Raising club funds by debentures

[BlueSkyNick]

This is a boaty subject, and didnt want to lose it in the morass of the Lounge or the mechanics of PBO.

We are embarking on a project to extend the clubhouse which provides extra storage, and most importantly lift facilities for disabled or elderly people, as well as for staff having to bring stock and furniture upstairs.

I have suggested a debenture scheme, ie which raises cash quickly from the members, repaid x years later, and need to find out how it works in practice.

Has anybody any experience or knowledge of how to run a scheme ?

I've been in one many years ago which was interest free, ie you just got back what you put in at the end of the set period. I suspect the average yottie would want to get a return approx equal to base rates - then are there tax issues, etc etc.

Any experience as an organiser, or punter, would be welcome. Also any links to websites, etc.

PM me if you prefer.

TIA

 

[aknight]

See RYA web page

 

[Bav34]

We did this at Hythe Sailing Club in Southampton many years ago. Seem to remember that the members lent money to the Club and received interest back in the form of a reduction in the annual membership fee.

Lots of links to committee members etc HERE

 

[Barry777]

The Chichester Yacht Club has been down this road in the past and you may wish to contact the Secretary, Martin Buckley on 01243 512918, who could give you the background

Hope this helps.

 

[Tranona]

Have been used by Poole Yacht Club along with pre-payment of berthing fees over a period of years. Limited to an extent by the number of members willing to subscribe and ensuring that the terms are equitable to all members. For example if they are linked to berthing, non berth holders are not able to take advantage, so the terms need to be set close to a commercial rate of interest.

 

[Alfie168]

I was going to ask what point there was in selling false teeth, but then I put my glasses back on /forums/images/graemlins/grin.gif /forums/images/graemlins/grin.gif

Tim

 

[BlueSkyNick]

Thanks for all the replies - well most anyway. /forums/images/graemlins/smile.gif

 

[DJE]

I seem to remember making a "Compulsory loan" to Benfleet Yacht Club in about 1980 for construction of the new shore headquarters building. Don't think I ever got it back. Don't begrudge them a penny of it, but £50 was a lot for a student in those days.

 

[BlueSkyNick]

Compulsory loans or levies have been ruled out already - volutary purchases, donations and investments only, I believe.

 

[ParaHandy]

some rugby clubs (eg Murrayfield) requiring a new stand have offered a debenture in exchange for a seat at so many matches each year. the debenture exists in perpetuity unless failure of the club occurs. this structure avoids the club having to pay interest or repay the capital. the debenture holders occupy a minority of the available seats in the new stand. Difficult to see how that would work in a yacht club where the additional facility is not likely to increase membership. Offering a debenture in exchange for a benefit eg life membership is also not prudent because of the impact on future income. Would a surcharge on the annual sub not work better or, if greater capital is needed, dun the members for it?

 

[jhr]

I think you're missing the bigger picture here.

Surely there's scope for the club to sell off seats in the Bar in perpetuity? Allocation of seats could be determined by the amount donated, so a real cheapskate would find themselves next to the Club Bore or, erm, might find that their ability to stretch out was limited by the extremely long legs of the person seated opposite them, whereas high rollers would find themselves next to the Club Babe, or the wealthy philanthropist who always buys a round for his besht matesh.

Just a thought.

 

[BlueSkyNick]

Thanks Para - I looked at buying a debenture at The Millenium Stadium but they were £3950 at the time, and I felt one on its own would be boring and two would be necessary, which (fortunately!) blew the idea right out of the water.

You are right that debentures have to be repaid by the club, but as long as the total exposure is kept to a sensible level, and is significantly less than a commercial loan, the scheme is less onerous on the club as they are in control.

When I worked in the Cayman Is, we built a new club house in this way - when it was time for us to leave, I just asked for my money back and received it, no worries. Others were repaid after 10 years, IIRC

The RYA scheme seems to suggest an annual lottery to see who gets their money back each year - not sure how this would work.

As for surcharges, or 'dunning' (in this context), these are very unpopular with rich and poor alike - of which we have the full range in the Club.