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6 Common Misconceptions about Chambers of Commerce

Updated: Oct 25, 2022

The Basics

There are many misconceptions regarding many brands, products and organizations, and when it comes to the term “chamber of commerce,” confusion and mistaken expectations are even more likely, even though almost everyone has at one stage belonged to them or at least has heard of the term. The lack of understanding is in large part self-inflicted because chambers in various towns, cities, regions, provinces and even nations focus on different subjects and mostly operate in different ways.

Definition (as per Wikipedia)

A chamber of commerce (or board of trade) is a form of business network, for example, a local organization of businesses whose goal is to further the interests of businesses. Business owners in towns and cities form these local societies to advocate on behalf of the business community. Local businesses are members, and they elect a board of directors or executive council to set policy for the chamber. The board or council then hires a President, CEO or Executive Director, plus staffing appropriate to size, to run the organization.

The first chamber of commerce was founded in 1599 in Marseille, France another official chamber of commerce would follow 65 years later, probably in Bruges, then part of the Spanish Netherlands. Wikipedia – Chamber of Commerce

In South Africa, the chamber movement started more than 120 years ago and the AHI now SBI was formed in 1942

As a non-governmental institution, a chamber of commerce has no direct role in the writing and passage of laws and regulations that affect businesses. Wikipedia

The aim of the AHI now SBI has always been to not oppose but rather to influence and steer Government decisions favourable for the private sector.

1. Membership

Under the Voluntary Association model (VA), which exists in South Africa and many other nations, companies are not obligated to become chamber members. Hence the name ‘Voluntary Association”.

Chambers do not operate in the same manner as clubs and “by invitation only membership” societies. , which can bind its members under a formal constitution and or an operations manual (and, thus, can remove them). Business entities pay their dues to belong and expect to receive the benefits of membership as long as they continue to invest in the organization.

Chambers usually accept any reputable business as a member, provide them with services and charge them a joining and a monthly or annual fee

It is important to note that in most cases it is the company that is the member, not an individual. A member company is then encouraged to involve numerous senior-level employees in the work of the chamber. While five, ten or more individuals from a given company will identify themselves as “members” of the chamber, only the organization they work for is counted when a chamber states its size. A company is free to join (pay dues to) multiple chambers and many mid-size to large firms do so (especially neighbours), to further advance their companies' market or policy interests.

2. Relationships

The chambers in South Africa is affiliated to mainly two informal Chamber associations, The SBI and The South African Chamber of Commerce and Industry (SACCI). There is no operations manual or franchise arrangement between or among them.

Some independent chambers do not belong to any association but rather perform on their own. The JCCI is such an organisation who from time to time breaks their affiliation.

Chambers interact with each other across the nation and the globe – many even maintain formal memberships in other chambers – but the network is informal. In the chamber world, nobody is “in charge” of anybody; a local chamber does not answer to a state or national chamber.

3. Policy Independence and Cooperation

The most difficult aspect for the general public, media, government officials and even some businesses to understand is that there is no inherent hierarchical structure in the chamber world. This can be extremely confusing to those who naturally assume that a few thousand entities sharing the same name must be related and that some ordered lineage must exist among them. That is simply not the case in South Africa.

When business and economic policy priorities align, which is usually the case, chambers of all sizes attempt to work together and speak with a unified voice. Inevitably, conflicting positions will arise about some issues or strong positions (or lack thereof) of chambers at various levels.

Since businesses are not required to join a chamber (penetration levels vary widely), and because territories overlap, it can be difficult for anyone organization, regardless of size, to state that it “speaks for business,” but they do. They earn that privilege by attracting numerous and large heterogeneous employers to their membership and leadership, as well as by utilizing their collective voice on meaningful policy initiatives. In general, the smaller the chamber (and community it represents), the less active the organization will be on the policy/advocacy front. Even small organizations, however, take stands on regional issues ranging from school funding to road development.

The processes of choosing and articulating specific policy positions vary by organization and issue. For the most part, a vote (or expression of consensus) of a chamber board of directors determines the stand to be taken in the name of that chamber on any issue. In recent years, with the increased involvement of the public sector and non-profit employers in chambers, consensus-building has become more difficult at all levels. Chamber boards are independent, but they usually take into account the recommendations of state and national organizations when larger issues are considered.

Because the chamber world is not structured around an affiliate or chapter model, such disagreements cannot be solved by a controlling authority. Sometimes the disagreements cause destructive friction which results in bonds between chambers being broken. More often, chambers issue differing position statements and agree to disagree, knowing that the opportunity for cooperation on future issues will be critical for them all.

4. Structure

All Chambers of commerce in South Africa operate almost exclusively as non-profit entities knew Sec 21 Companies or NPO’s. Unlike charities, these NPO”s have the authority under state and SARS tax rules to represent their members in public policy debates. They may lobby and take positions on actual or proposed legislation, subject to local, Provincial and Government laws Chamber business models and organizational missions vary significantly. Some chambers may offer services and products that appear to compete with businesses operating within their territories. One group of chambers may affiliate with a service provider to offer discounts or other benefits to chamber members (from low-cost office products to health insurance), while another group aligns with a completely different vendor. As a rule, larger chambers tend to rely less on membership dues revenue than their smaller counterparts. About one-third of the chambers of commerce in the US also include economic development corporations and/or tourism and visitors bureaus. Virtually all chambers have revenue sources other than dues; event income is the most common.

Although a chamber is a non-profit entity under SARS law, such an NPO is free to undertake supporting business activities (referred to as “unrelated business income) – publishing, trade shows, insurance programs, etc. In many cases, these activities are subject to business income taxes.

In a few cases, for-profit chambers have been established in some areas. The East Rand Chamber of Commerce and industry is such a chamber, they allow their service provider Chamberlink to earn a profit in the provision of certain services to member companies These business ventures are routinely shunned and fought by traditional non-profit chambers.

5. If You've Seen One...

The term “chamber of commerce” is one of the oldest and most well-recognized brands in the world, but there is a significant public misunderstanding of its meaning. There is an adage in the chamber world: “If you’ve seen one chamber, you’ve seen them all.” Others who find themselves frustrated with a desire to apply universal truths to the chamber of commerce models point to the Chinese parable of the seven blind men touching different parts of an elephant and coming away describing it differently (“It’s a snake . . . no it’s a tree . . . no it’s a brush on a rope . . .”). In all cases, the whole of a chamber of commerce is greater than the sum of its parts, programs, people and participants.

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