Archive for the ‘Finance’ Category

WEEKLY NEWS DIGEST (April 1-6, 2013)

Sunday, April 7th, 2013

FINANCE

Nonprofit finances on the mend; Groups, feeling more confident about future, add new programs and expand their services, study says. Still, some organizations continue to struggle as they get used to ‘new normal’.” By Theresa Agovino. Crain’s New York Business. March 29, 2013. Executives at nonprofit groups in New York City are feeling more confident about the future, with an increasing number saying they plan to add new programs and serve more people this year than they did in 2012, according to a new study. This year, 61% of nonprofits surveyed planned to boost services, while 57% expected to add clients, according to the study by the Nonprofit Finance Fund, which makes loans to charitable organizations. Last year, only 53% of the groups said they had expanded programs while 44% served more people. The executives’ optimism likely stems from their organizations’ improved financial picture. According to the study, 31% of nonprofits surveyed ended their 2012 fiscal year with a deficit while 22% broke even; yet 23% predict they will end their 2013 fiscal year in the red, while 38% believe they will break even. Despite the brightening picture, executives say many organizations are still struggling in the aftermath of the recession, which increased need and decreased funding. “I think they are getting used to the new normal and accepting that the money they used to get isn’t coming back,” said Anjali Deshmukh, director of knowledge and information for the Nonprofit Finance Fund. The organization surveyed 224 New York City charities in various sectors including health, the arts and human services.

Tennessee Republicans freak out that voucher plan might fund Muslim schools.” By Laura Clawson. Daily Kos. April 03, 2013. Tennessee Republicans’ anti-Muslim hysteria may actually do a good thing, if for the absolute wrong reason (anti-Muslim hysteria). The state legislature is considering a school voucher bill, but there’s a hitch: At least one Muslim school might qualify for voucher money, and some legislators are freaking out over it. That the same people whose first thought on seeing a mop sink was “OMG MUSLIM FOOT-WASHING” would have objections to public money going to Muslim schools is, shall we say, not a surprise. And it’s gross. But in this case, it may get in the way of another top Republican priority: sending public money to Christian schools in the form of vouchers. The voucher plan currently under consideration was proposed by Gov. Bill Haslam and would give vouchers to kids eligible for free or reduced-price school lunches in the bottom five percent of public schools. Some Republican legislators want to broaden the bill substantially, extending it to every school in the state and raising the income cap. But where Haslam’s plan would only make one Muslim school eligible for vouchers, several others would be eligible under the expanded plan. And one is already one too many for the mop-sink brigade.

WEEKLY NEWS DIGEST (JANUARY 7-13, 2013)

Monday, January 14th, 2013

FINANCE

Pizarro: Turkey Trot charities benefit from a stock market bump.” By Sal Pizarro. San Jose Mercury-News. January 12, 2013. Sometimes the stock market takes a funny — and beneficial — bounce, as Silicon Valley Leadership Group CEO Carl Guardino found out recently. You might recall that a valley CEO gave an anonymous $500,000 donation to the Applied Materials Silicon Valley Turkey Trot, which benefits three local charities. The donation was in stock, and it’s the Silicon Valley Leadership Group Foundation’s policy to convert stock gifts ASAP, so they don’t wind up playing the market. But the process isn’t instantaneous, and Guardino told me it took about four weeks to complete. And by the time it was done, the gift had grown in value to $607,000. The donor asked that the extra be applied to this year’s race, so the three nonprofits — Second Harvest Food Bank, the Housing Trust of Santa Clara County and Children’s Health Initiative — are ahead of the game. In real terms, by the way, that’s 70,000 meals for Second Harvest, help for about 300 homeless people who are transitioning into permanent housing and dental care for hundreds of low-income kids.

WEEKLY NEWS DIGEST (December 24-30, 2012)

Monday, December 31st, 2012

FINANCE

Historic Boston Church’s Decision to Sell Rare Psalmbook Divides Congregation.” By Jess Bidgood. New York Times. December 24, 2012. When the leadership at Old South Church decided it was time to fix up their cathedral, they turned to a fund-raising option most likely available only to a Colonial-era institution like this one, founded in this city’s primordial hinterlands: selling a copy of a rare psalmbook, printed across the river in Cambridge in 1640, that could fetch up to $20 million at auction. That proposal, and the congregation’s recent vote to authorize it, has forced one of the nation’s oldest churches to consider how to square the icons of its past — and this country’s — with the challenges of operating a contemporary urban church. In the process, it has stirred dissent from some members who say the sale of heritage assets is a betrayal of their history. “For 340 years, this was unthinkable,” said Jeff Makholm, an economist who acts as the church’s historian. “We think it’s disgusting. It’s breaking faith with the people who poured their energies into keeping them safe as a representation of our history.” For Ms. Taylor, the sale of the Bay Psalm — as well as 19 pieces of silver, currently housed at the Museum of Fine Arts in Boston, that the congregation also empowered the trustees to sell — is a proper use of historic assets to help continue its legacy and mission. “We want to repurpose them to carry out ministries today,” Ms. Taylor said. “I adore and cherish this congregation’s history. We collect up these stories and we carry them with us, but we don’t have to carry the book with us, or the silver with us, to learn from it, to be inspired by it, to be made brave by it.” Ms. Taylor says the building needs about $7 million in deferred maintenance projects, including upgrades to the heating and sprinkler systems, that would be impossible to finance without a major cash infusion.

9/11 Foundation’s Costs Rise.” By Michael Howard Saul. Wall Street Journal. December 26, 2012. Labor costs at the National September 11 Memorial & Museum at the World Trade Center Foundation rose 58% in 2011 as the organization more than doubled its staff in preparation for opening on the 10th anniversary of the terrorist attacks, tax records show. The organization’s total expenses nearly tripled in 2011 to $35.6 million, compared with $12 million the previous year, according to the nonprofit foundation’s 2011 tax records. At the same time, revenue was falling: Donations and grants dropped 10% in 2011, to $78.3 million, from $87.4 million in 2010. The organization employed 253 people in 2011, compared with 107 in 2010. Three of the organization’s executives received annual compensation packages of more than $300,000, including the president, Joseph Daniels, who earned $366,224 in salary and other benefits. Another seven executives had compensation of more than $200,000. The packages were roughly the same as in 2011.In an emailed response to questions about the tax records, Mr. Daniels said the foundation had largely concluded a fundraising campaign and was making a transition “into a fully operating institution serving the needs of more than 5 million annual visitors.” “Like similar institutions, we now receive revenue from multiple sources, with one of those sources being continued private fundraising,” Mr. Daniels said. Foundation officials said they anticipate hiring more employees before the museum opens. Its scheduled opening this year was delayed by a dispute over construction costs and control of the site involving the foundation, its chairman, Mayor Michael Bloomberg, the Port Authority of New York and New Jersey and those states’ governors, Andrew Cuomo and Chris Christie, respectively. This year, on the eve of the attacks’ 11th anniversary, a deal was struck to break the impasse. The museum is slated to open in late 2013 or early 2014. When the memorial and museum are fully operational, officials expect the annual budget to be $60 million.

WEEKLY NEWS DIGEST (December 10-16, 2012)

Monday, December 17th, 2012

FINANCE

The Scoop: Local nonprofits are increasingly asked to do more with less.” By Emily Laermer. Crains New York Business. December 9, 2012. Local nonprofits are increasingly asked to do more with less. As more people require their services, many organizations are forced to expand their programs as their own resources start to dry up. Though income stayed about flat at the area’s top 25 nonprofits, operating expenses increased 2% from 2011 to 2012, according to Crain’s research. That’s on top of a 5.9% increase from 2010 to 2011. Seventeen showed growth in operating expenses this year, compared with 14 last year, indicating that more nonprofits are expanding, though at a slower pace. “There’s only so much money,” said Michael Niekamp, assistant controller at the Leukemia & Lymphoma Society, which ranked No. 6 on Crain’s list, with operating revenue of $311.2 million, and reported a small drop in private support, its sole source of income. “But everybody gets a little bit.” Private support for top nonprofits was flat, compared with a year earlier. Even so, many that rely primarily on donations are finding ways to expand.

In New Brand of Philanthropy, Nonprofits Invest in For-Profits.” By Stephanie Strom. New York Times. December 11, 2012. When the W. K. Kellogg Foundation set aside $100 million in 2007 to invest in companies that could produce both social and financial benefits, it was considered revolutionary. Historically, major foundations had used mainly stocks, bonds, real estate and other traditional asset classes to build their endowments. Now, such investments are increasingly common – and profitable. In 2010, the Kellogg Foundation invested $5 million in Wireless Generation, a tiny educational software maker working to improve public education in New York City. Just 219 days later, it made a 25.9 percent return after Rupert Murdoch’s News Corporation bought Wireless Generation for $360 million. “The customer and market insights that the private companies we’ve invested in have, whether it be in food, health care, financial institutions or education, sharpened our ability to target our grant making and public policy efforts,” said Sterling K. Speirn, the foundation’s chief executive. “Similarly, I think the companies we have invested in are able to leverage not only our patient capital but the different kind of knowledge assets we bring to the relationship.” Philanthropy is taking its cues from Wall Street and Silicon Valley. The language of finance is so common that it is sometimes hard to tell the difference between an investment conference and a fund-raiser. Grants are referred to as investments, and public-private partnerships as innovations. Money used to buy vans, computers and buildings is called growth capital. “It’s not just the language that is changing,” said Antony Bugg-Levine, chief executive of the Nonprofit Finance Fund. “The actual distinction between the two sectors, for-profit and nonprofit, is starting to collapse.” The shift stems from a new generation of philanthropists, like Bill and Melinda Gates, Pierre and Pam Omidyar and Steve and Jean Case, hoping to stretch their dollars. As they see it, the pool of philanthropic assets – even at a whopping $4 trillion-plus – is too small to make a dent in seemingly intractable social problems like malnutrition, chronic homelessness, water quality and sanitation. So they are trying to find ways to reuse existing financing and to attract new types of capital.

Met Opera Raises $100 Million in Bond Sale.” By Daniel J. Wakin. New York Times. December 14, 2012. The Metropolitan Opera successfully sold $100 million worth of taxable bonds on Thursday, according to The Wall Street Journal, and plans to use about two-thirds of the proceeds to pay off a bank loan and to pay down a line of credit. The rest of the money will go toward operating expenses and renovations, said Peter Gelb, the Met’s general manager. The Met has said it is embarking on replacement of key technical systems, including those of its flies, stage elevators, lighting and air circulation. The renovations, which are estimated to cost $60 million over the next five to seven years, are also being paid for by donations. Mr. Gelb said the Met decided to issue the bonds – its first such action – because of low interest rates, at the suggestion of a board member. “It’s a window of opportunity,” he said. The Met’s budget runs at $329 million a year, almost half of that coming from donations. Some 2.5 million people around the world watch its high-definition movie theater broadcasts, about four times its seasonal live attendance.

WEEKLY NEWS DIGEST (August 8-14, 2011)

Monday, August 15th, 2011

FINANCE

Nonprofits Watch Anxiously As Market Wobbles.” By Jim Zarroli. Weekend Edition Saturday/National Public Radio. August 13, 2011. The turmoil on Wall Street threatens to wreak financial havoc on a lot of people and institutions — including the country’s 1.2 million nonprofits. Charities of all sizes are only beginning to recover from the recession. Now many are wondering how they’ll survive another market plunge. Camp Henry on Manhattan’s Lower East Side is run by the venerable Henry Street Settlement, which provides a range of social services for low-income New Yorkers. Executive Director David Garza says after the 2008 financial crisis, corporate donations to the agency fell off. “It was really kind of a vice grip on the supply side and the demand side,” he says, “where there’s more demand for our services and less resources to provide the services.” For a while federal stimulus money helped keep the agency going, but now that’s dried up, so Garza has been watching the recent Wall Street meltdown with some trepidation. “It starts actually in the stomach,” he says. “It’s the pit in the stomach and then it goes through the mind. It’s the ‘here-we-go-again’ feeling.” A big drop in stock prices tends to hurt charities in two ways. First, many own stocks directly through their endowments and their holdings lose value, or at least they no longer pay the kinds of dividends they once did. Second, individuals and companies can no longer afford to donate as much as they used to, nonprofit consultant Bob Evans says.

WEEKLY NEWS DIGEST (May 23-29, 2011)

Monday, May 30th, 2011

FINANCE

Returns for foundations, charities slip in 2010; Investment returns for nonprofits totaled roughly 12% in 2010, down from about 21% the year before. Private equity real estate was the only asset class that sustained losses, a survey says.” By Timothy Inklebarger. Crain’s New York Business. May 25, 2011. Foundations and charities reported investment returns of roughly 12% in 2010, below the 21% range reported in 2009, with private equity real estate the only asset class that sustained losses, according a Commonfund Institute survey. Foundations had an average investment return of 12.5%, while operating charities returned an average 11.6% for the 2010 calendar year. Foundations returned an average 20.9% in 2009, and operating charities returned an average 21.5% for the same year. According to a report on the survey, the asset class consisting of energy and natural resources, commodities and managed futures was the best performer, returning 22.1% for the year. Following were domestic equities, at 17.7%; distressed debt, 15%; international equities, 14.5%; private equity 11.3%; alternative strategies, 10.6%; venture capital, 9.4%; short-term securities and cash, 9.2%; marketable alternative strategies, 9.1%; fixed income, 8.1%; and private equity real estate, -2.5%. Other category returned 10.6%. The average asset allocation for foundations at year-end 2010 was 38% alternatives, 26% domestic equities, 16% international equities, 13% fixed income and 7% short-term securities, cash and other investments. John Griswold, Commonfund’s executive director, said that private foundations typically do not receive additional donations above money used to establish themselves and must use investments for both normal operating costs and to regain assets lost to the financial crisis.

WEEKLY NEWS DIGEST (March 28-April 3, 2011)

Monday, April 4th, 2011

ETHICAL INVESTING

Penn clarifies stance on HEI.” By Alison Griswold. Yale Daily News. April 1, 2011. Following in the footsteps of Brown University, the University of Pennsylvania has said it will not make future investments in the controversial HEI Hotels & Resorts chain. Yale, Brown and Penn are among the universities that have holdings in HEI — which has come under fire for allegedly mistreating workers and interfering with their efforts to unionize — but Brown decided in mid-February that it would refrain from making further investments in the hotel company. Penn Executive Vice President Craig Carnaroli announced on March 25 that the university does not plan to make additional investments in HEI, and, like Brown, will reach future decisions when the time arises. Yale has not altered its investment plans for HEI. Penn has watched a “continuing labor dispute” between HEI managers and national labor union UNITE HERE, Carnaroli wrote in his statement. While HEI asks employees to elect unions through anonymous, secret ballots, UNITE HERE members prefer employees to use a public vote in the presence of union leaders, Carnaroli said. Jonathan Macey, the chairman of Yale’s Advisory Committee on Investor Responsibility, told the News in early March that Yale is unlikely to alter its policies toward HEI unless new evidence appears against the hotel company. At the time of Brown’s decision, Macey questioned the practical implications of the choice, saying that what activists and the media perceived as a “huge step” has little impact on the university’s investing policies. Yale’s current investment in HEI is worth at least $119 million according to Yale’s Undergraduate Organizing Committee.

WEEKLY NEWS DIGEST (March 21-27, 2011)

Monday, March 28th, 2011

GIVING & FINANCE

Charitable giving lags economic growth.” By Mary Beth Marklein. USA Today. March 22, 2011. But a larger percentage of organizations reported bringing in about the same amount of revenue both years, says the report by the Nonprofit Research Collaborative, a coalition of six organizations that focus on philanthropy. Just over half (52%) said they met fundraising goals, about the same (53%) as in a similar 2009 survey conducted by the Association of Fundraising Professionals, a member of the collaborative. “While many organizations stopped the bleeding, giving simply didn’t rebound like we thought it might, especially given the economic growth we saw in the last quarter of the year,” says Paulette Maehara, CEO of the fundraising association. Findings are based on responses from 1,616 charities to an online survey conducted in February. The report notes that online giving is still a relatively small source of revenue; a survey released last month by collaborative member Blackbaud Inc. found that at most, online giving accounts for less than 10% of total contributions received. “It does take some time for organizations to make the investment in online fundraising and to learn how best to integrate that” into their fundraising strategy, says Una Osili, director of research at the Center on Philanthropy at Indiana University, a collaborative member. Some charitable groups are turning to even more electronic ways to make contributions. The American Red Cross, for example, raised $32 million in donations via text messages after a magnitude-7.0 earthquake struck Haiti last year. What’s the appeal? “It takes less time to click,” Red Cross spokesman Roger Lowe says. “You feel like you’ve made a difference immediately.”

Economic Recession Continues To Hit Nonprofits Hard.” By Gabrielle Canon. Huffington Post. March 22, 2011. Nonprofit agencies provide a safety net for America’s most needy individuals and families. The nonprofit sector, however, is facing a crisis and has no safety net of its own. Many organizations continue to experience the effects of the recession, which has resulted in the reduction of badly needed resources. In a new study released by the Nonprofit Finance Fund (NFF), an organization that surveyed nearly 2,000 nonprofit organizations, 87 percent report the decline in the U.S. economy continues to impact their operations. This figure is largely attributed to the increase in demand for nonprofit services, as an upswing in unemployment, poverty, and government budget cuts, resulting from the recession, have put added pressure on nonprofits. A separate study, released in November 2010 by Guidestar and a coalition of other agencies analyzing nonprofit financial trends, also cites concerns over increased demand. For the eighth consecutive year, a majority of nonprofits surveyed report increases in demand for their services. This could result in more needy people being turned away as the effects of the recession continue. According to the Guidestar report, nonprofits facing limited resources to meet looming increases in demand have had to find new strategies, like partnership, to increase efficiency. Strapped nonprofits have seen increased civic engagement, as volunteers have helped fill the gaps when budgets are tight. They have also employed online strategies to open new revenue models and resources. The 2010 Blackbaud online giving report, an annual analysis of the nonprofit industry, indicates that the importance of online fundraising continues to grow. Led by the influx in online contributions for natural disasters, like the Haiti earthquake that occurred last year and the current disaster affecting Japan, online giving has increased by 77 percent over the past year. The study showed that peer-to-peer fundraising and social media shaped this growth, in addition to increases in online response for disaster relief. There is hope, however. Another new study, this one from the Nonprofit Research Collaborative, shows that nonprofits aren’t letting the slower trickle of donations get them down, and 63 percent of organizations surveyed anticipate contributions to them will increase in 2011.
Related story:
Recession lingering for nonprofits; The vast majority of organizations surveyed by Nonprofit Finance Fund said they will find it hard to meet increased demand for their services this year.” Crain’s New York Business. March 22, 2011.

United Way falls short of ambitious $41M goal; Central Indiana chapter likely to trim funding for agencies as charitable giving lags economic recovery.” By Will Higgins. Indianapolis Star. March 23, 2011. United Way of Central Indiana raised $38.2 million in its 2010 campaign — well short of its goal of $41 million and about $600,000 less than it raised the previous year. That shortfall will come with consequences: United Way officials said it is likely that for the second time in three years the agency will need to cut funding to the various agencies that rely on it for support — agencies that already are experiencing increased demand for services. The group announced the fundraising total during an annual meeting Tuesday. Philanthropy experts say the outcome is not surprising because charitable giving is generally slow to recover from hard economic times. “Look back to the Great Depression, and it was more like four years before giving returned to pre-Depression levels,” said Timothy L. Seiler, director of Public Service and The Fund Raising School at the Center on Philanthropy at Indiana University. The comeback gap was three years after the 1970s recession. “A consistent factor in charitable giving is how secure a person feels financially,” Seiler said. “That includes the general population, as well as the high-net-worth population.” With some recovery of the stock market, United Way is looking longer and harder at wealthy individuals, expanding its major gifts staff from one person to three. A new Meridian Society, for donors giving $25,000 or more, drew 30 members. The agencies that receive United Way funding likely will see a reduction, said Ellen Annala, the local group’s chief executive, “but we don’t know how much. We’re just now starting our budgeting.”

WEEKLY NEWS DIGEST (February 14-20, 2011)

Tuesday, February 22nd, 2011

FINANCE

Nonprofits Land Deals.” No by-line. Wall Street Journal. February 14, 2011. In another sign of a tenant-friendly office market, nonprofit groups are continuing to find attractive deals especially in downtown Manhattan. Take the case of the American Geriatrics Society, which decided to move out of the Empire State Building. It recently cut a deal for 8,200 square feet at 40 Fulton St. where it will be neighbors to numerous other nonprofits that cut deals in 2010. “We actually are able to save money by going there,” says Jennie Chin Hansen, the society’s chief executive. Vornado Realty Trust, the landlord, declined to comment. Jones Lang LaSalle was the broker.

WEEKLY NEWS DIGEST (January 24-30, 2011)

Tuesday, February 1st, 2011

FINANCE

Nonprofits Turn to Out-of-State Options for Bonds.” By Stephanie Strom. New York Times. January 24, 2011. Nonprofits based in New York are turning to other states for help in issuing tax-exempt bonds. Late last year, the Phoenix Industrial Development Agency in Arizona sold bonds for two private schools in Manhattan, the Nightingale-Bamford School and the Friends Seminary School, and Planned Parenthood of America is seeking to follow suit. “We are exploring our options for out-of-state financing in several states,” said Stuart Schear, a spokesman for Planned Parenthood. Historically, New York’s own industrial development agencies have issued tax-exempt bonds on behalf of the state’s nonprofits seeking to raise money for new facilities and other projects. But the law allowing those agencies to float such bonds expired in January 2008, and the state Legislature has not renewed it. The lapsed law worsened the problems experienced at the height of the financial crisis by nonprofits that had issued auction-rate securities, but it has not received much attention until now. “With the I.D.A. out of commission and the Legislature unable to remove the law, people are looking at other options,” said Sisi Kamal, chief financial and operating officer at the Friends Seminary School in New York. In the past, several large, national nonprofits have issued bonds in states other than those in which they operated, but not because laws had lapsed, said Richard A. Newman, a lawyer in Washington who specializes in tax-exempt bond issuance. “We had a client with facilities in 23 states, and the transaction costs of issuing bonds separately in each state would have exceeded any benefits,” Mr. Newman said. “So instead, they went to an out-of-state issuer to do the whole thing.” Not all states offer such services to groups outside their borders. Arizona, Colorado and Virginia do, as well as one agency in California, and Wisconsin has created an agency devoted in large measure to issuing bonds on behalf of out-of-state borrowers.