Owners Not Donors Campaign

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Bob Kuczewski
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Owners Not Donors Campaign

Post by Bob Kuczewski » Thu Jan 14, 2016 10:55 am

Owners Not Donors Campaign

In a recent post on hanggliding.org, Mark Forbes (USHPA's Insurance Chairman) wrote:
Mark Forbes (mgforbes) on Jan 13, 2016 wrote:
Jaybird78 wrote:The only people who are privy to an RRG benefits are its owner members. Is everyone going to be an owner member?
The law says that every party insured by a RRG has to be a part-owner of that RRG. The law also says that every owner of the RRG *must* be an insured.

USHPA is one of the owners. The Foundation is another, and so is PASA, and so are some individual schools. Ownership and control of decisions is determined by the percentage of ownership of each entity. USHPA will be in for a little over a million (at present) and the Foundation will have about half a million in the pot. Another quarter-million will come from PASA and schools collectively. The remainder of the $2 million is either loans or additional fundraising money through USHPA. USHPA owns the majority share, followed by the Foundation, and then by PASA and the schools.

Individual USHPA members are not owners of the RRG. They are named on the USHPA insurance policy, as are clubs and landowners, but they do not own a piece of the RRG. The RRG is not allowed to sell insurance to entities which are not owners. If what you're fishing for is a statement that the so-called "Hawks" could purchase insurance from the RRG, then I'd respond this way:

If the "Hawks" was an organization with a structure, management and membership (rather than being an online-rant-forum) that offered a training and rating program, that had an established board of directors which met regularly, and in general operated as a real association, then it might apply to the existing owners of the RRG for approval to buy into it as an additional owner. If the other RRG owners agreed that the "Hawks" was a legitimate organization with a shared purpose and values, intent on promoting our sport and dedicated to our common interests, then they might even approve it. There would be a significant capital investment required, subject to regulatory review and approval. But as currently constituted, that's not likely. I'm speaking purely hypothetically here; there is currently no interest in adding any other organizations to the RRG.

The core purpose of our RRG is to provide a source for liability insurance for our sport; our pilots, instructors, schools and association. By owning our insurer, we gain control over the decisions that shape our future. We may have future problems, but we'll own those problems and their solutions.

MGF
Please read that carefully a few times. It is saying that clubs (like Sylmar and Crestline and Treetoppers and every other local club) can be an OWNER of the RRG if their members give their money through their local clubs first.

As I've said in other discussions, the difference between owners and donors is like the difference between the Green Bay Packers (still in Green Bay since 1919) and the Los Angeles Rams (now in Saint Louis).

Owners have control. Owners have a say. Owners share in profits. Owners have ... ownership!! Donors have none of that.

I am starting this topic to spread the word to all local clubs that they should be pooling their member's donations to buy into the RRG as OWNERS. If you are a member of a local club anywhere, please post this message and open the discussion about your club purchasing an OWNERSHIP of the RRG rather than having your members give away those resources.

Also, as mentioned in Mark's message, this does open up the possibility of the US Hawks also becoming part OWNERS of the RRG at some point in the (hopefully) near future. As Mark mentioned, we will have a few hurtles to jump, but there's nothing in his list of naysaying that we can't accomplish fairly easily. So if you would like to participate in ownership of the RRG and don't have a local club that's going that route, please consider holding that money in reserve to participate in the RRG through the US Hawks.

Thanks.
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OP
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Post by OP » Fri Jan 15, 2016 10:01 am

I'm spiraling into insanity. Quote = crazy pants.

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Ken Andrews
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SHGA cannot be an owner of the RRG

Post by Ken Andrews » Tue Jan 19, 2016 11:33 am

It’s interesting how two people can read the same text and reach opposite conclusions. Bob’s a clever guy, and so in his war against USHPA, I think he applied considerable ingenuity to misunderstand Mark Forbes's text. On the chance that someone else is still reading these posts, I’ll explain. Since I've spent a bunch of hours researching the law and discussing it in person with the USHPA folks I think I can speak with confidence.

An RRG is basically a corporation, with investors, and with the aim of being profitable. There are two ways to invest in a corporation: by buying stocks (i.e. owning a piece of the company), and by buying bonds (i.e. loaning money to the company).

The stockholders have full control of the corporation, and they get some portion of the profits if there are any, but the law that created RRGs place a whole lot of restrictions on them. One of those restrictions is that the stockholders can only be the people who buy insurance directly from the RRG. USHPA buys insurance for its members, like most of us, and for its chapters, like SHGA. Members and chapters do NOT directly buy insurance from the RRG, and so they CANNOT be stockholders.

Let me repeat that: SHGA cannot be an owner of the RRG.

In this case, those who buy insurance from the RRG will be USHPA, the Foundation for Free Flight, PASA, and a few flight schools, and so they will be the stockholders (in that order, from highest to lowest percentage of ownership). USHPA will dominate control of the RRG, and for most of us, this is a good thing: USHPA members elect the USHPA board, and so the members will control the RRG, albeit indirectly. This of course, is also Bob’s objection. He is not a USHPA member, and as he attacks USHPA, it is in his interest to kick and scream, and misunderstand, and mislead others, and generally try to derail the whole plan.

The RRG will also have bondholders. A bond is just a loan, and it’s another way for the RRG to get the money it needs to get started. As usual, the bondholders will have no control over the company, but they will get some portion of the profits, if there are any. This is a high-risk loan, and so to protect the unwary, the law restricts who can invest (recall the subprime mortgage crisis).

Bob keeps talking about control and profit, so let’s address those. USHPA and the other stockholders will have full control. I bet most pilots would rather have these folks be in control, than a commercial insurance company. Profit is a different matter. The insurance companies don’t want our business, so clearly there won’t be much profit, though we sincerely hope there will be some. Supposing that there is a profit, the law dictates that it will be used first to build the RRG’s equity to make sure it can stay in business, and then to pay back loans from the bondholders, and finally to the stockholders like USHPA. If and when that happens, USHPA has said that they will use that profit to lower (or at least not raise) membership dues.

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Post by BudRob » Tue Jan 19, 2016 2:31 pm

Thank you Ken for researching this issue and posting your thoughts. Your informed and unbiased opinion is much appreciated!

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Bob Kuczewski
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Circular Reasoning

Post by Bob Kuczewski » Tue Jan 19, 2016 5:09 pm

Ken Andrews wrote:Members and chapters do NOT directly buy insurance from the RRG, and so they CANNOT be stockholders.

Let me repeat that: SHGA cannot be an owner of the RRG.
Ken, you've got some circular reasoning going on here.

First you say that members and chapters "do NOT" directly buy insurance from the RRG without saying why they "do NOT". Then you essentially use that unsubstantiated fact to imply that's why they can't be owners. They can't be owners because they don't buy insurance and the can't buy insurance because they're not owners. Nowhere have you said why they can't do both. USHPA is a non-profit just like SHGA, and yet somehow USHPA can be an owner and the SHGA can't?

There may be financial limits on who can actually be an owner (which, I suspect is one of the reasons USHPA chose this mechanism over any other), but if Sylmar doesn't have enough resources to be an owner, then what about Sylmar and Crestline combined? These are options that USHPA is not giving us because these options don't benefit ... USHPA.

USHPA has set this up to protect their monopoly, and you (Ken) are now bound - as a USHPA Director - to do what's in USHPA's intrests and NOT what is in the interests of clubs and members. If you can post the oath they make you take, that will clear up any misconceptions about who you now represent.

Finally, the reality of the situation is that big schools have much deeper pockets than individual pilots or most clubs. I firmly believe that they've run the numbers and know that they will kick in whatever is needed when the deadline rolls around - otherwise they're out of business. But they don't want to say that up front because it makes it harder to milk free money from the general membership (it's free money to them, and they get to keep - "own" - the part of the RRG that you've purchased for them - maybe you'll get a "thank you" note). Mark my words, the RRG will "miraculously" be funded in the 11th hour whether members have given a dime or not.
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Post by dhmartens » Tue Jan 19, 2016 9:47 pm

Ive had a Fosters beer, but as I understand it, SHGA must have $2 million in assets or yearly revenue of $200,000 before they would be allowed to invest in the rrg startup loan to where they would be repayed. If a dozen clubs organized together with a legal structure maybe but its late in the game.

BobK has endorsed donating to the RRg through your local club just to go on record.

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Post by JD » Wed Jan 20, 2016 9:27 am

dhmartens wrote:...BobK has endorsed donating to the RRg through your local club just to go on record.

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OMG Doug! This has to be the wryest piece of wit ever. I am buying you a beer next time we meet. That was brilliant drawing the parallel to Jerry Lewis who was inexplicably gone from the MDA telethon. Where is the due process? BobK, the Jerry Lewis of hang gliding. ROTFLOL! http://www.showbiz411.com/2011/08/18/je ... ped-by-mda
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Mark my words ...

Post by Bob Kuczewski » Sat Mar 17, 2018 5:05 pm

"Mark my words ..."

In January 2016, Bob Kuczewski wrote:USHPA has set this up to protect their monopoly, and you (Ken) are now bound - as a USHPA Director - to do what's in USHPA's intrests and NOT what is in the interests of clubs and members. If you can post the oath they make you take, that will clear up any misconceptions about who you now represent.
Ken never posted the oath USHPA requires of Directors. I wonder why he couldn't do that.
In January 2016, Bob Kuczewski wrote:Finally, the reality of the situation is that big schools have much deeper pockets than individual pilots or most clubs. I firmly believe that they've run the numbers and know that they will kick in whatever is needed when the deadline rolls around - otherwise they're out of business. But they don't want to say that up front because it makes it harder to milk free money from the general membership (it's free money to them, and they get to keep - "own" - the part of the RRG that you've purchased for them - maybe you'll get a "thank you" note). Mark my words, the RRG will "miraculously" be funded in the 11th hour whether members have given a dime or not.
That's exactly what happened. The big money came in at the end after they'd first emptied the pockets of ("fleeced") the general members. The money donated to the RRG didn't protect recreational pilots at all. It went to support the big schools. Once again USHPA played its members as ... chumps.
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