Nearly half of all trade associations ended 2008 in the red, according to an analysis of IRS documents by CEO Update.

The data, gleaned from IRS 990 forms, show 46.5 percent of organizations that ended their fiscal year on December 31, 2008 operating at a deficit - double the rate of the two previous years. The numbers clearly indicate the groups were struggling to deal with a slowing economy.

"Associations generally lag recessions by six to nine months," said Mark Graham, managing director of CEO Update. "They weren't prepared. Expenses were already set and revenues didn't come in to cover it."

After the economy plummeted in late 2007, many associations saw a drop off in membership dues, event revenues and advertising. To make matters worse, 89 percent of the groups saw a decline in revenue from investments - the money most often used to cover budget shortfalls.

Big trade associations tend to have large cash reserves to handle rainy days, but the deteriorating economy led several teetering groups to pursue mergers and acquisitions, said Graham.

Associations also lag behind an economic recovery. Groups are now watching the unemployment numbers and the hospitality industry for hopeful signs. Most don't expect to see an upturn until 2010.