May 29, 2025
Your Board proposes changing the club Bylaws for the future – making bond refunds contingent on receiving a bond payment from a new member. This would only apply to new members who join after the change is approved by the membership. Click here to read the actual language. In this article, I’ll explain why we want to make this change and how it would strengthen the club’s financial standing.
Why change? Our bond liability continues to grow. Ten years ago, our total bond liability was $167K. Five years ago, it was $181K and today it’s $214K. That’s hardly a meteoric rise, but it’s growth nonetheless and it will likely continue to grow over time.
Why has our bond liability grown? Because bonds are only refunded to resigning members and many non-flying members choose to go/remain inactive; that doesn’t trigger a refund. Additionally, the bond cost has gone up from $1,000 (50 years ago) to $3,000 today and we have increased the number of active members. As we add new members to replace those who go inactive, the total liability increases by the amount of the new bond.
How do we pay for bond refunds? They are simply categorized as an expense so we must budget for them. Last fiscal year, we paid $10K to members who resigned and asked for a bond refund. For the current fiscal year, we budgeted $9,000 for bond refunds. This is covered by dues and works out to be $14 per member, per month.
Past practice has been to take bond payments we receive from new members and add them to our operating funds; they have not been set aside to cover refunds. For that, we must rely on available cash. If we were to receive many bond refund requests at once, when our cash balance was low, the worst-case scenario would be the need to sell a plane. By changing the Bylaws as proposed, we gradually reduce this risk.
How will this help? By making this change, we reduce and eventually eliminate the need to budget for the expense of bond refunds. When the club is made up entirely of active and inactive members who joined after this change, the club’s bond liability will be zero. Monthly dues will no longer need to cover bond refunds. Yes, this will be a very long time, but the club will ultimately be in even better financial condition for having addressed this liability.
Any downsides? There’s a chance this will be viewed as a disadvantage by prospective members but since other local flying clubs (e.g., Paramus, Princeton, Mach 1) and other social organizations like golf clubs follow the same practice, the concern isn’t high. We’re well regarded and can expect to continue maintaining our appeal with fleet quality, cost competitiveness and member-friendly operating practices.
Feel free to contact me for clarifications. Thanks for your consideration, voting will open shortly.