Gun Club Life Member dues usage

[45crittergitter]

Mods - please move if not in the right forum.

Hi folks - as you know many associations/clubs offer lifetime memberships. Whereas annual dues may be $20, a lifetime membership fee may be $300. For you club officers out there, how do you handle the one-time money? Obviously if it's just spent on expenses with the rest of the money, it runs out long before services to that member end in most cases. Seems to me the only responsible thing to do is invest it at a fairly high rate of return, making sure the lifetime fee is typically adequate to at least generate income equal to the expenses of the membership for the typical term of the lifetime membership. This income would be withdrawn annually as needed, but the bulk of the principal would remain invested, and hopefully not dwindle to nothing before the member expires. Input please?

 

[yesit'sloaded]

You would be amazed at the number of lifetime "members" that only show up once a year to sight in a deer rifle or two.

 

[45crittergitter]

66,331 THR members, and not one fiscally responsible gun club/association member? :banghead:

 

[TexasRifleman]

66,331 THR members, and not one fiscally responsible gun club/association member?

Frankly I don't know any private gun clubs around me that offer a life membership, for the very reason you suggest. It takes money to keep up the taxes, insurance, maintenance etc.

There are a very few "legacy" type life memberships awarded to a few of the old timers that contributed in a major way over the years but those are voted on and gifted.

As with the NRA, the "lifetime memberships" seem to be a gamble and a way to raise cash quickly. "Robbing Peter to pay Paul" as it were unless you make the price substantial enough to cover the average membership expectancy; 10 years, 20 years etc.

 

[mpthole]

45cg : Didn't see your post until tonight.

Our lifetime member money goes into an investment account. So far, that account doesn't earn a whole lot of money, but the idea is that down the road, it'll be able to help pay for the fixed expenses and up keep of the club. I think that is a long ways off.

One interesting thing that we did was to borrow against it and pay it back with interest to ourselves. We needed some range imrovements, to the tune of about $15k, so we took money out of the life membership fund and are repaying it back to ourselves, with interest. Beats taking out a loan from a bank!

 

[Happiness Is A Warm Gun]

Seems to me the only responsible thing to do is invest it at a fairly high rate of return, making sure the lifetime fee is typically adequate to at least generate income equal to the expenses of the membership for the typical term of the lifetime membership. This income would be withdrawn annually as needed, but the bulk of the principal would remain invested, and hopefully not dwindle to nothing before the member expires. Input please?

That is what any organization would do if financially responsible but if they do or not is another thing.

It doesn't take a very high interest rate it make it work though.

Lets look at gun club with $20 fee and $300 lifetime.
Invested at 4% (average for high yield CD in last 10 years)

Starting - Costs = Ending + Interest = Ending
$300 - $20 = $280 + $12 = $292
$292 - $20 = $272 + $11 = $283
$283 - $20 = $264 + $11 = $275 (actually $10.52)
$275 - $20 = $255 + $10 = $265

So after 4 years of the $300 $265 is still left. Using this scenario the "money would run out" in 27 years. If lifetime member uses range for 27 years or less it is a net profit for range. If they uses it for 28 years it ends up costing them in long run.

Of course I doubt many ranges are run by accountants and most aren't looking at forward cash projections 20 years into the future. If the money is spent early it will create an "unfunded liability". Also my (very basic) scenario didn't take into account inflation.

Still I hope it shows that a lifetime membership can work and work with even a low interest rate if money is invested.

 

[444]

I went to our local club meeting last month and they actually went over all that.
I can't tell you exactly but they did have a couple CDs along with a pretty substantial amount of money that was in a checking account. They were discussing it because a new treasurer took over and he is actually a banker and is now going to start getting real serious about the money the club has.
One of the things he is going to work on is putting together an actual budget so he can keep the rest of the money working for us.
This guy was very in-depth about his plans and probably spoke for 20 minutes or so. He said that they spent over 2 hours at the executive board meeting discussing the club's money. Of course being a banker, he not only knew the correct bookkeeping and investment vehicles he also knew the applicable laws involving non-profit organizations and all that.
It was very interesting.
I had no idea the amount of money they were dealing with.

FWIW: If I remember correctly he said it costs over $80,000/year to keep the club going. The property taxes alone were a couple grand a month.

 

[chbrow10]

My club did away with the Life memberships because too many folks were signing up for it, and the club wasn't bringing in enough cash...

 

[mpthole]

My club did away with the Life memberships because too many folks were signing up for it, and the club wasn't bringing in enough cash...

I tried to talk my club into getting rid of the life memberships for this exact reason. It didn't fly though.

 

[CDignition]

Ill never buy another life membership for a gunrange again. I bought one 10 years ago to the local indoor range. this year they decide to cancel them all..I'm like how can you do that, theres no stipulation for canceling the contract.. I haven't gotten an attorney yet...

 

[wuchak]

The NRA life membership goes into a fund and the principle is never touched. With a pool of money as big as they have their investment options are far superior to what is available to most groups.

 

[mpthole]

I meant discontinue the sale of life memberships, not cancelling those already purchased. Just wanted to clarify.

 

[shooting4life]

300 for life time? One of the ranges near me wants 250 a year.

 

[45crittergitter]

Thanks for the replies guys, that's more like it. Keep them coming.

444, if your banker has a written plan on what y'all are doing, I'd love to get a copy for our association.

 

[jnyork]

Our club quit selling life memberships. Got to the point almost everyone was a life member, we didnt have hardly any income from dues. That was about 5 years ago and we are now solvent again.

 

[45crittergitter]

Yeah, that's my concern. If the life dues were high enough and properly invested, it shouldn't be a problem...

 

[mgkdrgn]

Mods - please move if not in the right forum.

Hi folks - as you know many associations/clubs offer lifetime memberships. Whereas annual dues may be $20, a lifetime membership fee may be $300. For you club officers out there, how do you handle the one-time money? Obviously if it's just spent on expenses with the rest of the money, it runs out long before services to that member end in most cases. Seems to me the only responsible thing to do is invest it at a fairly high rate of return, making sure the lifetime fee is typically adequate to at least generate income equal to the expenses of the membership for the typical term of the lifetime membership. This income would be withdrawn annually as needed, but the bulk of the principal would remain invested, and hopefully not dwindle to nothing before the member expires. Input please?

Nice idea, but that isn't how any association or club that I'm aware of handles the accounting (and I've been doing computer support for associations for some 20 years now).

"Lifetime" membership money goes in the same pot as all the rest.