Here is the treasurer's report on Cyberspace Communications, Inc. finances
through June 30th, 1998.
Beginning Balance $2,778.05
Credits $1,182.00 Member contributions
$70.00 Miscellaneous donations
$10.00 Spare Parts Fund
$2.00 Silly Hat Fund
$35.00 Grex store proceeds
$2.10 Sales tax collected
------------
$1,301.10
Debits $60.00 Pumpkin Rent for July
$83.00 Electricity for June
$20.00 Innovative Concepts phone line
$427.74 Phone Bill
$8.00 Bank service charge
------------
$598.74
Ending Balance $3,480.41
Our current balance breaks down as follows:
$2,475.79 General Fund
$816.00 Spare parts / 501(c)3 / Mail machine fund
$102.86 Silly Hat Fund
$65.00 UPS Fund
$15.24 Use Tax owed on $253.95 worth of mail-order purchases
$5.52 Sales tax collected
The Grex Store activity looks like this:
Cash Stock
--------- ---------
Beginning Balances: ($216.60) $384.10
$35.00 <-- Items sold <-- ($17.70)
--------- ---------
Ending Balances: ($181.60) $366.40
We had four new members in April: kdkd, straker, jmm, and tsdave. We are
currently at 103 members, 93 of whom are paid through at least July 15th.
(The others expired recently and are in a grace period.)
The reason the dues total is so high this month is that we received one check
for $600, for *ten years* membership. We now have one member who is paid
through 2008! We're now back above our $2000 cushion in the general fund,
which makes me sleep better.
Thanks to everyone who contributed in June:
atticus, bigwalt, bjorn, bmoran, bruin, carson, coyote, dadroc, dpc, giry,
headdoc, jmm, kdkd, keesan, krj, mnl2e, nephi, remmers, straker, tsdave,
valerie, and one mystery person. Thanks everyone!
Thanks everyone!
If you or your institution would like to become a member of Grex, or to extend
your membership into the next millenium, it only costs $6/month or $60/year.
Send money to:
Cyberspace Communications
P. O. Box 4432
Ann Arbor, MI 48106-4432
If you pay by cash or money order, please include a photocopy of some form
of ID. I can't add you to the rolls without ID. (If you pay by personal
check, we consider that a good enough ID.) Type !support for more info.
62 responses total.
Wow. Thanks to our ten-year member!
$600 is, BTW, by far the largest single donation of money that Grex has received, at least on my watch. Dan, do you remember anything that big?
Nope. That is definitely the biggest.
That raises the idea of offering a life membership. That, however, is usually based on about 20-years dues, so that the donation can be invested and the interest supports the membership. Then after the member dies the money is still there as an endowment.
As long as Grex's bank does not have a minimum balance, funds beyond what is needed for normal month-to-month activities should be kept earning 5% in a money market mutual fund. (no fees, no appreciable risk to principal) That way, a lifetime membership of $1200 should generate about a year's membership worth of income every year as long as interest rates don't decline greatly.
I can't see any reason not to have some sort of lifetime membership rate. I would set it at considerably less than 20 times the annual membership. No one is going to send hundreds of dollars to Grex as a cost-saving measure; they would do so only as an act of charity and support. There are no fiscal benefits for anyone in sending any amount to Grex. Most likely, anyone who sends such an amount is going to be happily willing to crack the checkbook again if Grex needs money in the future, as long as it's character doesn't change. Calling them a "lifetime member" is a special way of saying "thanks for the big contribution". Arbornet set the "lifetime patron" contribution level at 7 times an annual patronship. At the time it was done, that amount was 7x$150, or $1050. No one ever sent a check for a lifetime patronship. One person was awarded a lifetime patronship in exchange for the donation of a computer (the K-12 computer), but then never created a loginid so the patronship wasn't implemented. I blather. A lifetime membership rate of 7 years of membership seems like a reasonable rate to me.
Life memberships *are* inherently "charity and support", and only cost savings if one intends to stick around longer. I am in another society where I keep hearing members saying "I wish I had bought a life membership twenty years ago". However maybe a conferencing system doesn't generate that kind of loyalty - or expectation that the technology will still be around and used. The trouble with a life membership only 7xannual is that the person will be subsidized for long after that. Why should other users subsidize someone just trying to get a bargain? What good does it do Grex? The motives and the results are all negative.
The reason you might create a "cheap" lifetime membership rate would be if you had some short-term need for a lot of capital, and could afford the resulting "liability" later on. I don't think this is particularly attractive or necessary for grex.
#8..right. Grex is not despearate enough to need to offer lifetime memberships. Now M-net on the other hand probably ought to consider that as an idea because it needs to find a way to hit up the patrons it already has for more money. Also would need to spell out that such large memberships cant be' refundable, at least not 100%, because Grex cant be in a position if its in financial trouble someday of having to reimburse lifetime memberships for those who start thinking they may not outlive grex and have gotten a bad deal.
As usual, Richard, you need to learn to read. jep said Arbornet does (or did) have a lifetime patronship, & that it hasn't attracted any real interest.
M-net is now feeling the finiancial effect of the 'buy 3 months, get one free' offer, as a lot of free months are going by. Without follow-up fund-raising, it will be down to an emergcy again.
Having seen the humble numbers and having been a voyeur long, when I get home from work in the morning I'll get out the check-book and do my thing for at least a couple of years. 1 dog year=7 human years...hmmm. There has to be something there, no?
What, again? We should have an M-net Financial Emergency Tally to keep track of how many times it has to be bailed out.
(How about moving the M-Net discussion elsewhere, and using this item to discuss Grex finances or to thank the member who donated $600?) Re #12: Thanks Todd!
I didn't mean to bring a discussion of M-Net here, I just thought it was reasonable to mention what Arbornet did and what the results were. I don't see a "lifetime membership" as being a budget membership. I see it as recognition for people who send in a large chunk of money. Grex doesn't need people to send in big chunks of money to keep it afloat at it's current level of operation, that's true. Grex is stable right now. I have no doubt it can keep doing what it's doing for at least a year or two; maybe three or four. Grex should be looking at what it wants to do beyond that time frame, like any individual, group or corporation which has achieved short term stability.
I don't think your comment was out of place, John. It is interesting to note how lifetime memberships have worked (or not) elsewhere in examing them for Grex. On the otherhand hand this is a good time to thank our anonymous donor! Thank you, thank you, thank you!
A life membership should not be considered a "big chunk of money". It should be considered an endowment, and put aside to earn interest. In another organization I arranged for most of life memberships to be deposited to an endowment fund with a Michigan Community Foundation, where it not only earns interest (5%) but can attract further endowment donations since donations to a Michigan community foundation can be treated partially as *tax credits*. The principle in the fund no longer belongs to the organization and cannot be recovered (by state law).
Wow, thanks to your anonymous donor!
Make that "our" anonymous donor... :)
Thank you, donor!
ok name names! out with it...give credit where credit is due... who bought the membership? (richard thinks valerie and janc probably bought it for their unborn child...who would presumably be computer literate within ten years eh?)
Here's the most eyeopening statistic: Mnet (cash in bank June 30, 1996 or two years ago)-- $9,192.44 Mnet (cash in bank June 30, 1998)-- $216.77 In 24 months, Mnet lost almost nine thousand dollars cumulatively. this is an object lesson for Grex. Never feel too comfortable. Even with money in the bank, it can all disappear in a hurry! Maybe in retrospect, lifetime memberships are too unnecesary a risk?
richard, were you helping to run m-net in the last two years? or did you think you were?
<other is somehow reminded of the bleating of sheep>
OK, somebody please start the quarterly M-net item.
Again - life memberships are a *donation* to help insure the future of the system. They are not a "risk". They *reduce* risk.
(That is, if Grex created Life Memberships.)
A lifetime membership could be handled two way:
- invest it. It will earn annual income which can be used to help run
the system.
- spend it. Or rather, invest it in your own system, with the hopes that
it will lead to a larger income base in the future.
Either method is sound. $1200 today really can equal $60 a year forever,
if invested well.
I don't think I'd have a problem with lifetime memberships. I think creating
them would require a bylaw amendment, which requires a membership vote. Quite
a lot of trouble to go through to create a membership catagory that I think
would have no takers (well, could happen).
All I know about the donor is that they have asked to be anonymous. Playing
guessing games is inappropriate. The least we can do when someone gives us
a lot of money is to respect their request for anonymity. Making guesses on
line as in #21 has the potential of putting the actual donor in a position
where they must either lie or have their anonymity compromised. This is rude
in the extreme, so I decline to deny Richard's guess, even at risk of
encouraging people to believe that subtracting the cost of taxes, a house,
and a baby from the incomes of two part-time consultants leaves behind a lot
of spare cash.
If M-Net didn't have a bunch of snotty stuck up jerks, they'd have a LOT more people and money coming in... M-Net is evil
I hereby propose:
That the bylaws of Cyberspace Communications be amended to include a
category of membership called "Lifetime Membership" with all rights,
privileges and responsibilities being equal to that of a regular
member, except that a "Lifetime Membership" cannot expire. The
cost of said "Lifetime Membership" shall be a multiple of the
annual membership rate to be determined by a vote of the board of
directors of Cyberspace Communications, and the dues revenue from
such memberships shall be invested or included in the general fund
as determined by the treasurer.
The reference to rights, privileges and responsibilities assures that in case
of abuse of the system, vandalism or other offensive action, Grex retains the
right to refund dues and eliminate an account, even though the membership
cannot expire. Discussion?
In principle I think a lifetime membership contribution level is a good idea. I have a few points which I think should be considered before it is implemented. What if the membership rate changes? It is possible it will change radically. Grex might go to an hourly rate, for example. What happens to the lifetime members? Also, Grex might implement different rate structures. Arbornet went to some pains to make sure any lifetime patrons would always have the highest level of privileges available to anyone. If we had ever gotten really wealthy, and purchased CompuServe, I believe M-Net lifetime patrons would have gotten free, unlimited access to all of it's services that were available to the public. I believe there should be no guarantees, such as refunds. I think it should be made clear that lifetime members are subject to the same rules, conditions and expectations as any others. They are making a contribution, and they are getting a privilege, and the two are independent. I don't know if anyone has ever requested (or received) a refund from Grex. I haven't heard of anyone doing either. There are probably at least a dozen people who could be considered deserving of being awarded a lifetime membership. How about allowing the Board to make such awards? (I bet this point is going to fail miserably, because it doesn't seem to be in keeping with the Grex culture, but at least it can be considered.)
I would like to see an example of how this money could be invested to make 5% before considering a change in policy. In order to get 5% in most investments you either have to have a whole lot of money involved (jumbo accounts) or a reasonable amount of money (thousands) tied up for a long time. Are there others ways to have a small amount of money safe and returning 5% and yet available and managed without a lot of fees?
You can easily get a return of 3.5% w/ $2500 at a bank, in a 7 day CD
#28...geez, all I was saying was that the person deserves gratitude and compliments for buying a 10-year membership., I wasnt aware that buying such a membership was such an awful thing that he/she wouldnt want anyone to know about it? I bet grex would get more such memberships if it was 501(3)(c) and they were tax-deductable. Maynbe an incentive to go that route.
This is the ...finances....item. A proposal to amend the bylaws would be better put forward in its own item #30 does not offer a bylaw amendment per se, but is just a discussion item. If anyone wants to propose a bylaw amendment, it should be worded as are the bylaws, and its location identified by sectin/article. Having the board choose the "multiple" is the same as the board choosing the amount. It is simpler to choose the amount. Since the board sets the dues, they might wish to raise (or lower - heh) one or the other or both. It is not necessary to specify that a Life Membership will not expire. That is the understood meaning of Life Membership. Actually, Life Membership is only for the lifetime of a member - it is not desirable to continue the Life Membership of an expired member. It is sufficient to state that the Life Membership dues will be set by the board (they take all fiscal actions by vote). I consider it very desirable if Life Memberships are created, that a portion of the life membership that will return annually in interest the regular annual dues be immediately deposited to an endowment. The endowment can be held by the corporation, perhaps until it is large enough that it can be deposited to the Ann Arbor Community Foundation, where it will earn 5% *and* donations to it would be in part Michigan tax credits. Otherwise there is a great danger in spending Life Membership income on current expenses, conceivably leading to an inability to pay operating costs in support of those memberships.
my point was really to formally create a life membership with the proviso that the board, not the membership, determine the fee amount and the disposition of the revenue. that seemed appropriate to me.
Would we really get more money with tax deductables? It's certainly nice for people who have made the donation, but I don't think it's the deciding factor. Can we hear from people who have decided *not* to donate before making that assumption? Mnet is 501(3)(c). How are the donations doing over there?
Re #30: Eric, to make a bylaw amendment proposal "official", you should enter it as a new item in the Coop conference. Then it can discussed and ultimately voted on by the membership. See the bylaws (item 2 in Coop) for details on how this works.
See the bylaws also to determine the placement and appropriate style of wording of a new section/article/paragraph.
Other than the paragraph or two that says 'thank you' here is
some of the wording I got in the letter from the Michigan Tech Fund:
This letter serves as your offical receipt for tax purposes; please save it
for your records.
Federal lax law requires us to inform you that Michigan Tech did not provide
you with any good or services in whole or in partial consideration for your
contribution. YOur contribution is tax deductible for federal income tax.
Regular membership/dues may be considered as receiving something
in return (voting rights, internet features) here on Grex. I would guess
that only an outright donation (cash or say, auction items) would be
tax deductible. It does seem right that the donation can have a
purpose; be it hardware fund, general operations or silly hat fund.
When I got my letter back from National Space Society, it
stated that $10 of the $25 i sent was for my subscription to the
Ad Astra magazine, the remaining $15 is tax deductable.
Looks like we need to gather up our collective experiences
with 501(c)3 types of organizations of all sizes to help Mark get a
handle of how best to implement his systems for Cyberspace, INc.
I would accept that Mark sent e-mail aknowledgment of donations
throughout the year, with a collectivsnail mail letter at year-end
to provide that paper record for tax purposes. He should not have to
spend time and 32 cents on each donation.
You can get 5% from a Money Market Mutual Fund. You don't need gobs of money to open one, and you can avoid monthly fees. I mentioned earlier that if Grex has money in the bank that it is not planning on spending, that a money morket account would be a better choice. Even if there is not enough to open one as is, there would be if we had a single life membership at $1200 to augment it. I doubt anyone would donate that much until the 501(C)(3) was adopted, but after that it is a possibilty (perhaps remote, perhaps not). I would rather see us invest any such money as an endowment than to invest it in hardware or other infrastructure in hopes of growing grex's membership. THe latter seems risky. The former much less so.
Dues in 501(c)3 non-profits are tax deductible unless something of significant value is provided. An example of this is a magazine that is also sold on the newstand. I will agree that this can gradate into a murky area. Examples of what has and has not been allowed essentially define the law. I the 501(c)3 item I gave a URL for further information on what is deductible and what is not, and what services do or do not have to be declared. Since a members-only parking lot in the middle of New York City does not have to be declared (value deducted from dues), the rules are pretty liberal. I recall one of the criteria that if the service is *used frequently* by members, it need not be declared. However if a free annual dinner were awarded members, the value of that would have to be declared (i.e, subtracted from the deduction).
Wow! Where do you get a Money Market Account that pays 5% on an investment of less than $5,000, without fees or that isn't tied to an account with a much larger balance? I'd like the name of that investment firm or bank. ;-)
i have a mutual fund account that seems to be paying about 25% per year...
So do I but that wasn't the question. ;-)
Unless something's changed very recently, Vanguard is paying about 5.2% on their money market fund with a $3K minimum. 800-662-6273,#,7#,30# should tell you the actual current yield. (Or visit their web site, or subtract about 29 basis points from the current AAA money rate, or...) Note: they call it their "Prime Portfolio", but it bears *NO* resemblance to (far risker and less liquid) "Prime Rate" funds.
I have a Fidelity MM account with a $2500 minimum to open it, but the minimum is only checked once a year or some such. I don't remember the exact details about what maintenance minimums are, but they are not way above what Grex can handle. I called last year and confirmed that there are no monthly fees, even for an organization as opposed to an individual.
What's the interest rate?
MOst investment company money market mutual funds pay 5% right now, give or take a basis point or two. Most also have minimum balance requirements to open (unless you sign up for automatic investments) but the ones I have experience with allow the balance to fall after the account is opened. Most have checking limits; either you`re allowed a certain number of checks per month, or each check must be written for a minimum amount. MOney market mutual funds are extremely safe and liquid; however they are NOT guaranteed or insured. I don't know of any money market funds that have fees. The ones I have experience with are totally free of charge.
Thanks!
Several items to consider if shopping for a money market mutual fund:
The quoted interest rate is probably not what you'd get if you let
your money sit and compound for a year for two reasons:
- compounding effects (and which of the 17 ways of calculating the
interest rate did they quote you, anyway?)
- the interest rate goes up and down with the "going rate" in the
money markets (Wall St., etc.) and the expense ratio.
In taxable accounts, a low interest on a treasury or municipal money
market fund can leave more dollars in your pocket than a higher interest
fully-taxable fund.
Tight regulation or no, the fund company and management does matter.
There's *no* FDIC insurance on a mutual fund. "U.S. Treasury" in the
name is no magic wand to keep them for losing some of your money in
an Orange-County-style gamble. They can jack up the interest rate to
pull in investments, then drop it way down to make $$$ at the expense
of investors who aren't paying enough attention. Minimum investments,
fees, and how often they screw vary quite a bit.
I have never experienced any of those practices with a money market mutual fund. Banks can do that stuff; by law, money market mutual funds cannot. The fund and its selling agents must quote the SEC annualized yield--a uniform measure in the industry.
Well, let's see. Semantics aside, temporary waivers of fees & expenses by the fund company can easily be used to play the bank's game of "lure 'em in, then milk 'em good". I believe that it was '94 or '95 when the Treasury money market fund that NBD wanted our company to invest in dropped below $1.00 per share. (Probably '94. I had the prospectus for a couple years and was quite amused by how little it would have cost them to - ah - "fix" the NAV compared to the lost management fees when most of their assets under management bolted for the exits. My recollection of the times is that they weren't the only ones, but that most management companies "covered" their losses.) And whether that SEC yield is always quoted or not, my experience is that many similar-sounding numbers are often quoted, and a sharp eye & ear (and clear understanding of which numbers to treat how) is needed to compare apples to apples. Such things aside, it is nice hear that your experience inside part of the industry has been good.
Was this a bank money market account, or a money market mutual fund? There is a big difference. To my knowledge there was a money market mutual fund (*one*) *once* that *would have* fallen below $1 per share had the management company *not* "fixed" the nav by pumping in its own money. Unfortunately, banks do not fall under the SEC and NASD rules (which are extremely strict) as investment companies must, even though banks now sell investment products. This will change eventually, as there have been many many complaints against the way banks market and (fail to) service investment accounts.
I'm talking *only* mutual funds. NBD was marketing this one, and my recollection is that the management company was basically a NBD corporate lap dog. More than one "portfolio" of this fund dropped below the magic $1/share - which might mean more than one legally defined fund, depending on the small print. Everything i've heard suggests that buying mutual funds at a bank is a very poor idea.
since we generally pay no tax. I have never experienced any of the problems walter described. My experience seems to be the same as Katie's. It's payiong about 5% right now. THis can vary with time. It is true that they are not insured. I do not think Grex should be concerned about this if they are doing business with Fidelity or Vanguard. NBD seems like a poor place to go for one of these.
Pax, a socially responsible investment company, now also has a money market fund. They sent me one small envelope containing all the information that I needed to apply for their IRA. Fidelity sent me several large envelopes full of redundant glossy brochures, an application form for the application, and then a large box containing the application form and a video for my employees (after I had filled in that I had none). Pax chooses companies that are not involved in the defense industry and treat their employees well, and you get a person almost immediately when you call instead of having to poke numbers for five minutes. (But Fidelity is also very competent and nice).
Need to check if we'd owe income tax on interest income.
This response has been erased.
(Calvert has politically correct funds, too)
Ya know, Mutual funds can lose lots of money, So that's something to think about.
Yes, but **money market** funds almost NEVER do so. If they are in any danger, the fund managers buy the losing investments themselves. In something like twenty years, only one such has "broken the buck". Mutual funds are an ENTIRELY different story.
You have several choices: