal review of contracts over $10,000.