Archive for the ‘Investment’ Category
February 27, 2009
A report from Johns Hopkins estimates that nonprofit infrastructure projects worth $166 billion have been delayed by what its press release refers to as “the current credit crisis.” But is the problem that nonprofits have been unable to build these projects because they can’t get construction loans (a credit problem) or because they can’t raise the money?
Not being able to borrow money is a serious problem, but it’s also a chronic and familiar one in the nonprofit sector. When the credit markets were hot, nonprofits still mostly couldn’t borrow a dime. Not being able to raise the money necessary to expand and serve more people is, by contrast, an artifact of the collapsing economy and the straitened circumstances of people who would others be donors–not lenders.
We need short-term solutions to the shortage of money; that’s what the stimulus package is about, and one certainly hopes nonprofits will get their share of those dollars. We also need a long-term solution to the long-term problem that nonprofits can’t get credit. If we conflate the two problems, we’ll never find a solution for either one.
Tags:nonprofit infrastructure
Posted in Current Affairs, Finances, Fundraising, Investment, Nonprofits--General, Private Philanthropy, Public private partnerships | 2 Comments »
February 25, 2009
The Nonprofiteer loves the suggestion that banks be required to account for the money they get from the government using time-honored nonprofit fund accounting. It’s refreshing to hear for a change that businesses should act more like nonprofits, rather than the other way around.
Tags:businesslike nonprofits, fund accounting
Posted in Advocacy, Current Affairs, Evaluation, Investment, Nonprofit management, Nonprofits--General, Public private partnerships, Relations with funders | Leave a Comment »
January 30, 2009
The Nonprofiteer rarely agrees with Jack Siegel of Charity Governance; but this is the exception. Noting the Dodge Foundation’s recent decision to cancel its poetry festival because of a decline in its endowment, he describes in one well-turned paragraph what’s wrong with that picture:
At the most elemental level, an endowment is a rainy day fund. As President Obama pointed out yesterday, the rainy day has come. Yet, many institutions are not using the endowment as it is intended to be used: As a source to stabilize the ebbs and flows in operating revenue so that vital programs can go on despite temporary economic downturns. That suggests that endowments—and we can’t speak specifically to the Dodge Foundation’s practices—during the last decade endowments were mismanaged by directors and trustees. Our hypothesis: Directors and trustees focused on maximizing investment return, forgetting to link return to the purpose served by endowments—smoothing out the ups and downs in the economy to provide stability to charitable programs.
Siegel describes his own post as “speculative,” based not on any inside knowledge of foundation investing practices but simply on inferences reasonably to be drawn from the results. The Nonprofiteer would argue that his discussion is instead theoretical, in the highest and best use of that term. And instead of merely railing (as she does) against the failure of foundation executives and Boards to respond with open-handedness to conditions requiring that response, Siegel analyzes what brought them to these straitened circumstances, and proposes how to prevent its happening again.
And she salutes him.
Tags:Endowment, foundation, payout rate, poetry festival
Posted in Arts Organizations, Boards of Directors, Current Affairs, Endowment, Foundation Hall of Shame/Stupid Foundation Tricks, Investment, Mission, Nonprofit management, Nonprofits--General, Private Philanthropy | 1 Comment »
January 23, 2009
Kudos to The George Gund Foundation for its decision to respond to the current financial crisis by increasing the percentage of its assets it will give away. The Nonprofiteer views this as the only defensible position for those who hold accumulated assets tax-free, and is always happy to welcome another participant to the fold.
She’s disappointed, though, at Gund’s failure to describe publicly the magnitude of the increase it intends. The Foundation’s language on the subject can almost be described as “weaselly.”
Federal tax law requires that we spend 5% of our assets every year, and we always exceed that minimum. But in 2009 we will go substantially beyond that. However, because our portfolio is diminished, the dollars available for grants still will likely decline in 2009. Thus, we do not expect to make any large new commitments.
The Foundation obviously knows how deeply it’s digging into its assets or it wouldn’t know how much money it has available for grants. So why hide the ball?
The Nonprofiteer wishes to suggest that a public statement by a leading foundation about what size chunk it believes can prudently be removed from its asset base would set an example for the rest of the foundation community–not to mention providing enough of a whiff of self-regulation to keep the Congress from upping the legally required ante.
So how about it? Will foundations expressing a willingness to increase their payout rates (and, again, thanks and praise be to them) also make public the new rates, and thereby Give A Lead (as the British say) to all the rest?
Tags:payout rate
Posted in Current Affairs, Endowment, Foundation Hall of Shame/Stupid Foundation Tricks, Investment, Nonprofits--General, Philanthropy and Taxation, Private Philanthropy | Leave a Comment »
January 12, 2009
The Fall issue of the Nonprofit Quarterly contains a timely article (in print edition only) detailing the pros and cons of purchasing real estate. Now that the real estate market has finally crashed, there may be a tendency among nonprofits (as among other bargain-hunters) to finally purchase that home they’ve always dreamed of.
Authors Gabriella DiFilippo and Tanya Vartivarian of the Illinois Facilities Fund provide the following straightforward bit of advice:
With few exceptions, new nonprofit organizations should not focus on real estate ownership. Instead they should establish the organization and its value to the community.
The Nonprofiteer hopes that even established nonprofit organizations will heed this discouraging word. Especially among the social service agencies, the process of “establish[ing] the organization and its value to the community” is nearly never-ending, and the business of making sure the roof doesn’t leak is often nothing more than a gigantic distraction from making sure that value continues to be provided.
And, as anyone who’s ever bought a home knows, even if it’s not an out-and-out money pit, it always costs more than you think it will. And that’s money you could instead be using to serve your clients.
Tags:buildings, Real Estate
Posted in Investment, Mission, Nonprofit management, Nonprofits--General, Real Estate, Social Service Agencies | 5 Comments »
December 10, 2008
Two quick responses to a recent announcement from the Growth Philanthropy Network, which provides growth capital to nonprofits. First, the Nonprofiteer remains skeptical of the Network’s mantra that it requires grantees to have “the ability to scale their proven solutions nationally.” Any agency with that level of demonstrable success probably needs private financing less than it needs a good lobbyist: nationally scalable programs are just the sort of thing the Feds are dying to pick up, if and when they can find them. And the Network’s observation in its press release that the government now has a lessened ability to fund such programs seems weirdly out of touch with new Keynesian realities: the middle of a financial crisis is precisely when the government should, and will, invest in successful social programs–do the words “WPA” ring a bell?
But the press release (see “Announcements” on the Network’s home page) interested the Nonprofiteer for another reason: when all was said and done, it was merely an announcement that a new member had joined the GPN Board. This was presented as an endorsement of the Network’s concept–which, of course, it is–and used as an opportunity to present that concept in the breathless prose reserved for something new.
Good work, guys. Every charity should put out a press release whenever a new member joins its Board–not just because the Board member’s neighborhood paper will pick it up (though it will) but because it’s an opportunity to claim an endorsement from a substantial member of society while at the same time describing an old institution as if it were new.
And because it’s an acknowledgement, one of far too few, of the importance of Board members to the nonprofits they serve.
Tags:Board of Directors, Keynesian spending, nonprofit venture capital
Posted in Boards of Directors, Coverage of nonprofits, Investment, Nonprofits--General, Private Philanthropy, Social Service Agencies | 4 Comments »
December 9, 2008
Every day brings another idea for the new Administration–today, a group of ex-Secretaries of State and Defense suggested creating an office against genocide in the White House, certainly a creditable idea but not necessarily more entitled to immediate attention than the notion that President Obama should endorse the use of Esperanto. Still, rather than be left out of this season’s most fashionable parlor game, the Nonprofiteer offers her version of How Everything Would Be Much Better If People Would Only Run The Government My Way.
Here’s the idea:
This country’s most important work is done by amateurs–which is another way of saying that we have nonprofits, governed by volunteers, provide most of our social services, education, arts, and health care. If we’re going to continue to do this (and there are good social-capital reasons why we should), let’s give those amateurs the same tools the Small Business Administration gives entrepreneurs, namely expert advice and access to money.
Creating a Nonprofit Business Administration would be a very low-cost way to capitalize on the spirit of service and volunteerism the President-elect created through his campaign and evokes repeatedly in his speeches. Volunteer effort is too valuable a resource to be wasted, as it is every time a nonprofit board has to reinvent the fundraising wheel. And the work of charities is too important to be stymied by a financial system which won’t give them access to working capital unless they beg for it–and sometimes not even then.
The Aspen Institute, a leading think tank on issues related to charity, recommended creation of such an agency back in June, an idea which the Nonprofiteer dutifully reported as though she hadn’t had it herself in 1992.
Tags:nonprofit access to capital, Nonprofit Business Administration, social capital, third sector
Posted in Current Affairs, Investment, Nonprofit management, Nonprofits--General, Public private partnerships | 3 Comments »
July 21, 2008
Here’s an intriguing development in the ongoing process of trying to connect residents of deep-poverty nations with the resources of the Internet and, thus, the world economy: a computing device and software that enables up to 30 people to use a PC at one time, as if each person had a computer of his/her own. While this may sound like the sort of triumph only a gearhead could appreciate, what it really means is computer access costing less than $70 per person–all the world’s knowledge in a form approaching the affordability level of bednets and clean water.
The Nonprofiteer is rarely enthusiastic about e-this or cyber-that; but making information commonly available to people who have been deprived of it is an unalloyed Good Thing, and even she’s not churlish enough to withhold her thanks and praise from people who’ve figured out how to accomplish it while making a profit at the same time. Excerpts from the company’s press release appear below.
REDWOOD CITY, CALIF., July 15, 2008– NComputing, the leading provider of desktop virtualization software and hardware, today announced it is working with leading non-governmental organizations (NGOs) worldwide to help reduce the digital divide between developed and developing countries. The company has already deployed successful partnerships with such leading NGOs as U.S.-based Save the Children, France-based Ateliers Sans Frontieres (ASF), Bangladesh-based BRAC, Latin America-based Organization for American States (OAS), UNESCO, and India-based Azim Premji Foundation to name just a few. NComputing further announced special discounts and programs to help NGOs on every continent reach their goals for digital inclusion in emerging markets.
[snip]
The NComputing solution is based on a simple fact: today’s PCs are so powerful that the vast majority of applications only use a small fraction of the computer’s capacity. NComputing’s virtualization software and hardware tap this unused capacity so that it can be simultaneously shared by multiple users. Each user’s monitor, keyboard, and mouse connect to the shared PC through a small and very durable NComputing access device. The access device itself has no CPU, memory or moving parts so it is rugged, durable, and easy to deploy and maintain – especially critical in developing nations. The NComputing software and hardware costs as little as $70 per seat. With NComputing, people and organizations around the world are maximizing their investments in PCs.
[snip]
No other attempts at bridging the digital divide have been as successful. Low-priced laptop solutions, such as the $188 OLPC XO, carry very high hidden costs—like maintenance and support—that far outweigh their benefits.
[snip]
[S]aid Medhy Davary, director of DSF[,] “The virtual desktops are extremely affordable and durable, require very little maintenance, and use only one watt of electricity. This allows users in even the world’s poorest countries to benefit from computer access and the Internet.”
“Almost one billion users around the world who would benefit from access to computing have been unable to afford it—until now,” said Stephen Dukker, chairman and CEO of NComputing. “It is only by fundamentally changing the economics of computing that our industry can bridge the digital divide. We are going to deploy more than a million virtual desktops in the coming year and are honored to work with such prestigious NGOs to improve the daily lives of hundreds of thousands of people around the world.”
“In response to increasing interest from NGOs, NComputing is developing programs to help them better leverage their skills and funds,” said Ms. Lindsay Petrillose, Government Liaison for NComputing. “We offer seed units and special NGO discounts that multiply the impact of an NGO’s limited funds.” Interested NGOs and governmental institutions seeking NGO assistance can contact Ms. Petrillose at lpetrillose@ncomputing.com, (650) 454-4991.
————-
*of computer access
+as in “the digital divide”
Tags:charity, computers, computing, corporate giving, International, Internet access, nonprofit, not for profit, philanthropy, Poverty
Posted in Current Affairs, Education, International, Investment, Marketing, Nonprofits--General, Poverty, Private Philanthropy, Uncategorized | 1 Comment »
July 16, 2008
Micro-lending has come to the American student financial aid market. GreenNote.com will syndicate student loans among individuals who wish to provide as little as $100 to college-bound students, in return for which the lenders will get a guaranteed return of nearly 7% (while the syndicator, presumably, gets the difference between the lender’s return and the borrower’s interest rate, unspecified in Green Note’s promotional materials). Even if the borrowers are paying only a few basis points above the lenders’ return, this seems an awfully expensive way to provide college money to students at a time when the discount rate is below 4%. Unless students are totally shut out of the college lending system as mediated by Sallie Mae, it’s not at all clear why they would turn to this electronicized (and commercialized) version of the old mutual-aid-society lending arrangement.
If the American banking system is actually collapsing, this is neither a good time to borrow money for college nor a good time to become an unsecured creditor to debtors without skills or degrees. If the American banking system is not collapsing, there should be sufficient guaranteed student loans available to attendees at most accredited institutions. The Nonprofiteer has no doubt that GreenNote.com will make money connecting small lenders to small borrowers, but she doubts strongly that this connection will make much of a contribution toward paying the average college student’s bills of more than $40,000 annually.
Not everything that comes dressed up as “e-commerce” and “micro-lending” actually makes any sense.
Tags:Higher education, micro-lending, nonprofit, not for profit, student loans
Posted in Education, Higher education, Investment, Uncategorized | Leave a Comment »
