[committee] Protecting the rainy day fund

[Jeremy Cole]

Well I think with something such as this amount of money you really only
want changes in the investment 'schedule' to be changeable with something
like an SGM. At the end of the day you are going to get a decent enough
real interest from a term deposit to make it worth while, these large
deposits are how banks run do remember. If you really want to keep things
flexible whilst still keeping the money safe you could require an absolute
majority opinion from the committee of the time to change how it is invested
(because any change along these lines should be so obviously good for the
club that an entire committee would be for it) whilst still requiring an SGM
to actually withdraw funds.

I get the feeling that this is going to be a tough nut to crack as either
way you go there seems to be either not enough flexibility or too much
ability for a 'rogue committee' to go nuts. Perhaps it is in the best
interests for one of these to be the case rather then spend forever trying
to find a Goldilocks policy on it.


On Tue, Oct 12, 2010 at 10:45 PM, <bob at ucc.gu.uwa.edu.au> wrote:

> 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
>
>
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