Why NAID’s structure is critical to its success

May 14, 2013

By Bob Johnson, NAID CEO

Although most members are not aware of it, four or five other industry trade associations have been attempted to share the same space as NAID in the past 20 years. To date, none have been successful.

When reflecting on those failures, one of the leading reasons is that founding members of those associations did not establish any legal structure. When NAID was created, the founding members understood that it had to be a non-profit, 501(c)(6) corporation that would be under the total ownership and control of its members. Legally, every NAID member is an owner and no single person or entity owns it otherwise.

This legal structure is important for a number of reasons including transparency, control and the legitimacy of its mission and existence. First, there can be no credibility with potential members if they do not have ultimate and total control of the organization. Why would they invest in an organization that someone else would ultimately have control? Second, there is a clear conflict of interest if NAID were a for-profit organization. Any money that is raised from the association’s efforts should go to promoting the industry not into someone’s profit margin.

To look at it from the other side, an organization that portrays itself as an association but is not formed with non-profit, 501(c)(6) trade group status is attempting to fool the public by masquerading as an association. No member would benefit from being associated with an organization that is misrepresenting what they are to fool the public.

It is impossible to say whether we have seen the end of people trying to profit from pretending to be a trade association when they are actually a for-profit business. The best way to avoid being fooled is to make sure they post their bylaws that detail their legal structure. Also, any such organization should clearly define its bylaws, governance and structural elements as well as publicize the names of board and staff members.

On Thursday, I will outline the second ingredient of NAID’s success.