At out club we play a comp every Saturday. 2 x a month they are qualifiers in which it counts to your actual handicap when these happen we basically run 2 comps in one so that the non members that rock up can still take part.
However as a group we have our own handicap system on top of this that is updated every time we play. As we do Stableford 40 points is the line. For every shot over the 40 points you get cut .5 of a shot. Every shot under 40 points you go up by .2 of a shot. Spreads the money out fairly enough.
For some reason we are trying to move away from that now though and just want to use our official handicaps. Not sure it's going to work as well as you're not required to enter the official comp so a few people that don't bother with the comps their handicaps will stay the same and can win the side comp. I don't think anyone has realised this yet (not sure how) but I'll wait until people realise now as nobody listened before.
In the summer we also have a roll up every friday night which we also have another handicap but that's only 9 holes. I think last season I got down to like 1-2 in that which is pretty decent being a 11HC. Was quite funny when a previously scratch golfer (10 years ago) turned up and got 4 shots
I was like WTF.