Can a new member join a club at the same value as all the other members?

We occasionally speak with clubs who intend to keep all partners equal financial participants. On the surface, this seems like a worthwhile objective. The bookkeeping seems simpler than the Valuation Unit system, and everyone is entitled an equal say in the operation of the club. While this can be the case at the outset, the longer the club continues, the more potential issues crop up.


    • Late payments. Is it fair to members who always pay on time to allow others the use of their money for an additional month or more, and still grant them an equal share in the club? Using the Valuation Units accounting, the number of units purchased depends on the value of a unit at the time payment is received.

 

    • Financial emergencies. If a member needs money for an unexpected emergency or special need, how do you accommodate a partial withdrawal and still keep that member an equal partner?

 

    • Increase the monthly payments. What if some members want to increase monthly investments and others can’t or wont? The Valuation Unit system accommodates unequal monthly payments.

 

    • Equal votes. Many club partnership agreements specify weighted voting based on the number of units owned, but in practice each member gets one vote. A member who disputes a result may still request a weighted vote.

 

    • Too expensive for prospective new members. It gets increasingly difficult to find new members able to buy an equal share. Are you likely to find someone willing to make an initial investment of $20,000 or more?

 


Maintaining “equality” is not necessarily fair to the more conscientious members, may limit growth, and can even threaten the continuing existence of a club. In the long run, the disadvantages outweigh the perceived advantages.

Keeping this in mind, while it is possible to approximate an equal partnership, we do not endorse doing so.

This is not what the Valuation Unit system was designed for, relies on working at CROSS PURPOSES to the program, and as such we cannot walk you through this process.
Attempt the following ONLY if you are very comfortable with the way the program operates.

1) Make a backup of the data in the program.

2) Print a member status report for the date on which you will be entering the new member's first payment.

3) Look at the "Current Value" column to see what the current members' units are worth as of that date.

4) Enter a payment for the amount in the "Current Value" column for the new member on the same date. The new member's payment will buy the same number of valuation units as the old members own (keep in mind that due to rounding issues this figure will not be exact)

5) If need be, enter any club fees in as needed. Make sure to mark them as fee payments in the program so that they do not add any units to the member's stake in the club.