Financing Facility Projects Made Easy

We keep seeing more and more hype on how to fund facility projects as if this is the end-all for club success. In reality, there are just a couple of basic ways to raise capital funds, and they all get back to asking members to pay more. The real issue is letting members decide how they want to pay. Yes, we advise fully funding club depreciation out of ongoing operations. This of course makes sense, but few clubs do this, and the results are not cataclysmic. But when it comes to funding major projects (normally done on ten-year cycles), they are generally funded with special funding programs that members want to approve. Members do not want to be taxed for these projects with upfront monthly payments years in advance which results in millions of dollars being collected when any board can tap into them for favorite projects. Members want to control these expenditures by voting on them. Maybe they should, but most members care little about a club’s balance sheet. 

RAISING FUNDS

Based on our experience in raising billions of dollars for private club projects, the club’s balance sheet should not be driving why projects are built. This is “the tail wagging the dog”. What is important is, projects should be built that achieve a club’s strategic objectives for gaining members, improving usage, achieving “very satisfied” members, etc. as these attributes drive club success. If we let bottom line objectives drive clubs, we will lose quality and members as a result. Please know that raising capital funds is relatively easy if the right projects are proposed. In funding major projects we find members’ preferences to be:

 • 70% prefer monthly payments,

 • 10% prefer up-front payments, and

 • 20% prefer a combination of both.

So, let’s not overthink financial issues affecting funding facility projects. If we build the right projects which retain existing and attract new members, the financial issue takes care of itself.