What do other clubs collect dues for? Is this the same as
member contributions?

Thanks

Hi Patrick,

At bivio, all member contributions are referred to and recorded as Payments and purchase ownership
in your club.

You can then decide to keep part of your club assets as cash and use it to pay expenses.

Just to orient you to the way investment club partnership accounting works, all of your assets
contribute to your club valuation. Investing activities and expenses both affect your overall club
performance.

       Laurie Frederiksen
       bivio Inc.

We cover our club NAIC membership and each members
subscription to Better-Investing's Online Tools and data
subscription through our fees. This is a monthly fee and
kept separately in our banking account. Contributions go
there as well and then get transferred by the financial
partner to the brokerage once a month.

Bivio does a great job of keeping it all separate and
accountable for each member.

--Sandy
Women's Investment Network
Jupiter, FL.



Patrick O'Donnell wrote:
> What do other clubs collect dues for? Is this the same as
> member contributions?
>
> Thanks

> We cover our club NAIC membership and each members
> subscription to Better-Investing's Online Tools and data
> subscription through our fees. This is a monthly fee and
> kept separately in our banking account.

There is no reason to do this and it hurts those members of a club who own
fewer units. *Please* stop doing this! In fact, the bivio club accounting
web site has recently been changed to *help* you stop doing this.

To make it harder for clubs to misuse the fee transaction, bivio has removed
the "Fee" button from the Members page. That button used to provide an easy
way to enter a fee that applied to all club members. Since that is
something that should never be done, the button is now gone. (The only
proper use of a fee is to penalize a single club member. That can still be
done via the "fee" link in the Actions column.)


The following is a somewhat different explanation than Rip's earlier post,
but we are both saying the same thing. Never record money collected to pay
expenses as a "fee".

Investment clubs pay expenses. In the end, one way or another, the money to
pay club expenses comes from the club members. So, recording an expense
transaction in club accounting software takes money away from *all* the club
members, just as it should. So far so good.

It's pretty common practice for clubs to collect "investment" money from
members and then to separately collect "expense" money from members too.
Perhaps for budgeting purposes, some clubs like to keep the "expense" money
physically separated (say, in a different account). This is extra work for
everyone (especially the club treasurer) and is completely unnecessary.
However, as long as both the "investment" and the "expense" money is
recorded in exactly the same way in club accounting software, no harm is
done.

What causes problems is using "fee" transactions to record the collection of
"expense" money from club members. The purpose of a "fee" is to single out
one member of a club and penalize just that one member for doing something
wrong (for example bouncing a check). No matter what investment club
accounting software you use, the *only* reason to use a "fee" is to penalize
one club member.

What's the correct way to record "expense" money collected from club
members? Enter it as a "member payment", exactly like the "investment"
money.

OK, you say. I'll record all money collected from club members as "member
payments" (except in the very rare situation of a true penalty). But how,
then, do the club members share the club expenses? It's very simple.
Recording an "expense" transaction in club accounting software automatically
shares that expense among *all* the club members. That's the whole point of
an expense transaction! Recording an expense is all that's needed to share
a club expense among all the club members. (How the cash used to pay the
expense was collected has nothing to do with it.)

-Jim Thomas

Now THIS is clear. I need to correct my ways. Since probably
many people have done this wrong in the past, I suggest one
of those little pop-up things explaining this on the fee
icon where one has to actively click a check to make it not
show in the future.
Jim Thomas wrote:
> > We cover our club NAIC membership and each members
> > subscription to Better-Investing's Online Tools and data
> > subscription through our fees. This is a monthly fee and
> > kept separately in our banking account.
>
> There is no reason to do this and it hurts those members of a club who own
> fewer units. *Please* stop doing this! In fact, the bivio club accounting
> web site has recently been changed to *help* you stop doing this.
>
> To make it harder for clubs to misuse the fee transaction, bivio has removed
> the "Fee" button from the Members page. That button used to provide an easy
> way to enter a fee that applied to all club members. Since that is
> something that should never be done, the button is now gone. (The only
> proper use of a fee is to penalize a single club member. That can still be
> done via the "fee" link in the Actions column.)
>
>
> The following is a somewhat different explanation than Rip's earlier post,
> but we are both saying the same thing. Never record money collected to pay
> expenses as a "fee".
>
> Investment clubs pay expenses. In the end, one way or another, the money to
> pay club expenses comes from the club members. So, recording an expense
> transaction in club accounting software takes money away from *all* the club
> members, just as it should. So far so good.
>
> It's pretty common practice for clubs to collect "investment" money from
> members and then to separately collect "expense" money from members too.
> Perhaps for budgeting purposes, some clubs like to keep the "expense" money
> physically separated (say, in a different account). This is extra work for
> everyone (especially the club treasurer) and is completely unnecessary.
> However, as long as both the "investment" and the "expense" money is
> recorded in exactly the same way in club accounting software, no harm is
> done.
>
> What causes problems is using "fee" transactions to record the collection of
> "expense" money from club members. The purpose of a "fee" is to single out
> one member of a club and penalize just that one member for doing something
> wrong (for example bouncing a check). No matter what investment club
> accounting software you use, the *only* reason to use a "fee" is to penalize
> one club member.
>
> What's the correct way to record "expense" money collected from club
> members? Enter it as a "member payment", exactly like the "investment"
> money.
>
> OK, you say. I'll record all money collected from club members as "member
> payments" (except in the very rare situation of a true penalty). But how,
> then, do the club members share the club expenses? It's very simple.
> Recording an "expense" transaction in club accounting software automatically
> shares that expense among *all* the club members. That's the whole point of
> an expense transaction! Recording an expense is all that's needed to share
> a club expense among all the club members. (How the cash used to pay the
> expense was collected has nothing to do with it.)
>
> -Jim Thomas

Patrick O'Donnell wrote:
> What do other clubs collect dues for? Is this the same as
> member contributions?
>
> Thanks

The discussion on "dues" vs "fees" is of interst to me. I
am the treasurer of an investment club that has been around
for almost 40 years. When we selected bivio to help in the
accounting, there were a few items that do not fit our
operating method. It was not feasable to ask a group of
mature persons to change their ways that worked for 40 years
because of an accounting method.

We collect monthly "fees" that are proportional to the
number of shares owned. These go into the common available
funds for investing, paying expenses and whatever use the
club decides. They do not purchaes additional shares. They
are not penalties. They do increase the tax basis of the
individual members. They increase the value of the club.
Each member's percentage of the club does not change.

I found we could not use the "dues" method for our club
since the bivio software buys shares with this method and we
don't do that. A member may purchase additional shares at
any meeting based on the share valuation at that time.

By using the "fees" method, things seem to work properly for
us, but Rip West had some interesting anaylsis of unintended
results. Am I missing some unintended result?

By the way, the recent change in the method to enter "fees'
caught me by surprise. I finally found the method, but was
there a change notice I missed ?

Roy Williams
NAM Treasurer

Dear Roy,

I think you have a very good understanding of the way fees and payments work except for the
excellent point that Rip described which is the tax allocation consequences.

I think when people were making "fee" contributions to cover club expenses that there was probably
the thought in their mind that this was also a deductible amount for them.

As Rip pointed out, this is not the case. The amount of an expense a member will be allocated to
deduct is either based on his percentage ownership or based on a certain number of units used to
"pay" the expense.

If someone contributes a "fee" to a club that does not purchase ownership, he is making a
contribution which is basically shared with all based on everyones ownership. The only way to
ensure that his full contribution is attributed to him is to record it as a payment which affects
his percentage of club ownership.

Then, when an expense occurs, he shares in it based on his percent ownership, just like he shares
in income based on his percent ownership. He is also allocated the tax consequences of both the
expense and the income based on his percent ownership.

If you choose to pay for an expense by having each member contribute an equal number of units toward
it, he gets the full benefit of units purchased with his club contributions as well as the correct
tax allocation for the amount he contributes toward the expense.

I am sorry about the way the removal of the fees form was announced. It was announced on this list
but it was in the midst of a discussion and may have been easily missed by some.

Best of luck to your club. I think we all enjoy hearing from clubs that have been active as long as
yours.

      Laurie Frederiksen
      bivio Inc.

iras1 wrote:
> In a message dated 05/05/09 08:02:16 Eastern Daylight Time, clubyahoo@bivio.com writes:
>
>
>
> .aolmailheader {font-size:8pt; color:black; font-family:Arial}
> a.aolmailheader:link {color:blue; text-decoration:underline; font-weight:normal}
> a.aolmailheader:visited {color:magenta; text-decoration:underline; font-weight:normal}
> a.aolmailheader:active {color:blue; text-decoration:underline; font-weight:normal}
> a.aolmailheader:hover {color:blue; text-decoration:underline; font-weight:normal}
>
> Patrick O'Donnell wrote:
> > What do other clubs collect dues for? Is this the same as
> > member contributions?
> >
> > Thanks
>
> The discussion on "dues" vs "fees" is of interst to me.  I
> am the treasurer of an investment club that has been around
> for almost 40 years.  When we selected bivio to help in the
> accounting, there were a few items that do not fit our
> operating method.  It was not feasable to ask a group of
> mature persons to change their ways that worked for 40 years
> because of an accounting method.
>
> We collect monthly "fees" that are proportional to the
> number of shares owned. These  go into the common available
> funds for investing, paying expenses and whatever use the
> club decides.  They do not purchaes additional shares. They
> are not penalties.  They do increase the tax basis of the
> individual members.  They increase the value of the club.
> Each member's percentage of the club does not change.
>
> I found we could not use the "dues" method for our club
> since the bivio software buys shares with this method and we
> don't do that.  A member may purchase additional shares at
> any meeting based on the share valuation at that time.
>
> By using the "fees" method, things seem to work properly for
> us, but Rip West had some interesting anaylsis of unintended
> results.  Am I missing some unintended result?
>  
> What do you do if someone doesn't make a timely deposit of their monthly contribution? Let's assume for argument's sake that you have a club with 3 equal members. Each member owns 100 shares worth $10 each and is expected to contribute $50 each month. This month, A and B contribute their $50, but C does not. The club, which was worth $3000 before the meeting, is now worth $3100 ($3000 + A's $50 + B's $50). Everyone still owns 100 shares each, so each member's stake in the club is $1033.33. C has gained $33.33 at the expense of A and B by not making timely payment.
>  
> Ira Smilovitz
> A Good Credit Score is 700 or Above. See yours in just 2 easy steps!

Thanks Ira Smilovitz.
 I will have to think this through. We do limit how long a
 member can be in arrears and we have few problems with late
 problems. The disparity in valuation would seem to
 equalize if a member resigned since we collect any fees in
 arrears before cashing them out. I suppose the time value
 of money is still an issue.

Thanks
Roy Williams