NEW ROCHELLE, NY -- The membership of the New Rochelle Chamber of Commerce is alive and well under the leadership of Executive Director Eli Gordon thanks to an innovative insurance program that has brought hundreds of new members and some controversy among members of the old guard.
The Chamber, founded in 1940, had fallen on hard times in recent years. A series of financial scandals involving past leaders and defections following the creation of the New Rochelle Downtown Business Improvement District in 2000, had pushed the Chamber of Commerce to the brink.
The low point came in 2009 when the annual Chamber Thanksgiving Day Parade was cancelled over funding and organizational issues. The biggest money-maker for the Chamber, the annual Halloween Haunted House had folded amidst allegations of financial improprieties.
As the Chamber floundered, the Downtown BID flourished. As the BID grew to over 800 business and property owners focused on economic development, new business and new investment in the downtown area, the Chamber was on life-support. The once-thriving organization had dropped to just 80 members.
"And half of those were 'unpaid' members," says Chamber President Rosemary McLaughlin who proudly notes that membership today stands at 660, a staggering 800% growth in just over two years.
The phenomenal growth has not come without controversy. Some long-time Chamber members have complained privately that the growth consists almost entirely of "phantom" members assigned to the Chamber through a discount insurance program created by Gordon in partnership with a local insurance broker.
Anxiety over the mission of the Chamber came to a boiling point last spring when some board members say they first became aware that Gordon was receiving a commission on top of his $30,000 a year salary as a part-time employee of the Chamber. Gordon had been receiving a quarterly "bonus" check based on a percentage of memberships sold without the knowledge of board, according to some board members. McLaughlin disputes those claims.
"People did not listen," she says. "The Board approved the hiring of Eli. A contract was later approved by the entire board."
McLaughlin insists the amounts paid to Gordon as commission were small.
Part of the problem is the stated mission of the organization. IRS filings reviewed by Talk of the Sound show that the Chamber has annually described the organization's mission or most significant activities as "Stimulating activity throughout the business community by sponsoring events which attract visitors and shoppers to the area."
Critics argue that insurance discounts do not attract shoppers to New Rochelle and that Gordon and McLaughlin have effectively turned the New Rochelle Chamber of Commerce into an insurance agency with Gordon earning what amounts to a sales commission on insurance premiums. They contend that the focus on insurance sales is distracting the organization from its core mission.
McLaughlin does not agree.
She says that organizations need to adapt to be successful and that there is nothing unusual about a Chamber of Commerce having members from outside their city of operation. Ultimately, she says, it is the "traditional" members who benefit.
"Having other members allows us to offer additional programs and better services than we would otherwise be able to offer," says McLaughlin.
There is no arguing that Gordon and McLaughlin have improved the financial condition of the Chamber, based on recent tax returns filed with the IRS.
In 2009, the Chamber was basically broke. In 2011, the last year on file, the Chamber ended the year with over $67,000 in assets. Membership revenue nearly tripled from $30,620 in 2009 to $102,178 in 2011. Overall revenues grew rom $116,753 to $195,836.
"Without the insurance members the Chamber would be bankrupt," says McLaughlin. "We had to try something different."
Although she would not provide exact figures, sources tell Talk of the Sound that Chamber membership today consists largely of these so-called "insurance members", people who pay dues solely for the purpose of obtaining insurance.
McLaughlin sees no conflict between people who join the Chamber to get discounted insurance anymore than people join the Chamber to get access to networking events, the membership mailing list or any other benefit offered by the organization.
She described two ways in which the Chamber membership has grown as a result of the insurance program. Members join the organization to access the insurance program and are then referred to the insurance broker who actually sells the insurance. The Chamber is not paid for the referral but gets the membership dues which are typically $200 per membership. Alternatively, a customer of the broker is referred to the Chamber and becomes eligible for insurance coverage as a member of a business association upon joining. McLaughlin declined to provide figures for the number of members who join through these two routes.
For McLaughlin it does not matter how or why a member joins, just that they do join.
"These members are the same as every member," said McLaughlin. "They vote in every election and are on the Chamber e-mail list."