This article ran as the Washington Report in the September issue of the ESOP Report. The ESOP Report is the newsletter of The ESOP Association. The ESOP Report newsletter is available to Association members on the website.
People who care about ESOPs, who are members of the Association, who do not wish to take a chance and dismiss, like TV pundits do, talk of ‘Congress will never do tax reform’ are asking, “What can we do to protect ESOPs and what is the Association doing to protect our ESOP?”
For over 20 years, the answer to the ‘what can we do’ question has remained the same, and will remain the same — tell your ESOP story directly to an elected official who visits your ESOP company is first and foremost the way to protect your ESOP, and your company.
In other words, to win for ESOPs, the Association needs members, and needs the number of members to grow. Members are educated by various methods and primarily on how to make their ESOP all it can be, and how to reach as many employee owners as possible. When the company succeeds, because of its success, its performance, its unique ownership culture, then the Association and its members’ advocacy work persuading members of Congress to continue a positive policy for ESOP creation and operation is going to succeed.
Fewer members, declining membership means less education on how to create the magic of an ESOP company that has caused elected official after elected official to learn firsthand how positive employee ownership through the ESOP model works. Less education means that the positive impact of an ESOP company dissipates, and macro research on the performance of an ESOP company declines. Fewer magical ESOP companies means fewer high performing ESOP companies as they are not tapping the reservoir of knowledge available at Association meetings and networking. The fewer companies, with not so stellar track records means that the advocacy message becomes less heard, and less impressive.
Sure these big picture messages are supplemented in the challenging times of ESOP cynics trying to denude ESOP tax benefits in the name of a simpler tax code, with lower tax rates. But the Association is not sparing any of its resources in fielding government process experts, who know the nuances of how laws are made — in other words, fielding a team of inside the beltway veterans of legislative campaigns involving tax laws — who provide intelligence that triggers timely, and targeted advocacy messages to key members of Congress by grass roots, high performing ESOP companies.
But never ever think that winning for ESOPs is about how many members the Association has, how many members move their companies to high performance, or how much advocacy messaging is done. Membership without education does not win. Education without advocacy does not win. Advocacy without membership does not win, and the circle of victory can be described back and forth on these three mega traits in as many permutations as can be done with three interconnected elements.
Remember the diagram.