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 us.

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 of ways:

• 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 voting rights).
• 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 members.

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.