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Grex > Coop12 > #68: Cyberspace Communications finances for November 2001 |  |
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aruba
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Cyberspace Communications finances for November 2001
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Dec 1 05:06 UTC 2001 |
Here is the treasurer's report on Cyberspace Communications, Inc. finances
through November 30th, 2001.
Beginning Balance $6,092.37
Credits $654.00 Member contributions
$5.62 Miscellaneous donations
$5.00 Donations to the Silly Hat Fund
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$664.62
Debits $72.93 Pumpkin Rent for December
$45.97 Electricity for November
$182.26 Phone Bill
$135.00 DSL November 15 through December 15
$4.13 Paypal fees (income = $121.62)
$58.00 Reimbursement to cross for shipping
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$498.29
Ending Balance $6,258.70
Our current balance breaks down as follows:
$5,025.84 General Fund
$148.86 Silly Hat Fund
$60.00 Spare Parts Fund
$1,024.00 Infrastructure Fund
The money is distributed like this:
$5,758.70 Checking account
$500.00 8-month 3.00% CD which comes due 5/28/2002
There was no activity in the Grex store this month, so the balances remain at:
Cash Stock
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$149.40 $162.10
We had six new members (neve, slydawg, jp2, bhelliom, program, and saw) and
one returning member (eskarina) in November. We are currently at 99
members, 95 of whom are paid through at least December 15th. (The others
expired recently and are in a grace period.)
Notes:
- November was certainly a good month for Grex.
- Dan Cross sent us two Sun Ultra computers, so we reimbursed him for
shipping costs (though he paid the handling). Thanks Dan!
Thanks to everyone who contributed in November:
bhelliom, bmoran, bruin, dang, dpc, dpfitzen, eeyore, eskarina, flem,
glenda, gregory, jp2, jplatt, neve, other, program, saw, steve, tomaso,
the Grex walkers, and wlevak.
Thanks everyone!
If you or your institution would like to become a member of Grex, 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 with a personal
check that has your name pre-printed on it, we consider that a good enough
ID.) Type !support or see http://www.cyberspace.org/member.html for more
info.
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| 36 responses total. |
keesan
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response 1 of 36:
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Dec 1 14:30 UTC 2001 |
Mark, you were six minutes late with your monthly report! Usually you file
just before midnight.
Can someone confirm my arithmetic. Bank of Ann Arbor, last I checked, was
paying 2% on 12 month CDs and 4% on 5 year CDs. The penalty for early
withdrawal is 3 months interest. This means you don't want to take the money
out before three months, but at three months you have not lost anything with
either account if you take it out then as compared to never investing it.
After six months you will have made 3 months interest on either account - which
is one quarter of 2% (.5%) or 4% (1%). At the end of one year, you would be
paid 2% on the 1-year account, or 4-1% = 3% on the 5-year account (4% minus
3 months penalty). Which makes the 5-year account better for investing in
for even one year than the one year account.
Is my reasoning wrong that you can hardly lose by opening a CD even
if you plan to take the money out early (as long as it is there at least three
months) and that it pays to get the CD with the highest rates even if you
don't plan to leave the money in for the entire term? If rates go up during
the 5 year period, you can take the money out early, lose 3 months interest
(say at 4%) and reinvest it at the higher rate.
Mark, what is TCF's highest-paying CD at the moment, and for what term?
It sounds like it would be simpler for you to keep things at one bank, if
there is not much difference in rates. Is grex likely to be making any major
investments in the next 3 months? (Even if it did, unexpectedly, on a 4% CD
you would lose only 1% of whatever you took out, or $10 on $1000). I think
the banks expect people will leave their money in the long-term CDs by inertia
instead of switching to new better paying ones.
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keesan
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response 2 of 36:
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Dec 1 14:46 UTC 2001 |
I cannot find TCF rates online. Bank of Ann Arbor:
3 mo 2%, 6 mo 2.25% 1 year 2.50% 2 year 2.75% 5 year 4%
At the end of one year, a 5-year CD would pay 3% and a 1 year CD 2.5%.
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keesan
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response 3 of 36:
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Dec 1 14:53 UTC 2001 |
Flagstar - I could only find rates for their online banking CDs, which must
be purchased online and are not available for corporate accounts and require
$5,000 minimum. Apart from this they are attractive as they pay slightly
higher than BoAA (1 year 2.5%, 5 yar 4.3%) but there is mention of having to
pay fees out of this. Flagstar is based in Bloomfield Hills and has branches
in Illinois and elsewhere. Anyone know the rates paid offline?
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carson
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response 4 of 36:
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Dec 1 15:28 UTC 2001 |
THANK YOU, DAN!
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i
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response 5 of 36:
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Dec 2 14:51 UTC 2001 |
My impression is that early withdrawal from multi-year CD's results in an
interest penalty of 6 to 12 months. Given Bank of Ann Arbor's interest
rate on regular savings vs. CD's, i feel that it would be both a poor use
of resources and an imposition on our great but unpaid Treasurer to go the
more complicated & higher-maintenance CD route.
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keesan
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response 6 of 36:
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Dec 2 16:16 UTC 2001 |
Both banks said it was a penalty of 3 months interest, not 6-12 months.
Mark expressed a preference for sticking with just one bank. I will check
to make sure all CDs (even 5 year) have the same penalty. When I called,
I did not specify the term and they did not ask.
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cross
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response 7 of 36:
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Dec 3 00:47 UTC 2001 |
Sure thing. I do have one question, though: What the hell is the
silly hat fund? :-)
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mdw
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response 8 of 36:
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Dec 3 03:15 UTC 2001 |
We buy silly hats and mail them off to, er, unsuspecting people,
somewhere in New Jersey...
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aruba
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response 9 of 36:
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Dec 3 04:06 UTC 2001 |
Re #7: At the November 1996 board meeting, we were talking about
having special funds earmarked for specific purchases. Apparently someone
said something about "still accepting donations that can be used for
anything, even silly hats". I don't know who said it, because I didn't hear
it. After the meeting Peter Riley (nestene) handed me $5 and said "this
is for the Silly Hat Fund". So I dutifully created the fund.
Various people have donated to it over the years, so it's grown. No one
has thought of a use for it yet.
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cross
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response 10 of 36:
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Dec 3 07:56 UTC 2001 |
Buy Marcus a clown hat for Response #8. :-)
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keesan
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response 11 of 36:
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Dec 3 14:38 UTC 2001 |
I phoned Bank of Ann Arbor to ask again about CDs. Minimum deposit is $1000.
Penalty for early withdrawal is 3 mo interest on the amount that you withdrew
early. So if you put in $1000 in a 4% 5-year account, and decide to take out
$100 in one year, you will be penalized on the $100 only. The penalty is 3/12
x 4% of $100 = $1, but you will have earned $4 on this amount, coming out $3
ahead of leaving it in a 0% interest checking account. If you take out $1000
after a year in a 5-year 4% account, you will therefore have earned $30 ($40
minus $10 penalty). This sounds a lot easier than putting the money in a
series of 6-month CDs and probably also more profitable since a 5-year CD pays
a higher rate.
Online they talk about a 'substantial penalty' for early withdrawal.
I think this is designed to scare people away from the longer-term and
higher-paying accounts. $1000 left in a 1-year account for 1 year earns only
2.5% - $25 instead of $30.
I did not phone TCF again but last time they told me 3 mo penalty.
(It took me at least a half hour on hold to get through to someone who knew
the answers).
If after a year rates go up to 6% instead of 4%, you can withdraw all
the money, lose 1% of it, but know that you will make back twice that in a
year. So you are not even locked into a low interest rate. If CD rates go
down, you can stay with the higher rate.
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keesan
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response 12 of 36:
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Dec 3 15:44 UTC 2001 |
I got through to TCF info (1, 0, 3, 2 on a tone phone). CDs open to anyone
or any company, $500 minimum. Penalty of 3 months interest for early
withdrawal (same as BoAA). She tried to interest me in their rate specials,
the 6 mo being 2.50%. I asked if there were higher rates - yes, 2 yar 3.5%
and 59 month (just under 5 year) 4.75%, which is even better than BoAA's 4%.
At the end of 2 years the 2-year account would have paid 2 x 3.5% - 7% and
the 59 mo account would have paid 2 x 4.75% (9.5%) minus 1.1875% or 8.3%.
A series of 6-mo accounts would have paid 2 x 2.5% or 5%. At the end of 1
year (when grex might want some of the money to buy computers with):
6-mo account - 2.5%
2-year account - 3.5 minus .875 - 2.62%
59-mo account - 4.75 minus 1.1875 - 3.56%
A 1-year account pays less than the 6-mo account.
Mark already knows how to open a CD at TCF and it has to be less time
consuming to open one account than ten accounts.
How much money would grex make by transferring $4000 to a 5-year CD but
withdrawing $1000 after one year, at the end of 5 years.
$1000 for one year at 3.56% = $35.60
$3000 for five years at 4.75% = $712.50
Total earnings in five years = $748 (enough to buy another computer?)
About $150/year average.
Time required to open the account, maybe an hour?
Time required for account maintenance - a few minutes a year?
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other
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response 13 of 36:
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Dec 3 17:11 UTC 2001 |
The silly hat fund is our emergency cash cushion. If funds are
desperately needed and cannot be found anywhere else, and we have not at
that point determined silly hats on which to spend it, the silly hat fund
will save our silly butts. Somehow I can't quite see this eventuality
coming to pass, but it sounds as good as anything else I've heard.
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aruba
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response 14 of 36:
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Dec 3 17:24 UTC 2001 |
I would rather see Grex spend the silly hat fund on something silly - that
being what it was donated for. Preferably something silly that many Grexers
can enjoy.
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tpryan
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response 15 of 36:
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Dec 3 18:09 UTC 2001 |
Grex has also had other funds that have come and gone. Specific
hardware funds with mission completed. Specific fund to sponsor a
movie at Top Of the Park (TOP) in 2000.
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mary
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response 16 of 36:
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Dec 3 18:14 UTC 2001 |
When non-profits invest do they have to pay any income taxes
on the money earned?
If you take out a CD with $1000, the minimum investment allowed,
then cash out $100 early, are you able to keep the remaining
money invested in the same certificate even though you've now
taken it lower than the minimum allowed?
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other
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response 17 of 36:
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Dec 3 18:20 UTC 2001 |
Is an endowment considered an investment?
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jp2
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response 18 of 36:
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Dec 3 18:24 UTC 2001 |
This response has been erased.
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aruba
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response 19 of 36:
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Dec 3 18:32 UTC 2001 |
Grex, as a 501(c)3 corporation, is immune to income tax.
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keesan
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response 20 of 36:
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Dec 3 20:05 UTC 2001 |
At BoAA you have to maintain $1000 minimum, same as what you need to open the
account. If TCF has the same rules, you would need to leave at least $500
or close the account. If you were down to $500 and needed $50 of it, you
would have to withdraw the whole $500 (at a penalty of about $6).
Therefore money in a CD at TCF - is insured, is local, is convenient to the
post office, is relatively readily accessible (you might have to go to the
bank to withdraw it but there is only a small penalty), and would earn good
interest, especially compared to the 0% at a checking account. Are other
local banks paying more than 4.75% for a CD? A CD is also guaranteed against
a decline in the interest rate for as long as 5 years, but if rates go up more
than about 1% it would pay to close the account and open a new one.
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aruba
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response 21 of 36:
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Dec 3 21:09 UTC 2001 |
Sindi, are you sure the penalty at TCF is 3 months' interest no matter how
long the CD is for?
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keesan
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response 22 of 36:
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Dec 4 00:47 UTC 2001 |
That is what they told me when I asked. They said the penalty depended on
the interest rate and was equal to three months of interest. I called twice
and asked two different people to make sure. Please be sure to ask all the
same questions and get things in writing. A 5-year CD would have a larger
penalty (/14 of 4.75%) than a 6-month CD (1/4 of 2.50%) but, unless you only
kept the money in for a short time, the higher interest rate would more than
make up for the higher penalty.
For a short time TCF (Great Lakes) had a policy whereby you could open a CD
and then add more money to it for a year at the same interest rate. I added
lots more money to a CD after the regular interest rates dropped sharply
around 1990. They must have decided this was a bad policy.
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jmsaul
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response 23 of 36:
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Dec 8 20:49 UTC 2001 |
Re #19: That isn't true. 501(c)(3) corporations are liable for tax on
income from "unrelated business activities." I have no idea whether
interest would be included in that category.
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keesan
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response 24 of 36:
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Dec 8 21:08 UTC 2001 |
I can ask a couple of other nonprofits to which I belong, which have invested
their money, whether they have to pay tax on it.
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