[committee] Protecting the rainy day fund

[Jeremy Cole]

>
> If you have another look at the term deposit rates, you will notice that
> there are *special* rates for certain time periods. Committee needs to be
> able to select the periods that will give the best interest rates and will
> pay out at times they deem suitable. This shouldn't really require a General
> Meeting as long as we've defined minimum reinvestment rates somewhere.
>

The point about the special rates ties in with how banks work. Based upon
Wespac's rates it would seem that the difference between a 7-8 month
investment and a 12-24 month investment is nowhere near enough to
substantiate the amount of time that that money will be almost unusable
(like I said before these deposits are how banks stay in business and
pulling money out earlier is a costly (read: stupid) move) for that much
longer for what is a pittance more interest, even with 40 - 50k (if people
care to make a point about small sums of money in return... no just don't...
please)

I don't think reinvesting all of the money is a good idea. For starters, it
> removes any incentive for a committee to pay attention to it and manage it
> well. Furthermore, I have a pretty good idea how hard it is in UCC to spend
> large chunks of money - this isn't necessarily a bad thing, but it's a lot
> easier to do things in small amounts with greater regularity.
>

I think it's slightly faulty logic to think that there will be
no incentive to manage it well. I would hope that the club will elect
committees who have enough brains to back out of a bank that is ripping us
off. Having said that, it is also a mistaken assumption that you are going
to get 'ripped off' by banks in long term deposits as (I repeat) these
deposits are how they continue running, it's the biggest competitive market
within the sector.

At the end of the day, so long as you stay within the bonus rates you are
going to get the best deal, interest rates form investment to investment are
going to change based upon the money rate and how that then relates to real
interest rates.

As for the protection of the money, I think it will have to come down to
making almost arbitrary decisions as to how much you want to allow a
committee to spend. Something like (this is not legalese so don't stab me):

"The Committee of the Club shall have the power to use xxxx of the total
monies invested requiring a two thirds majority of an OGM. Beyond that
figure a SGM of which xxx (perhaps higher then normal quorum) members of the
club will need to be in attendance is required. If there is over xx
withdrawals below the aforementioned figure in xxx time frame then a similar
SGM will need to be called"

It allows smaller amounts of money to be used flexibly but not stupidly,
whilst protecting larger withdrawals which are not beneficial in the eyes of
the whole club. If you wanted to go even further you could even mention
something about the use of the money being 'only in the best interests of
the club where the cost of accessing the monies is far outweighed by the use
of the money', but this is dangerous territory as the committee is the only
entity entitled to interpret the constitution.

Now back to the study of labour markets!
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