About Our Club |
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A Brief Guide To The Club Trust Fund
The article has been prepared by Peter Blaxell and Hugh Plaistowe |
What is the Club Trust Fund? The Trust Fund provides capital for the future replacement and refurbishment of all Club assets including sea walls, jetty structures, the clubhouse, other buildings, other land based facilities, and major items of equipment. As and when each of these assets needs to be replaced or renewed, funds are made available from the Trust Fund for that purpose. Why is there a separate Trust Fund? When the Trust Fund was established in 1985 the Club had been through severe financial trouble, and the members realised that future long term needs could be easily overlooked. They were particularly concerned about the likely life of the jetty structures and the massive capital costs that would be incurred when these ultimately came to be replaced. Accordingly, it was resolved to commence a special fund which would accumulate the necessary capital over a long period. The Constitution was amended to require that these accumulated funds be placed in trust, thus ensuring that they could not be used for any other purpose. Who administers the Trust Fund? The Fund is administered by a separate Board of Trustees (of between three and five members) elected at each Annual General Meeting. No trustee can be a member of the Board of Management. This ensures that the long term needs of the Club are considered separately and independently of current financial priorities. These constitutional provisions also have the effect that the necessary moneys are saved and not spent. The present Board of Trustees comprises Hugh Plaistowe (Chairman), Peter Blaxell, Frank Daly, Denis Glennon and Martin Searle. How much is in the Trust Fund and how is it invested? As at 31 March 2006 the total value of assets in the Trust Fund was $7,376,030. Of this, $3,208,713 was held in cash and bonds, $3,491,627 was invested in a mix of Australian and international equities, and $675,351 was in freehold property. The Board of Trustees has the responsibility for all investment decisions relating to the Trust Fund and receives regular professional advice for this purpose. Investment decisions tend to be conservative because of the restrictions imposed by the laws, which apply to all trustees. Where has the money in the Trust Fund come from? Under the Club Constitution the Board of Management is obliged to make an annual payment into the Trust Fund of such amount as in its “bona fide” opinion will meet the needs of the Fund. Theoretically, this decision requires careful and considerable judgment, because the higher the level of annual maintenance of Club assets, the less will be the future demand on the Trust Fund for items of major expenditure. However, in practice, the calculation of the annual “bona fide amount” is quite simple. The reason for this is that the Board of Management and the Board of Trustees have agreed on the appropriate maintenance programs, the predicted life of each asset, and the likely costs (in today’s dollars) of replacement. The likely rates of future inflation and rates of return on investments are also agreed. Accordingly, the annual payment required to sustain the predicted future expenditure can be readily calculated. Who decides how the Trust Fund should be spent? All expenditure from the Trust Fund (other than for professional fees) must be approved by a general meeting of members. In practice, a motion seeking such expenditure only goes forward to a general meeting if the Board of Management and the Board of Trustees both agree. It is the Board of Management’s responsibility to administer all expenditures approved pursuant to a resolution of a general meeting. What is the “F Schedule”? It is the joint responsibility of the Board of Management and the Board of Trustees to prepare and keep current a schedule of items of future replacement and refurbishment. Because this schedule is provided for in clause 31(f) of the Constitution, it has become known as the “F Schedule”. This schedule identifies the likely date of replacement or refurbishment of each Club asset and the predicted costs that will then be incurred. The ongoing time frame is a period of 50 years, and the current total estimated expenditure approximates $25 million. The contents of the schedule are regularly adjusted to allow for changes in estimated lifetime of assets and of predicted costs of replacement or refurbishment. Assets not included in the schedule (eg, those of a minor nature) are the responsibility of the Board of Management to replace. Has the Trust Fund been of benefit to the Club? The foresight of the members back in 1985 has ensured the accumulation of a substantial fund for the upkeep of the Club’s major assets. The Constitution in effect imposes a system of compulsory saving, and without this there can be little doubt that most of the moneys in the Trust Fund would have been used for other purposes. Accordingly, we can all be confident that the Club’s assets will continue to be maintained and upgraded, and that the facilities enjoyed by members will always be first class. |