USPA changes lifetime membership to $2,500 for domestic member, $4,000 for international

[Doug_Davis 0]

PhreeZone

Remember your "trust" idea means that the pool decreases every year as funds are drawn out and the potential for interest decreases to the point that the pool will not be able to be sustained and will drain out if the cost to offer the services increases. Then the cost is shared across every annual dues member.

Im not insulting you, but you arent getting how compound interest works. When a trust or nonprofit sets up an endowment the money from charitable donations, estates/wills, life time member lump sum payments, etc all go into it and with the annual interest compounding and it quickly grows into a sizable cushion. It would be an ideal way for them to eventually move to self insuring if they so chose.
Its why nearly every large national nonprofit and most universities and everyone else uses endowments.

Its not "my idea", its fairly standard practice in the nonprofit world.

Additionally the ACA used to run their own magazine for members as well. There is no way the USPA should be losing $25 per member annually on every magazine subscription. If they are then either their advertising revenues arent in line with their production costs; or they are paying to much for printing, staff or some other overhead cost. Why do you think most other print magazines only charge $8-20 in subscription fees these days? You are covering production and mailing costs, and then the magazine is making its money on advertising revenues.

So if the USPA is LOSING $25 per member on the magazine then something is seriously wrong.

This isnt rocket science. Their are organizations out there like the Center for Nonprofit Excellence (https://www.cnpe.org/) that could help the board and staff work through these issues and come up with a better stratgeic long term financial plan.

[kuai43 7]

Doug_Davis

***

Remember your "trust" idea means that the pool decreases every year as funds are drawn out and the potential for interest decreases to the point that the pool will not be able to be sustained and will drain out if the cost to offer the services increases. Then the cost is shared across every annual dues member.

Im not insulting you, but you arent getting how compound interest works. When a trust or nonprofit sets up an endowment the money from charitable donations, estates/wills, life time member lump sum payments, etc all go into it and with the annual interest compounding and it quickly grows into a sizable cushion. It would be an ideal way for them to eventually move to self insuring if they so chose.
Its why nearly every large national nonprofit and most universities and everyone else uses endowments.

Its not "my idea", its fairly standard practice in the nonprofit world.

Additionally the ACA used to run their own magazine for members as well. There is no way the USPA should be losing $25 per member annually on every magazine subscription. If they are then either their advertising revenues arent in line with their production costs; or they are paying to much for printing, staff or some other overhead cost. Why do you think most other print magazines only charge $8-20 in subscription fees these days? You are covering production and mailing costs, and then the magazine is making its money on advertising revenues.

So if the USPA is LOSING $25 per member on the magazine then something is seriously wrong.

This isnt rocket science. Their are organizations out there like the Center for Nonprofit Excellence (https://www.cnpe.org/) that could help the board and staff work through these issues and come up with a better stratgeic long term financial plan.

Damn, boy... Get it!

Every fight is a food fight if you're a cannibal

Goodness is something to be chosen. When a man cannot choose, he ceases to be a man. - Anthony Burgess

[Southern_Man 0]

Doug_Davis

***

Im not insulting you, but you arent getting how compound interest works. When a trust or nonprofit sets up an endowment the money from charitable donations, estates/wills, life time member lump sum payments, etc all go into it and with the annual interest compounding and it quickly grows into a sizable cushion. It would be an ideal way for them to eventually move to self insuring if they so chose.
Its why nearly every large national nonprofit and most universities and everyone else uses endowments.

Pretty sure the Airport Access Defense Fund and U.S. Parachute Team Trust Fund are both set up that way, so I wouldn't go assuming that USPA can't do that in this area.

If USPA wanted to, well, I think it would be pretty easy to plus in some (conservative) assumptions and come up with a fair value number for a lifetime membership.

This number seems to have come out of thin air, as far as I can tell.

"What if there were no hypothetical questions?"

[pchapman 261]

Southern_Man

[
If USPA wanted to, well, I think it would be pretty easy to plus in some (conservative) assumptions and come up with a fair value number for a lifetime membership.

I guess that's where the tricky bit lies. Make a bunch of really conservative assumptions, worrying about every eventuality, and the price goes up and may not be seen as "fair". Managing a fair lifetime membership becomes as complex as managing a pension plan. So in the end they just jack the price way up to discourage anyone who doesn't in effect want to make a large donation to the USPA, to make sure the USPA doesn't get screwed 40 years down the road. ("Crap, they cured cancer, banned swooping, liability insurance is through the roof... and our lifetime members are living to age 90?")

[DanG 1]

Quote

Additionally the ACA used to run their own magazine for members as well. There is no way the USPA should be losing $25 per member annually on every magazine subscription. If they are then either their advertising revenues arent in line with their production costs; or they are paying to much for printing, staff or some other overhead cost. Why do you think most other print magazines only charge $8-20 in subscription fees these days? You are covering production and mailing costs, and then the magazine is making its money on advertising revenues.

So if the USPA is LOSING $25 per member on the magazine then something is seriously wrong.

That number seems highly questionable. I'm not sure where MakeItHappen came up with it.

- Dan G

[Usetawuz 1]

So okay--the 'Powers-That-Be' (and represent us!) were thinking! They just weren't thinking very clearly!

_________________________________________
The older I get, the better I was!

[PhreeZone 15]

I understand compounding interest and trusts quite well (I've made decent money off of it over the last few years!), the issue with most the trusts that are set up is that they have to be in very safe investment vehicles in order to allow the base money to still be there later to allow the annual withdraws of the money to pay for required services. These types of investments tend to draw interest at a much lower rate than your quoted 6%. Current MM rates are around .05% (not 5%), interest on savings only accounts is at .01% and the best rates are only at 1%. Start playing in the safe treasury bonds and you might get to return rates of around 2.5% for a 10 year note. 2.5% is not even going to keep up with inflation rates shortly. Index funds had a good rate of return but move that back a few years and the rate of return was over -30% in 2009 Add in staff to manage the additional bookkeeping or a management firm to manage it and their fees, the additional taxes for the small amount of lifetime members and it might not be worth the hassle anymore for it.

From what I understand the US Team Trust basically only allows for the team to spend the gains from a yearly basis and never touch the base money so that it always has a pool to use to generate money for the next yet. Their Team budget varies year to year depending on how much they make off the trust but the base money is there to always generate from.

A LifeTime member trust would have to pull out say $60 per year per member no matter if they covered that cost or not in their gains. Some years the pool goes up, others down. As the costs climb on a yearly basis the hope would be that the trust would climb faster than our rising expenses are.

Is it worth the cost to set up a new fund, manage it and then maintain it for feature that only saw about 100 people joining it each year out of a 35,000 member organization?

Yesterday is history
And tomorrow is a mystery

Parachutemanuals.com

[Doug_Davis 0]

PhreeZone

I understand compounding interest and trusts quite well (I've made decent money off of it over the last few years!), the issue with most the trusts that are set up is that they have to be in very safe investment vehicles in order to allow the base money to still be there later to allow the annual withdraws of the money to pay for required services. These types of investments tend to draw interest at a much lower rate than your quoted 6%. Current MM rates are around .05% (not 5%), interest on savings only accounts is at .01% and the best rates are only at 1%. Start playing in the safe treasury bonds and you might get to return rates of around 2.5% for a 10 year note. 2.5% is not even going to keep up with inflation rates shortly. Index funds had a good rate of return but move that back a few years and the rate of return was over -30% in 2009 Add in staff to manage the additional bookkeeping or a management firm to manage it and their fees, the additional taxes for the small amount of lifetime members and it might not be worth the hassle anymore for it.

From what I understand the US Team Trust basically only allows for the team to spend the gains from a yearly basis and never touch the base money so that it always has a pool to use to generate money for the next yet. Their Team budget varies year to year depending on how much they make off the trust but the base money is there to always generate from.

A LifeTime member trust would have to pull out say $60 per year per member no matter if they covered that cost or not in their gains. Some years the pool goes up, others down. As the costs climb on a yearly basis the hope would be that the trust would climb faster than our rising expenses are.

Is it worth the cost to set up a new fund, manage it and then maintain it for feature that only saw about 100 people joining it each year out of a 35,000 member organization?

Firstly thats why you dont dump all your money into one single investment product such as a money market account.
Dow Jones Industrial Average rate of return:
40 years 6.7%
50 years 5.8%

S&P 500
40 years 6.5%
50 years 6.2%

Nasdaq Composite (only has a 30 year or so history since founding in 1971)
30 years 9.5%

I am not an investment expert though, just someone with lots of board and consulting experience so wont get into a debate on the specifics of this. Suffice it to say, again, that every major national nonprofit and university uses an endowment trust so its certainly a worthwhile endeavor for long term financial solvency.

Secondly, no the pool would not being going up or down as you alluded to. Why? Because any LTM lump sum payments would be put together with other estate gifts, wills or such large donations to create and finance the initial pool. So its not just LTM payments creating the initial trust. In that way, in the immediate near term future, yes annual payments from normal members would offset the costs of LTM members allowing time for the endowment to grow.

As to your last question....

Quote

Is it worth the cost to set up a new fund, manage it and then maintain it for feature that only saw about 100 people joining it each year out of a 35,000 member organization?

If they started with an initial pool of 100 LTM's so $100k initial pool. And an additional 1 LTM joined every month for a total of 12 a year (2 more than your question but allow me that for ease in math). Not counting any other large gifts, estate donations or money from wills. At 6% annual rate of return in an index fund with no overhead management fees in 40 years they would have an endowment fund worth: $2.9 million dollars.
In 80 years it would be $35.8 million dollars (interest compounded monthly), with inflation averaging 2% annually would still give you about $7.11 million in today's buying power which is still pretty decent spending money.
So yes I would say its worth it.

All of which ignores how they are managing to lose so much money per member on the monthly periodical. Thats the craziest thing if true.

[PhreeZone 15]

Quote

Not counting any other large gifts, estate donations or money from wills

Outside of two or three large donations to the US Team Trust or the Airport Defense Fund (WHO, Mike Truffer, POP's, Moorehead and a few other older ones) I can not recall any mention of a donation to the USPA for operational purposes in any of the magazines over the last 12 years. Not saying it does not happen but these are extremely rare.

The US Team Trust operates from an endowment fund in this way but the general operation fund is different. My limited understanding is that endowments do have side effects like specific treatment for tax purposes and limitations on how funds can be spent. Endowments are typically based around donations and are not linked to services being purchased and are treated so that a donation is not considered a purchase or has an exception of services being rendered later.

Yesterday is history
And tomorrow is a mystery

Parachutemanuals.com

[Doug_Davis 0]

Endowments used to have restrictions on how much could be spent annually but no longer. Under the current law, New York Prudent Management of Institutional Funds Act (USPA was incorporated in NY if memory serves), the board is responsible for determine what a "prudent" amount is to spend each year.
Generally restrictions on how money can spent come from estate gifts or wills with specific guidelines on how the giver wished the money to be used.