[committee] Protecting the rainy day fund

[bob at ucc.gu.uwa.edu.au]

Hi again,

I figured this is worth a separate email because it's a big issue and  
needs more discussion; I want to protect the money we got from the  
hail storm insurance in the constitution or an attached policy.

Aims:
-ensure the long term future of UCC by giving it a good regular income
-allow the fund to grow so that if, in the future, the club has a  
reason to make a large purchase (supercomputer, buy our own clubroom,  
fit out a clubroom, that sort of thing) it is possible to do so
-protect the money from bad committees and/or unnecessary spending by  
requiring the special resolution of a general meeting for its use
-prevent the principal amount of the fund from being spent on  
day-to-day expenses, while allowing the interest to be used easily
-set up the fund in such a way that it will grow without any  
intervention from committee, perhaps by setting a percentage of the  
interest to be reinvested

Currently:
We have $50k sitting in a monthly Westpac term deposit until the SGM  
decides otherwise. This is giving us $246 a month interest, so it's  
not a small amount for a club that has ongoing expenses of just $22 a  
month. Some time in the next 12 months, UCC is also likely to be  
moving to a new clubroom and several thousand may be required to kit  
out the room. Hence I'm assuming $40k for future investing.

You may be wondering why we don't just put it in the clubs guild account.
1. The money should be in separate accounts so it's obvious what's  
what and is out of easy reach
2. The interest rate from the guild isn't great
3. The guild only pays interest once per financial year

Rules imposed by the Westpac:
1. UCC does not qualify to use high interest savings accounts, our  
best option (for Westpac and everywhere else I've looked) is to use  
term deposits.
2. A term deposit, by definition, does not allow you to add money to  
the deposit until maturity, at which point the maturity instructions  
are triggered.

How I suggest we set it up:
-Westpac term deposit rates are here:  
http://www.westpac.com.au/business-banking/bank-accounts/savings-investment-accounts/business-term-deposit/
-You will notice that for the better interest rates are for 7-8 months  
or 12 months, paid at maturity
-I propose we set up 4 deposits of $10k each, with a 7 month maturity
-If we start each term with the appropriate time offset (about 6 weeks  
each), we can get regular interest payments with the good interest  
rates of the longer terms.
-We then set the maturity instructions to automatically restart, with  
a percentage reinvested. Yay compound interest.

Problems:
-Each time the deposit matures, the interest rate could change. This  
can work for or against us, but should stay fairly steady. Not a huge  
issue, but do we want to have to have an SGM if it becomes a problem?
-How the hell can I specify all this in a policy document, whilst  
giving us flexibility where required?

I need some answers to my last two questions, if you have a suggestion  
on how to go about this I'm all ears.

Cheers, Bob

tl;dr - too bad, read it anyway