Industry Forward – Nat Bartholomew and John Tauer talk Associations – Just Scratching the Surface!

• December 20, 2018
• John Langan

John Langan talks with Nat Bartholomew and John Tauer about what it really means to uniquely and purposefully serve this vital Industry Segment: Associations. But what does the lifecycle of industry specialization look like and how does it create opportunities? Listen to Nat and John’s personal stories and find out!

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Transcript

[00:00:05]

Langan: Our promise comes alive when we live our culture, when we are entrepreneurs, owners, and leaders. At the center of the CLA promise is our promise to know you and help you, and especially in pursuing the why, to create opportunities for our clients, our people, and communities. The strategic advantages that support our promise include two we will focus on today; deep industry specialization and being the career building firm.

[00:00:31]

Our belief is that industry specialization connects us to our clients in a deeper and more meaningful way than a narrow focus on a particular service specialty, and in doing so, it creates more meaningful opportunities for our clients, our people, and even in today’s example, our communities.

[00:01:02]

Welcome, CLA family, to our Industry Forward podcast, designed to tell the industry stories behind the CLA promise. I’m John Langan, Chief Industry Officer at CLA. What does the life cycle of industry specialization look like and how does it create these opportunities? To help us answer these questions, we’ve invited Nat Bartholomew, our Washington D.C. based National Association Practice leader and John Tauer, our Minneapolis based non-profit based industry leader, to speak to us today.

[00:01:32]

Both Nat and John have built and led significant association practices over their career that have created opportunities for their clients, their teams, the firm, and themselves. So Nat, let’s start with you. How did you first come to service associations and decide that this would be your primary concentration?

[00:01:50]

Nat: Well, John, I wish I had a cool answer right out of the blocks, but honestly, it was an opportunity. I took it and I ran with it. One of the managers in our association practice was a member at ASAE and left the firm. And so when that person left, I just picked up their membership and started to go. The idea was, I heard it was cool meetings, it was fun, it was great destinations, and honestly, that’s kind of what took me into this.

[00:02:15]

But what really happened next was, I had a lot of fun, had a lot of fun doing it, and so I became a specialist in the nonprofit sector and really started looking at associations as really, truly a different group. I wanted to succeed, so bottom line, I attended, I listened, I read, I did everything I could do, you know, just any opportunity to get me in front of associations. You know, when people ask me, they say, “What do you do, Nat? You know, what is it you do?”

[00:02:42]

And after trying to explain I’m not just an accountant or I can’t do taxes, it’s, you know, I explain, I interpret financial information for the best of the best in every profession and industry under the sun. Last Monday, I was with the board of the National Association of Broadcasters. That means the CEO of TVs and radio stations–the largest media groups in the nation, on the planet.

[00:03:05]

By Wednesday, I was with the Military Officers Association of America, their board, down in Phoenix, Arizona. I met with admirals and generals. And then that Friday, I was with the CFO of National Rural Electric Cooperative Association. They’ve got 20 related entities. They’ve got two ten-story office buildings in Arlington, 25 billion in three investments, in investment funds, pension funds–and that is with a “B”–hundreds of employees.

[00:03:34]

They require a single audit, a federal funded audit. They have a wholly-owned brokerage firm. It’s one of the coolest clients we have at the firm. Seriously? And, you know, honestly, it all comes down to this: To be on the board of an association, you are the best of the best in your trade or profession. I’m always looking across the table at the best of the best. The chairman of the American Nurse’s Association audit committee is the chief nurse at Johns Hopkins.

[00:03:58]

She has 3,000 nurses reporting to her. The chairman of the Edison’s Electric Institute’s executive committee, CEO of Duke Energy, the largest publicly traded company on the electric utilities in the country, one of them. American Hotel and Lodging Association–you’re sitting across from Chris Nassetta, CEO of Hilton. Does it get any cooler than that?

[00:04:18]

Langan: Nat, for somebody who stumbled into it just because you wanted some cool trips, it sounds like you caught the passion pretty quickly. That sounds like a very cool practice area. So John, what brought you to the association world?

[00:04:31]

Tauer: A little bit like Nat, I would say it found me first, which was really a matter of getting assigned to a couple clients that I really didn’t probably understand at all, but very early in my career, probably at the two year level, I started developing kind of a strong understanding of unrelated business income, lobbying, proxy taxes, for-profit subsidiaries. And many of you may be listening may say, “Well, what’s that?”

[00:04:54]

Well, that was the value of me knowing that, is that many people didn’t have a good understanding of unrelated business income and all the risks that are associated on the tax side with associations, and to some extent, tax is what probably drove me toward the association practice more than anything. With that, then I was able to develop a very strong reputation within the community, within the environment, even within the firm.

[00:05:16]

And the firm had a lot of connections with industries, with associations, and that’s how I was able to kind of grow the practice fairly early on, is just taking advantage of the CLA way. At that time, CLA was focusing on developing strong industry professions, this was about 20 years ago. And what were they doing? They were getting involved in the in the industry associations, the state associations, the local association.

[00:05:41]

Every time I would go to one of those meetings, or have an opportunity to provide our services or talk about our services, around that table there would be other individuals that had worked at CLA. Either their company had worked with CLA or they knew other principles or other staff within CLA, and that greatly helped me develop that practice very early on, because, again, we were an industry-based firm. So again, that’s how I got involved.

[00:06:05]

Langan: So it sounds like associations within a non-profit practice are pretty unique. Nat, how are associations different from other non-profits, and– there seems to be some mystery around them, so maybe you could clarify.

[00:06:18]

Nat: Sure. Associations, really, are there to fulfill the needs and desires of professionals or businesses. They bring people together with similar goals and objectives. The idea is, “we’re better together.” Services to members include things like education and training, certification and credentialing, sharing of resources in content and magazines, white papers, journals, e-newsletters, websites, the ability to advertise your sale at trade shows, you see job boards, you see insurance programs.

[00:06:48]

The multitude of non-dues products and services are tremendous. Associations are uniquely different from other non-profits because it’s all about the value to the constituency. It’s measured, and we look at metrics; the number of members, the number of attendees, the number of certificates, maybe the number of donors, the number of volunteers, the number of books sold, the number of click-throughs on a website, the number of hours of education delivered, you know, square footage on the show floor sold, and quite frankly, one of the most important ones is the ability to successfully lobby or advocate on behalf of your constituents.

[00:07:23]

Langan: I know that, Nat, you mentioned some very large associations that are headquartered in DC, and I know it’s a big part of our DC practice, but John, there’s also state and local associations and affiliates of the national groups. Is this an opportunity across CLA?

[00:07:39]

Tauer: Yeah, and this is where, you know, you can really involve the association practice in every market. You talk about the metropolitan market here in the Twin Cities, it’s maybe 10th or 12th-largest in the country, and there’s over 700 associations. So again, lots of organizations to work with. Any time there’s a national association, there’s a state equivalent to that, whether you’re talking about hospital, retailers, auto dealers.

[00:08:03]

Again, many organizations, and more than you can probably even think about. In just the Twin Cities market alone, we–that practice has grown to over $3 million. So if you can think of that in the Twin Cities, obviously, we could duplicate that in St. Louis, in Denver, in Phoenix, in LA, and you can name, you know, another 20 large cities we are in that we could create that $3 million with those same relationships.

[00:08:26]

Langan: So, Nat, it sounds like a huge opportunity, not only for the firm, but for the people across the firm. So could you give us a sense of how large an opportunity is and what our market share is here?

[00:08:36]

Nat: This association group is $30 million. It’s got 20 CRPs already, as of September 30 that are billed more than a quarter of a million dollars. With 2,000 international, national, state, and local associations, you know, we’re the largest provider to this community in the nation. That said, there’s tens of thousands of associations out there. So honestly, the sky’s the limit.

[00:09:02]

Langan: So, John, talk about service mix. Are we just auditing these groups, doing 990s? Or is it a broader service mix offering?

[00:09:10]

Tauer: I mean, it’s a much broader mix, and particularly any of the non-profit segments, certainly the association practice is much broader, and we’ve relied on those other services to continue to grow at up to $30 million that it is today. So again, just kind of looking at my practice here locally, I think it’s a good example of that. Looking at the practice here locally, less than 1/3 of that work is assurance related, and I think that may surprise many individuals that look at the non-profit segment in total.

[00:09:37]

 So what is that? A significant amount is vis op, but there’s also consulting involved, some wealth advisory, cast, and other advisory services as well. And fact of the matter is, these associations are very open to, you know, again, needing these type of capabilities. And they’re small organizations many times, particularly at the state and local level, and they need all of our services, so–

[00:09:59]

Langan: It sounds like, based on your earlier answer about the capabilities that you brought and developing yourself personally, the technical capabilities, that they’re really starved for that, in terms of their staff size and their capabilities in the turnover and maybe the lack of a career path within some of those groups so that outsourcing or consulting are probably just as powerful for them as opportunities than audits.

[00:10:27]

Tauer: Yep, they have all those same issues, and then some.

[00:10:30]

Langan: So, Nat, I know what you’ve done in Washington, in terms of making yourself a famous person, which is important, in terms of building your career in any industry. Tell us a little bit about how you’ve done it, the team that you’ve created, and the opportunities that have presented themselves for those people on your team.

[00:10:50]

Nat: Okay, so I hate to say it, but I am the Ben Affleck of associations. All right, just being a little punny on the movie “The Accountant,” but seriously, you know, it all starts by putting yourself out there. You know, you start by joining. I joined the American Society of Association Executives, that’s the association of associations, I mentioned that earlier. I attended a few events, then I submitted an abstract to speak. And then I spoke a few times.

[00:11:14]

I volunteered for a committee. I gave some money to their PAC. I gave some money to their foundation. I played in their golf events. I joined a bowling league, and I’m not good. Okay, I attended happy hours, mixers, brown bag lunches. It takes a lot of effort. I made connections; friends of the firm, attorneys, insurance advisors, bankers, investment advisors, hotels and destinations, and yes, accounting firms.

[00:11:39]

So I became the chair of one committee, then another. Was invited to be on an honorary committee, and then I became a board member. ASAE has 45,000 members. There are only two supplier members on that board, so I’m one of two, which is kind of crazy, right. So I’m applying now for fellowship, and they bestow that honor on less than 100 members.

[00:12:01]

I now have the clout at ASAE and within the industry to get others on boards, on the committees, and so I’m scratching the backs of friends of the firm, prospects, clients, and certainly other members of my team. You know, it’s nice to have this kind of pull, and quite frankly, it’s huge. One piece of advice on all of this: Stretch your comfort zone. Put yourself out there.

[00:12:23]

Langan: So, Nat, you mentioned that you’re being considered as an ASA fellow. As somebody who got rejected twice from that, I don’t appreciate that, but I wish you the best of luck. John, does this–these opportunities for our clients and our people, do they only extend to the non-profit industry, or how can they extend to CLA people in other industries across the firm?

[00:12:46]

Tauer: Sure, again, always trying to focus in on this one-firm concept. And I’ll just tell a quick story just from last week. A construction contractor association I work with here locally gave me a call and said they’re having an annual retreat for their contractor members in Las Vegas. And they said, “Do you have anybody that can come talk on tax reform?”

[00:13:06]

Again, they’re looking at it from the standpoint of their contractors and the construction industry dealing with, really, a lot of entity structure issues is what they kind of defined that issue to me. Obviously, I’m not the one to talk about that. And then they said “What date was that?” And they said basically, it was about three days before the March 15th deadline, and I–

[00:13:24]

And I’m smart enough to know that we have a lot of tax people that are pretty busy at that point. And am I gonna be able to find somebody, you know, again, in Minneapolis that’s gonna come on over and want to fly down to Vegas for a day and a half or two days to make this presentation? But I said, “Okay, we have an office here in Vegas.” So I contacted some individuals in the construction group in Las Vegas. They said, “Yep, we’ll do it.” They’ll go head over to their meeting.

[00:13:47]

Again, present some topics of, you know, basically information on tax reform, and be able to help them out from an industry standpoint. So there we’re really connecting our construction expertise on a national basis with an organization that just so happens to be in Las Vegas, again, a few days before the March 15th deadline. We’re able to deliver that to them. And again, keep building our relationship with them not just from an association standpoint, but from a industry standpoint as well.

[00:14:11]

Langan: So a fancy name for that is vertical integration, right? Where we can drill down through an association that might be a health care association, a manufacturing association, a trucking association, to help our other industry groups get opportunities for people in our firm. So, Nat, finally, how does serving associations create opportunities for our communities?

[00:14:37]

Nat: Well, with respect to communities, associations, by their nature, they’re always community-minded. Often they have related foundations, charitable activities. By serving our association clients, we’re expanding our reach into those communities, we’re giving CLA a higher profile, locally, nationally, and internationally.

[00:14:55]

Langan: I want to thank you both for your leadership in growing opportunities for our clients, people in communities through your passion for serving associations.

[00:15:04]

Tauer: Thank you, John for having me here today.

[00:15:06]

Nat: Yeah, thanks, John. Really appreciate it.

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