I've had more than a few questions over the last couple of weeks about Paid In Plus Earnings, and there seemed to be a common thread to those questions: "How did we get here?". It isn't that the clubs have been negligent in running their member status and valuation reports; the impression I get is that they probably haven't been running much more than those two cornerstone reports.

As a result (I imagine) the club gets near the end of a year, and one of the members suddenly looks up from doing some quick figuring on a scratch pad, and asks "Why is my Paid In Plus Earnings so (much higher / much lower / different) from the person sitting next to me. The treasurer, who likely does not have every copy of each member status report for the year tucked into their back pocket, is caught like the proverbial deer in the headlights.

There are two helpful things in this case; the first is a bit of knowledge, the other is a report.

First, the bit of knowledge: To understand Paid In Plus Earnings, it's best to start with "What is Total Paid In", because the Paid In Plus Earnings builds from that. Total Paid In is the combination of everything the member has paid in to the club, minus any withdrawals they have taken. The second part of that statement is especially important to understand, becuase it means Total Paid In can be a negative number.

As I mentioned, Paid In Plus Earnings (also called PIPE, for short)is built off of Total Paid In. Instead of just the money that the member puts into the club, PIPE also takes into account any gains or losses the club had as a result of Dividends, Expenses, and Capital Gains (or losses) from stock sales. As with Total Paid in, the latter half of this explanation is particularly important; If the club has large expenses during the year, or has sold enough stocks at a loss, this will lower the PIPE for the member at the end of the year. Add to this a partial withdrawal, and an individual member might end up having a PIPE much lower than the regular Paid In amount.

The second most helpful thing when this question comes up is a report; the Individual Valuation Units Ledger. It's a long name for a report that I think does not get used too often. While the member status report is good for seeing Total Paid in, and Paid In Plus earnings, it's similar to looking at a snapshot of someone. The member status report doesn't give you a particularly good idea of how they got to where they are unless you have a lot of them all laid out going from month to month. The Individual Valuation Units Ledger is much more useful for seeing the progression in the Paid in columns (Paid in this date, Total Paid In, and Paid In Plus Earnings). If you look at that report, and set the start date to either the beginning of the current year, or perhaps the start of the previous year, it can give a much better idea of how the members got to the figures that show up on the Member Stauts reports from one meeting to the next. While it isn't a regualr monthly report, I would suggest to print out a copy two or maybe three times a year as a reminder of how things are going, and to cut down on what can feel lke sudden changes in both the Paid In, and Paid In Plus Earnings figures.