(Originally Written about May 2006. Also Reprinted in the Skirmish Line, Fall 2008.)
I recently read the April-May-June 2006 Skirmish Line, and when I got to the Recoil letters section, I really started thinking about our finances. I was at the National Board Meeting in January, and I listened to all the budget discussions. I know money is tight, and I know there are a lot of expenses in running an organization such as this.
I also think that some of the ideas in the SL Recoil did not hit the mark. Taxing members for bringing their campers to the Fort, or for simply showing up is a bad idea. I think it would not only hurt the National organization, but it would hurt many individual teams. But that’s a discussion for another time…
One idea in a letter sent by Bill Adams has some merit in my opinion. Bill suggested a Life Membership for the N-SSA, and I think it’s a great idea. It’s an idea I’ve toyed with for a few months (just ask my wife!). However, I think Bill is looking at the funds generated by such a membership program in the wrong way. Using a Life Membership for a short term “quick shot of revenue” as Bill put it, is irresponsible in my opinion.
Life memberships would better serve the N-SSA as a long term solution to some of our budget issues. I won’t claim that they would be the only solution, but a likely substantial part.
I would like to propose that we take a part of a Life Membership fee and invest it in a Certificate of Deposit, and use the interest to fund part of our yearly budget. I’ll explain how it can work, let’s look at some examples of Life Memberships:
The National Rifle Association’s (NRA) yearly membership fee is $35.00. The NRA also offers a $750.00 Life Membership option, as well as higher levels of membership. If I can remember some of my grade school math skills, The ratio of those membership fees is roughly 21:1, which basically states that the value of one Life Membership is roughly equivalent to 21 yearly memberships.
The Sierra Club (not an organization I endorse, nor am I a member, it’s just an example) has a yearly membership fee of $39.00, and a Life membership fee of $1000.00. The ratio here is near 25:1, or one Life Membership being the equivalent of 25 yearly memberships.
The N-SSA yearly membership fee is $50.00. Using a ratio of 25:1, a basic N-SSA Life Membership could be valued at $1250.00. For reasons that will become obvious in a moment, we will work with this value.
Let’s say that one member was granted a Life Membership to the N-SSA. The member sends in $1250. The N-SSA puts $50 in the bank to cover membership dues, and puts $50 in a 1 year CD, $50 in a 2 year CD, and so on for a 3 year and 4 year CD. That should leave us with $1000 ($1250 minus $50 for current year dues, and minus $50 for each of four CDs = $1000) which we will invest all at once in a five year CD.
Current Interest Rates for CDs average about 4.5%, but can be locked in today (5/10/2006) at 5.1% or higher at some banks (according to bankrate.com). We will use the average interest rate in our examples.
At 4.5% with monthly compounding the following will be returned at each CD’s Maturity:
The first $50 funds the current years dues with no return
The 1 Year CD @ $50 returns $52.30 to fund the second years dues
The 2 Year CD @ $50 returns $54.70 to fund the third years dues
The 3 Year CD @ $50 returns $57.00 to fund the fourth years dues
The 4 Year CD @ $50 returns $59.84 to fund the fifth years dues
The 5 Year CD @ $1000 returns $1251.80 to fund the 6th through the 10th years plus a new $1000 5 Year CD
The idea here is that the first $250 of the membership funds the first 5 years of dues, after that the $1000 returns enough to fund the next five years, and still roll over $1000 to reinvest for 5 more years. After you pay for each years dues, and reinvest the $1000, the N-SSA gets a $25.64 bonus in interest which could be reinvested to keep up with dues increases. Remember that current rates my be higher than 4.5%, and there may be other ways to invest so that we get a return of 7% or better!
If we have 3700 members, and if just 100 members become Life Members (3.7% of the total membership), the N-SSA would have $100,000 to invest over and over every five years.
This means that the N-SSA could have a substantial income that will be rock solid for years to come, and that the Life Member could get his Skirmish Line and membership card every year without worry of a yearly fee. That’s a good thing too, because when a member becomes a Life Member, they are more likely to participate. Younger members who invest in a Life membership early may be more likely to return after college and/or after they are married. Older members who already have a life membership wouldn’t need to worry about a yearly fee when they are living on a fixed income, or if they fall on hard times.
Here’s why this plan is a good long term investment for the N-SSA: after many years of skirmishing, inevitably some of our Life Members will pass on, but the Life Membership will keep returning $50 every year for the life of the organization, making it a gift that keeps giving!
Now, I must admit, there would be other issues that would need to be overcome. Taxes? I don’t really know how our status would affect the interest income every year. I’m also curious if this giant “war-chest” of investment would make our organization a target for lawsuits, but maybe not anymore than we already are. Interest Rates? Well, yes, they do go up and down, and there may be some risk, that’s why we need to discuss this idea more.
Another question: Who would be in charge of managing the money, and how would it be protected? More good questions that would need to be answered, I am personally in favor of a “lockbox” for the $1,000 per active life member. I’d also like to see a “Legacy” program for the $1000 from each Life Member that has passed on. These are all ideas that can be ironed out as we discuss this issue.
Now I’m sure this may spur other ideas, Such as an Easy Pay Life (EPL) program, Distinguished Life for members age 65+, or Endowment or Benefactor memberships similar to that of the NRA, but my purpose is to get the idea of an N-SSA Life Membership rolling.
As a member, you may be wondering: Is $1250 too much to pay for a life membership in the N-SSA? That I can’t answer. What I can tell you, as someone who has been around skirmishing for 27 years, and a member for the last 16 years, the experiences and the friendships I’ve enjoyed have been priceless.
I think these reasons make a Life Membership a win for the N-SSA, and also a win for the individual member! If we ever decide to go forward with this idea, I’d like to be the first to sign up!