When You Don't Have the Money to Give
Money can put a squeeze on
all of us at one time or another, whether we’re single or supporting
a family. OK, maybe not Madonna – but there’s still the rest of
So what does this have to do
with investment clubs? Well, cash flow can get a little tight from time
to time. If you’re experiencing a serious money-crunch, you might
want to consider taking some time off from your monthly investment club
contributions. Many investment club members, at one time or another,
have taken what's known as an "investment club hardship."
Most investment clubs have
a hardship clause in their bylaws (see sample bylaws, Article X, Paragraph B.) All families
come into a financial crunch once in a while. Sometimes it is necessary
to use the club hardship clause. A club member could do this in a couple
- First, the member
could bring up the motion citing the paragraph from the bylaws. A temporary
hardship should never be unreasonably denied, so the motion passes.
You should let your club know when you would like to start paying again,
and no penalty is charged against you while you are not paying (including
- Second, you could
file the motion in writing to the club. The club passes the motion,
and you will let them know when you are ready to reinstate payment.
As a full partner, you still
will try to make all meetings and vote on all issues and stock purchases.
The key to the hardship is that it is temporary. Any prolonged use of
the hardship, i.e. 6-8 months, should be discussed among the club’s
If your club does not have
this clause in your bylaws, consider adding it. Investment Clubs in
the 21st Century need to be as flexible as possible for the benefit
of the members. Hardship availability is just one example of this flexibility.