A group of parents decided to buy, paying in equal parts, an encyclopedia to donate to the neighborhood school, the price of which is $400. If the number of parents contributing to the purchase increased by a quarter, each one would pay $ 1 less. How many are the parents? How much does each one contribute?

Let the original number of parents be x and each parent contributes y dollars.
Thus, the total cost of the encyclopedia can be expressed as xy = 400 .

According to the second condition, if the number of parents increases by a quarter, the new number of parents becomes \frac{5}{4}x .
Also, the new contribution per parent is y-1 .

Thus, the new total cost can be expressed as \left(\frac{5}{4}x\right)(y-1) = 400 .

We now have the system of equations:
xy = 400
\left(\frac{5}{4}x\right)(y-1)=\frac{5}{4}xy-\frac{5}{4}x=400
Substituting the first expression into the second gives us the following:
\frac{5}{4}(400)-\frac{5}{4}x=400
500-\frac{5}{4}x=400
100=\frac{5}{4}x
Solving the equation above, we find x=100\cdot\frac{4}{5}=80 and y=5 , meaning there are originally 80 parents and each contributes $5.

\textbf{Answer:} There are 80 parents and each one contributes $5.