As with a lot of my posts, this one is inspired by a few similar questions that have come in recently. While the specific numbers are changed, the main point of the question remains the same.

One of our members was making larger payments for several months, and attained a large % of ownership. Recently they have begun to make the same payments as all the other members, and notice that their percent of ownership has gone down each month this happened.

Our resident expert, Russell Malley, gives a good explanation on this:

The member's ownership percentage decreases, because in order to maintain the same ownership percentage they would need to deposit the same percentage of money into the club each month.

Here is a simple example. Assume a club value of $1,000.00 , and one member's value of 400.00. The club invites 3 new members who contribute $25 each at the meeting just after the $1000 valuation for the club. In this case each member's total value increases only by the value of their deposit. The member who had 400.00 will increase their value to 425.00 with a $25 contribution. The club total value will increase to $1,100. This member will then have an ownership percentage of 425.00/1,100.00 or 38.63%. The equal contributions has decreased the ownership to 38.63% from 40.00%.

To extend Russell's example a bit, the fictional member in this case would have had to deposit 50.00 that month in order to keep her percentage up, then 83, then 138, and so on.

This doesn't begin to touch on the potential trouble of one member having such a large percentage of ownership; that will have to be a note for another time.