Endowed Membership Funds

Exemplifying the Plumb.

By: Robin Justice
Senior Grand Warden

Robin Justice

For the second year in a row, the investment returns on the Grand Lodge of New Mexico Endowed Membership Fund have fallen short of what is needed in order to provide a full payout to the Lodges as set forth in our Constitution and Bylaws. This means that unless the market  really changes in the foreseeable future, we may not have a payout in the upcoming year.

The stock market today is not the same market as when the Endowed Membership program was created. The market is much more volatile, and as a result, the returns on the investments sometimes do not provide adequate revenue as intended when the program was inaugurated.

In order for the fund to make a full payout, the principal of the fund needs to be $1.6 million dollars at the current rate of return. The fund as of September 12th has $1,517,125 dollars.

Period

Annualized Growth Rates

Range

From

To

DJIA

S&P500

NASDAQ

1

September 1, 2021

September 1, 2022

-10.36%

-12.33%

-23.03%

2

September 1, 2022

September 1, 2023

10.06%

13.85%

19.08%

Source: https://www.measuringworth.com/calculators/DJIA_SP_NASDAQ/

Code 62. GRAND LODGE FUNDS states

(d) The Endowed Membership Fund shall consist of all funds collected as principal by the constituent Lodges for Prepaid Memberships as prescribed and all monies, bonds and securities accruing thereto from investments.

  • Funds received by constituent Lodges for the purchase of an Endowed Membership shall be immediately transferred to the Grand Secretary for deposit. All of the amount required for purchase of an Endowed Membership as defined under Code 395, shall be deposited as principal in the Endowed Membership Fund.
  • The principal of this fund shall never be transferred to any other fund nor expended.
  • From the earnings of this fund each year the following distribution shall be made:
  1. There shall be returned to an Endowed Member’s constituent Lodge a sum equal to the dues effective in his Lodge on the first day of January of the year he initially became an Endowed Member.
  2. There shall be returned to Grand Lodge a sum equal to the Per Capita charge effective in his lodge on the first day of January of the year he initially became an endowed member.
  3. The balance of excess earnings, if any, shall be retained in the endowed fund and credited to the member’s Lodge account in direct proportion which the total of this Lodge’s principal bears to the sum total of all invested principal.
  • Should the average rate of earnings fall for one year such that there are insufficient funds to meet the distribution needs, the matter shall be reported to the Board of Directors by 31 December so that corrective action can be taken.

Last year, it was decided by the board of directors to borrow from the building reserve fund and the Ray Carpenter Retirement Fund to enable a full payout to the Lodges to be made. The Grand Lodge Officers took a voluntary cut in their travel budgets to provide the Per Capita payout to the Grand Lodge.

We cannot continue to “rob Peter to pay Paul”. If the Endowed Membership fund cannot perform as intended, then it needs to be modified to reduce the likelihood of this situation arising again.

There are other ramifications in the way the fund is implemented. Code 62 3(a) and 3(b) state that the returns to the Lodges and Grand Lodge are based on the Lodge dues and Grand Lodge Per Capita at the time the membership was purchased. As operating costs for the Lodges and Grand Lodge have increased, income from the Endowed Membership has not kept up (nor will it ever, as the program works now). Since the payout is frozen at the time the endowed membership is purchased, when the Lodges raise their dues and the Grand Lodge raises Per Capita, it places the burden for keeping the Lodge solvent on those who do not have endowed memberships.

We need to address the elephant in the room. As long as we kick the can down the road, we are liable to see this situation repeat itself. We also need to address repaying the funds borrowed from the building reserve fund and the Carpenter retirement fund.

This is your fund, and we need to have your involvement in coming up with ways to reduce the likelihood of this situation recurring. Kicking the can down the road will not work. We are going to have an Endowed Fund meeting immediately following the Grand Lodge Budget meeting in November. We need your ideas and buy in for whatever decisions are made.

Take care Brethren, and I hope to see you in Lodge.

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