Bivio Expense discussion

Philip Hayman on

Hello! Thanks to all who responded! It's nice to know that I can write a problem and get a quick response from interested, informed people. Hopefully I will be as informed one day, a goal for me.

Let me restate to make everything clear... Our club decided to make some education folders for all of the members who regularly attend meetings. The folder will be nice, with information that they can look up during the meetings if they need to. It's a way for our club to educate itself on the SSG and Portfolio Management (as taught by NAIC). Our club is finding that some members stop the conversation to ask definitions or concepts, hence the notebook. It's good for new members as well. Most of the members are older and it has been a slow process, but we're getting there. This is not a big expense, about $60.00 total.

Our club has 4 members who do not attend meetings anymore. All 4 were original members of the club and attended regularly for quite a long time. 2 of them are in their 80's and no longer attend due to health issues. The other 2 moved away (both in-state), for better employment opportunities. All 4 still contribute monthly. When they ceased attending, they agreed to let the other members make decisions on their behalf, since it was nearly impossible for them to do so. All 4 wanted to stay in as members, 3 of them said our club was doing better than their private/brokerage accounts. 3 of the 4 do not own a computer at all. The remaining members agreed that these 4 would not receive the information, since it's really only useful at the meetings. I agree with this. Why charge them for something that they won't need anyway?

I think the answer is simple. There should be a button on the member page(s) for an expense. I see payment, fee, and withdraw, but no expense button.

It can also be looked at this way..It takes a lot of expenditures to meet the requirement of the IRS (7.5% of gross income or something like that) for it to count anyway, but I like to give everyone credit for tax deductible expenses.

I like answer #1 better!

Your opinions/responses??

Thanks to all!

Steve Hayman
Pascagoula, MS

Rip West on

I think the answer is simple. There should be a button on the member page(s) for an expense. I see payment, fee, and withdraw, but no expense button.
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There was a discussion on this point on the treasurers' list about a year ago. The conclusion reached [at least, by me] was that if the expenditure does not affect all partners, it is not a partnership expense, and should not be so treated. So, it's one thing to assess a member for certain expenses that he/she, alone, creates, but it's not really sustainable to allocate an expense just to one partner. The solution offered by me, in effect, had certain partners paying their own expenses and taking a deduction for them. I would be against your 'button' where you could allocate an expense only to one partner.

BTW, I tried to offer a solution to your problem, but my own feeling would be that the partnership should pay all those expenses you want to allocate to your out-of-staters. Whether they should be allowed to be members when they only contribute financially is another question, but if the club decides to have them as members, I would make no special arrangements for charging them for mailing costs, etc.

Rip West
Saint Paul, MN

John R. Munn on

Philip...

Not to cast gasoline on a fire that's almost all embers, but I could
argue that these four members benefit from the wisdom of the
participating partners and they directly benefit from this expense. As
you indicated, your club gets better returns than three absent
partners' brokers. In addition, there's no reason why participating
partners should carry the burden of non-participating partners. Given
the small expense involved, $60 divided among the partnership, I would
have no qualms charging all partners equally. If the expense were so
burdensome then the absent partners who may object have the choice to
withdraw. And the few dollars spent by the non-participants as their
share to run the partnership is imaterial in the grand scheme. I would
allocate this particular expense equally and not worry about trying to
be so accurate.

I have to agree though... I would like to see an easy way to allocate an
expense to specific partners, only.

John Munn

Philip Hayman wrote:

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>Our club has 4 members who do not attend meetings anymore. ...cut... All 4 still contribute monthly. When they ceased attending, they agreed to let the other members make decisions on their behalf, since it was nearly impossible for them to do so. ...cut.... Why charge them for something that they won't need anyway?...cut...
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