SETTING UP AND RUNNING AN INVESTMENT CLUB BUILDING ECONOMIC EMPOWERMENT FROM THE GROUND UP

Paper presented at the PRIVATE INVESTORS CONSULTATIVE ASSEMBLY held on Saturday 14th December 2013 at WIN Empowerment Centre, Abeokuta by Alhaji Taofik Lawal, FCA.

The fundamental purpose of Investment Clubs is to promote the ideas and interest of like-minded individuals’ economic well-being.  The first step in building an effective investment club is to establish and maintain the interest of members.  A strong and effective leadership will benefit the local, state and national structures.

The key to building effective club organization is to establish effective two-way communication between your club and its members.

Club Leadership Positions

Each club should establish its own leadership positions based on its constitution.  The key is to ensure that the structure has the leadership it needs to organize meetings, raise funds, invest wisely, support local campaigns, recruit new members. Leadership positions include:  Chairman (the overall leader for the club), Vice Chairman, Secretary and Treasurer responsible for raising and managing funds).  It is essential that club leaders be elected after the inaugural meeting to ensure that all members are carried along by the leaders not just the founding members.

Club Meetings

Regular club meetings are a key tool for maintaining a two-way flow of communication between members and leaders and ensuring that the club structures remain active.  These meetings are usually held at least once a month and are designed to provide a forum to share information and coordinate plans for events like investment portfolio reviews, Stockbroker performance review, club assembly or local bye-elections.

Electing Club Leaders

Accountable club leadership is a key ingredient for achieving long-term success on the Stock market.  Regularly held internal elections are essential for ensuring that your club chairman has the support of their members.

 

 

Candidate Selection

It is often very helpful to have rules for the internal election established by the club members.  This will help avoid controversy.  In general, any club member should be eligible to seek an office in the leadership.  When recruiting candidates for leadership position, it is important to seek individuals who have leadership qualities and are willing to commit the time, effort, and energy needed to help your club grow.

 

Membership Development

The true measure of strength for any club is the size, commitment, and creativity of its membership.  Investors and club activists are the raw materials of investment club success.  Clubs that can maintain and expand their membership stand the best chance of improving their fortunes.

 

Membership Drives

The more members you are able to attract to support your club, the more successful your club is likely to be on the Stock market.  You want to keep the members you have and at the same time reach out to others whenever possible.  All club members should be encouraged to recruit new members.  People are a valuable resource, and your club needs as much of that resource as possible.

One way to expand your club’s membership base is to organize membership drives.  These membership drives consist of coordinated efforts to identify like-minded individuals and convince them to join your club.  Club members divide into teams to canvass key neighbourhoods within your area on an appointment day.  Successful membership drives involve research, creative preparations, and thorough planning, organization and follow-through.

 

Member Contacts

Another method of attracting new members is through the contacts of existing members.  Ask your members to bring a prospective new member with them to a meeting.  One idea is to refer to the meeting as a “member/guest meeting.”  The guest could be a family member, a co-worker or friend who might be interested in joining your club.  Make sure all guests feel welcome at the meeting and be sure that all guests are introduced properly, including late arrivals.  It might also be a good idea to set aside part of the meeting for social time giving guests a chance to talk with members in a more relaxed manner.  This will provide an added opportunity for guests to ask questions and hopefully learn more about your club.  Be sure to extend an invitation to each guest to join a future meeting.  As a follow up to the meeting, the Chairperson may want to send a note of appreciation to the guest for coming to the meeting.  The gesture will also provide an opportunity for the chairman to encourage the guest to join the club or attend a future meeting.  This added personal touch may be all that is needed to convince an interested individual to join your club.

 

 

Keeping Members Involved

It is equally important to ensure those existing club members remain actively involved.  One important way to ensure that club members stay active is to establish standing committees to focus on important club business.  Some committee chairmen may be elected, while the club chairman appoint others.  Some of the most common committees include finance committees, membership committees, investment committees and economic education committees.  Having committees that focus on one

particular area provides not only an opportunity for others to participate, but they also provide a forum for cultivating creative ideas and accomplish important club business.

 

Members who feel like they are contributing to the direction of the club are more likely to stay active over the long term.  These dedicated club activists form the backbone of your portfolio management efforts.

 

Finance

It takes money to run any organization. Raising funds and preparing club budgets are never easy. However, clubs that fail to take a hard look at and be realistic about their revenue raising ability and their essential expenses, run the risk of running out of funds when they need it most.

 

Membership Dues

Membership dues provide an important source of revenue for many clubs.  For Investment Clubs, it is the main source of investment funds.  For the other activities, it is important to remember to keep your dues low.  The goal is to increase membership and grow as a club.  The purpose is not to make a lot of money, but to raise enough money to cover your club’s operating expenses.

Working with Donors

Contributions from individual donors provide a key source of club’s income.

Many clubs make the mistake of waiting around and hoping that one big donor will pay all the bills.  When these donations fail to appear, many clubs deplete their investments and are forced to close.  Clubs can avoid the pitfalls of big donor dependence by working hard to cultivate a base of small and medium sized donors drawn from throughout the community.  Building a base of small donors takes time, but it is well worth the effort.  Donors often lose interest and move onto other things.  A club structure supported by a single wealthy donor quickly closes when their patron loses interest in the cause.

When making these fund-raising appeals, it is better to focus on how the specific policies your club supports will benefit the donor than to simply ask for help.  Anticipate and be prepared to overcome objections.  A potential donor’s first response may be “no” and if the person making the solicitation is unprepared to provide pertinent information to try to convince the potential donor, the solicitation will not be successful.  A successful fund raiser must know the topic, must know the targeted audience, in this case the donor, and must be prepared to present specifies to overcome objections raised.  It is also a good idea to tell the potential donor how the donation will be spent.

 

Thank everyone you meet with even the ones who turn you down.  The person who refuses you today may donate tomorrow.  If the person is willing to contribute, make sure that you follow-up with them regularly to inform them on the progress your club is making.  This special attention will help them gain confidence in the club and may convince them to donate more in the future.

 

In-kind Contributions

Clubs need more than cash.  Any donors who are willing and able to provide transportation, venues for meetings, printing, or any other resources should be encouraged to do so.  For many donors it will be much easier to let you use their meeting hall or give you a special discount on pamphlet printing than to give you cash.  These donors should receive the same type of special attention that cash donors receive.

 

Accountability in Fund-raising  

Financial accountability is essential both for effectiveness of your fund raising efforts and for the success of your club.  No one wants to contribute to a club that has a reputation for misusing funds.

It makes no sense to go to the trouble of raising funds if the resources are not used efficiently.  The best

way to build the confidence of members and donors in the financial accountability of the club is to prepare a written budget, establish formal procedures for the use of all funds, and to have the budget and spending procedures approved by the club members.

Even the most well researched budget can sometimes fail to meet your needs.  A proper “check and balance” system must be established to ensure expenses do not exceed funds raised.  Be prepared to adjust priorities if expected revenue is not raised to meet expenses.  This is the main reason why a realistic finance plan must be developed.

 

Press and Publicity

Building strong relationships with the media is just as important for individual club structures as it is for national club leaders.  By working hard to establish relationships with reporters and keeping them informed of your events, even individual club structures can attract free publicity to their activities.

 

Public Relations Officers/Press Secretaries/Press Releases

Many investors clubs designate a press secretary for the club.  This person has the responsibility for developing a positive relationship with members of the local media and attracting positive press for club activities.  This individual should be thoroughly familiar with the policies of the club in order to present it effectively.  The press secretary must also have strong writing and speaking skills, and the ability to represent the club’s interest in a variety of situations.  In general, it is best to designate a press secretary who already has some contacts with local reporters or experience in journalism.

Press releases are written advisories designed to provide specific information about your club to journalists in order to generate media attention.  Press releases are particularly useful in attracting attention to a special event, like the visit of a prominent investor, and for commenting on important news issues in the community.

 

Don’t be discouraged if reporters don’t come to all or even most of your events.  On busy news days you may not get coverage.  However, if you are persistent, you may well catch a reporter on a slow news day who is looking for something to write about.

 

Conclusion

Manageable organization is the key to building and sustaining a strong club structure over the long term.  There are many ways of accomplishing this goal.  A few of the more common approaches have been addressed in this lecture.

As we embark on the efforts to build strong club structures, make sure to set short and long-term goals, and work hard to implement them.  Work hard to keep your members informed and actively involved in club activities.

Practice democracy within the club by electing club leaders and encouraging open debate on club rules, finances, investments and other club business.  In doing so, you are much likely to keep members involved.

 

Reach out to as many like-minded individuals as you can and make sure they have an opportunity to share their views.  Clubs are designed to provide a platform for individuals to share ideals and work together to pursue common goals within the economic process.  Club structures provide the key linkage between capital market leaders and the investors on the ground.  If the Private Investors Club has strong club structures capable of channeling the ideas of its supporters to the capital market operators and leaders, the policies it adopts are much more likely to reflect the views and preferences of investors.

It is our wish as Trustees that having invested in strong club structures, individuals may come and go, but the Club’s structure, organization, and core vision will survive and prosper.

 

THANKS FOR YOUR ATTENTION.

 

TAOFIK LAWAL

KANO

 

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