Would you take this offer?

[disneysteve]

Here's the scenario:

For the past 15 years, you and your family have been increasingly active and involved members of an organization to which you currently pay approximately $2,000/year in membership dues. You anticipate remaining members of this organization for the rest of your life, at the very least until retirement which is some 18 years away. You have just been given the opportunity to become a lifetime member for a one-time price of 10 years worth of dues paid upfront, or about $20,000. Do you take the offer?

Pros:
Avoid future dues increases which typically range from 3-10%/year. This year, the increase is about 9%.
Assuming you stay at least 11 years, really start seeing the savings add up at that point and thereafter.
Know that you'd be greatly helping the current financial health of the organization during difficult economic times.
Dues payments are tax deductible.

Cons:
Tie up a significant chunk of money today.
Lose out on other investment options with that money that could possibly generate a higher return.
Risk losing out if you decide to leave the organization for whatever reason.

I'm sure there are more things that can be added to the pros and cons list but I think those are the biggies. Obviously, assume that you could come up with the money to do this without impacting other financial needs and goals.

[LivingAlmostLarge]

Yes I assume church so it's a reasonable thing since you've been doing it a long time.

[Mr Nice Guy]

That is a great question because it really makes you look far ahead into the future.

I guess the big question is if you plan on staying in your area for a while? If not, then it is probably not a wise choice. You seem to be pretty established and like where you live though.

[bjl584]

Here's the scenario:

For the past 15 years, you and your family have been increasingly active and involved members of an organization to which you currently pay approximately $2,000/year in membership dues. You anticipate remaining members of this organization for the rest of your life, at the very least until retirement which is some 18 years away. You have just been given the opportunity to become a lifetime member for a one-time price of 10 years worth of dues paid upfront, or about $20,000. Do you take the offer?

Pros:
Avoid future dues increases which typically range from 3-10%/year. This year, the increase is about 9%.
Assuming you stay at least 11 years, really start seeing the savings add up at that point and thereafter.
Know that you'd be greatly helping the current financial health of the organization during difficult economic times.
Dues payments are tax deductible.

Cons:
Tie up a significant chunk of money today.
Lose out on other investment options with that money that could possibly generate a higher return.
Risk losing out if you decide to leave the organization for whatever reason.

I'm sure there are more things that can be added to the pros and cons list but I think those are the biggies. Obviously, assume that you could come up with the money to do this without impacting other financial needs and goals.

What are the advantages to being a life member other than not oweing dues going forward? Do you gain some sort of voting privileges by being a life member, or is it more of a convenience to just pay the money up front now and not have to worry about it going forward? If this is a church organization, then I would think that even if you do pay for a lifetime membership upfront, then you will probably still be paying money for other things going forward. So, you could end up paying more money in total by doing this. Just something to think about I guess.

[GREENBACK]

The one thing that jumps out at me is the 3-10% dues increase. That's fairly significant over time. If I was sure it was something I'd be doing many years down the road I'd probably become a life member.

[disneysteve]

What are the advantages to being a life member other than not oweing dues going forward?

If this is a church organization, then I would think that even if you do pay for a lifetime membership upfront, then you will probably still be paying money for other things going forward.

No advantage to being a life member beyond not ever having to pay dues again.

Yes, there would still be other things to pay for along the way, special pledge drives and various assorted donations, but we do those anyway. I don't see that doing the life membership would change anything, as long as we don't start thinking, "Well, we didn't have to pay dues this year so we can be more generous." We might do that, but only if we were financially able anyway. We give more today than we did a few years ago because we are able to give more.

The one thing that jumps out at me is the 3-10% dues increase. That's fairly significant over time.

Yes. That's really the big appeal. Let's say increases average 5% over the next 10 years. That means we would realize the equivalent of a 5% return on our investment. Not as good as a good stock mutual fund but better than what we have sitting in savings, MMF, CD, etc. today. Of course, we lose the liquidity completely. It becomes totally sunk money.

I don't know that we will realistically do this but it is an interesting proposition. I wanted to see what others thought.

[bjl584]

I would say do it then. Assuming you will be a member for the rest of your life, then you will be saving a significant amount of money by paying for the life membership now.

[riverwed070707]

If this is a church organization, then I would think that even if you do pay for a lifetime membership upfront, then you will probably still be paying money for other things going forward. So, you could end up paying more money in total by doing this. Just something to think about I guess.

This was my thought as well. If its an organization you feel strongly about, you'll likely continue to donate (and probably more generously) once you don't have memebership dues.

My other question is why are they offering this option? Is the organization in financial trouble? Is it a risk that they may not be around long enough for you to realize the benefit of your investment? If that isn't a risk, then go for it. It sounds like even if the financial gain isn't as great as if you had invested elsewhere, you're going to feel good about being able to help them out.

[Scanner]

I would review the organization's balance sheet and expense report first before making such a decision.

I also would have to wonder how is your money held? In escrow?

"Here today. . .gone tommorrow. . .so sorry about that" is what I fear happening to you. And I am sure you are not so naive to think this sort of thing doesn't happen in churchs, synagogues and temples all of the time, sorry to say.

Personally, I'd take a month at a time, but I am not as devout as a person as you either, being the lapsed Catholic, Intelligent Designer, agnostic I am

If he's predicting the Rapture in October, well, I'd just hold onto your money

[MonkeyMama]

I agree with Scanner. Just to think a little more about the downsides.

Otherwise a 5% return is pretty awesome in this day and age. As with anything, comes with some risks.

[disneysteve]

My other question is why are they offering this option? Is the organization in financial trouble? Is it a risk that they may not be around long enough for you to realize the benefit of your investment?

I would review the organization's balance sheet and expense report first before making such a decision.

These are very valid concerns but I can assure you that I am intimately aware of the financials to the penny. I am the vice-president of the temple and will become president next year and I sit on the Finance committee. I was a member of the team that created the current budget. So I know every single detail of the organization's balance sheet, income and expenses.

The congregation has been around for 52 years and is doing just fine. The reason for this offer is to smooth over a short-term issue that we fully understand the cause of and are fully confident is going to resolve itself over the next 1-2 years. In fact, when we came up with the lifetime membership idea, we agreed to do it for no more than 5 people so as not to shoot ourselves in the foot by taking in a bunch of money today but hurting ourselves down the line in the process. If too many people were to take advantage of this offer, that could be an issue in the future. The group of us running the place, myself included, are all very fiscally responsible and always keep an eye on the long term even though our day to day focus tends to be on the short term.

[Slug]

If the dues increases trended over time suggest that such increases will continue and you have no intention of leaving and trust that the organization will not fail, then it is a rational decision.

My main question is by what right you are entitled to this offer when the vast majority of the congregation is not being given the same opportunity unless the bylaws of the organization conveys special privileges to its officers. It would seem more reasonable to let anyone front load their payments for a few years (depending on the interest level and amount you need) and avoid the yearly increase. It's more logistically difficult but far more fair to the membership as a whole.

[disneysteve]

My main question is by what right you are entitled to this offer when the vast majority of the congregation is not being given the same opportunity

Sorry if I gave that impression. No, the entire congregation is receiving this offer. Only 5 lifetime memberships will be sold, though. If more than 5 families express interest in doing this, all of the names will be put into a drawing and 5 will be randomly selected. We designed it to be as fair as possible so nobody could accuse the Board of having an advantage in the process.

[disneysteve]

In addition to the 5 lifetime memberships, we are also "selling" 5 opportunities to prepay 3 years worth of dues upfront and those people will be selected in the same manner. We are almost definitely going to do that unless we decide to take the plunge for the lifetime membership.

[Slug]

Ah, that explains a lot. I think that's a totally fair offering.