club_cafe: How do you handle dues or partner contributions

iras1 on

In a message dated 08/18/03 12:49:17 AM Eastern Daylight Time, spepper@bivio.com writes:

Our investment club currently requires every member to pay
the same amount of dues each month and we assesses a late
fee when the payment is not received on time. We are
considering droping the late fee. If a member does not pay
dues for a month(s) they will just have less value in the
club than others.
I was just wondering how other investment clubs commonly
handle dues. Is it common to require equal contributions
and/or assess late fees or is it common for partners to have
different unit values and different levels of ownership in
the partnership?

Personally, I favor eliminating mandatory minimums and late fees, but that is a decision each club must make. (Whatever choice you make should be incorporated in your partnership agreement). While I think you may find it common for clubs to require equal periodic contributions and also common for them to charge late fees, it is impossible to maintain equal levels of ownership.

Think of what happens when you have a new member join the club. Will you ask him/her to contribute as much as the older partners have already contributed? If you do, I can assure you the new partner will purchase a different number of units from that the other partners each own since the unit value changes every valuation date. If on the other hand, you require your new member to purchase enough units to establish an equal ownership stake, that partner will contribute a different amount of money from the original partners. The longer your club is in existence, the harder it will be to find a new member who can invest that much money at one time.

Ira Smilovitz

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