cartoon by YoSpilt

On the surface when one invests for their future it is important to understand what your investing in.  Auction rate securities were suppose to be ultra safe bonds that were sold by financial firms as cash like securities.  Without warning the auction rate market closed.

Who got hurt the most: municipalities, hospitals, universities and many other types of nonprofits.  Cash flow suffered on two levels.

1. First, organizations were locked out of accessing their money.
2. Two, organizations needed to increase their borrowing to cover cash needs at higher rates.

Safe is suppose to mean that ones cash is secure.

If your organization was effected file a compliant with your state Attorney General and the regulators for the financial institution that provided the investment.  Making them honor the terms of the bond as like equivalents takes work. If that does not work it may be time to reach out to an Attorney.

Do not let the delivery of the product be dependent upon outside influences.  Hold the financial institution accountable to their actions to deliver upon what you bought.

cartoon by Fuller

Times of economic stress are not the times to cut off communication with the external community.  It is the opposite that you should be doing.

• Forecasting is an important tool to use for bench marking ways to measure the organizations health in an ongoing manner.
• Forecasting is the means by which managers can gauge what variables to measure each month of the year.
• Thus providing managers established targets for analysis.
• Thus providing measures which will trigger adjustments.
• Thus providing the case for implementing the contingency plans which have been drawn up during the planning process in setting the bench marks for forecasting.

Nonprofits should be showing and involving its community of supporters and teaching them the range of variables that they should be measured by.  Half the battle is identifying for the organization what those variables are?  Until you do, do not expect confidence from your community of supporters.

Cartoon by Plutosthebubbleman

I am a little confused by the recent action of Veterans being opposed to private treatment through their insurance which would save up to $540 million dollars.  I understand their fear that they feel it is a way for government to abrogate its responsibility.  However, that is $540 million dollars that could be used for unmet needs in the VA budget.  Policies can be written to ensure Veterans rights to access of appropriate care.

I challenge anyone to show me why the government should pay when there is another insurer that should pay.  Government should be the payer of last resort.

It just goes to show you that a nationwide universal plan would serve the best interests of any population including Veterans.

The effectiveness of spending each dollar to maximize its purchasing power must be key to federal spending.   There are many examples of such in the Stimulus Bill where the spending on an initiative will result in accomplishing two other goals as well.

I call that effective cash management!!!

Posted on Flickr by Irish Spacemonk

Recent articles have been pushing the idea that just maybe our Nation should stop pushing the idea of owning a home as the ideal to the American Dream.

I would like to highlight how short sighted such a notion is.

• A market driven approach means that the investor/landlord controls price.
• A market driven approach means that at the discretion of the investor/landlord the price can change.
• A market driven approach means the investor/landlord can take advantage of the short term shifts in the market to their advantage.
• A market driven approach means the individuals less able to adapt to the marketplace will be harmed the most.

1. Home ownership provides cost containment on future increases.  Control of the housing expenses stays with the homeowner.
2. Income grows and cost stay relatively the same.  Thereby less of an individual’s income goes towards housing.
3. Even the costs of repairs when done in a planned manner, with many being done by the owner can be within ones means.  Labor is usually 50% of the costs, so if done by the home owner real savings can be realized.  For those repairs needing specialized individuals building a reserve is the best way to afford these repairs.

The same can be said of nonprofits owning their property and utilizing their volunteer network to maintain their property.  This is especially true of those whom are in expensive markets.  Your organization is not in the business of providing a return on an investment to an individual or individuals. Therefore, why spend your money doing so. Your money should be spent on securing the future of the organization and its mission.  Giving money to a property owning provides no long term return for the organization unless there is a mutual parallel mission.  A good set of examples are the many faith base organizations whom have nonprofits working out of their space for below market rent.  That is the right partnership in accomplishing ones joint mission for the communities they serve.

pic by SMDOOM

The United States government goes on a debt reduction plan for Debt  of $10 Trillion dollars.

While the nation is experiencing a serious recession the government is in a great position.  It can now borrow at 0%-2.3% and charge 8%-13% for having preferred share invested in banks and financial type businesses under the bailout.  It can buy distress securities for a major discount and hold them until their worth a whole lot more.  It is charging a premium for guaranteeing debt which provides additional revenues to the federal government with no cash investment upfront.

There are no investors waiting for a return and we all known government can wait out the down turn.    I wonder with these three options how quickly the payoff will take to reduce the federal deficit and provide for for the payoff of Americas debt.

pic by economic data chart

Treasuries pay zero to 3 percent interest for the Federal government to borrow money.  The government financial bailout of the 700 billion sells its use at 8-10 percent.   What an interesting way to reduce the deficit!

However, the high demand for the federal debt is creating a difficult environment for any business including nonprofits to obtain corporate debt.    The lack of Trust in any other financial instruments or institution has caused corporate debt to be priced at historic highs.

Nonprofits should look to Credit Unions and Cooperative banks for better rates on their corporate debt.  Nonprofits should join the credit unions and cooperative banks serving the community they serve.

photo by olaf

photo by Spices of Life

I have discover an old way to save money so that I can pay for the extra cost of gas and still have the money to take the family out for miniature golf and dinner.  You can thank my six year old to remind me of the days of preserving food either via canning or freezing.

The key areas to save are to utilize fruits and vegetables that are in season and create the base or final product that you, your family or the organization use.  For instance a crate of tomatoes and the ingredients to make spaghetti sauce can be produced in one day of cooking and canning and save you lots of money for the following six months.  We use sauce a minimum of once a week and enjoy the savings each week.   A little trick I learned to help you busy folks.  Once you ground up the tomatoes put them in the Tupperware or similar container and set overnight in the refrigerator; the pulp will separate.  While it will require have less time to boiler out the water, it does decrease the amount of time to blend the favors.

When it comes to pesto, the olive oil and ingredients freeze real well.   Use the small containers that are about the 2-inch size. It does not take much to give you the taste you want.

Do not limit yourself to a vegetables current form.  My favorite is Zucchini Bread.  It freezes well after you make it.

Try freezing the fruits or making the jams and using them to add to your yogurt.  It is a whole lot cheaper to buy plain yogurt and add your own favors.  You never have to think about what is on sale.

Some of you might be thinking, wow this is time consuming.  You are wrong.  It is just enough of your time to prepare for a large dinner party but once it is over you have the fruits of your labor for months to come and the savings to show for it.  The reason canning works best is that it does not require storage in the refrigerator.  I estimated that base on our small family garden for four and buying at the farmers market in bulk and doing the canning and freezing that our family saves about 20 dollars at a minimum a week.  All it took was planning.  Getting the two boys to help was easy.

P.S. The child whom hates vegetables loves the pesto he helps to make.  He even likes spinach because it makes the cheese in the lasagna firmer.

Oh, do not forget that you know the food is healthy because you made it and it does not include all of the sodium and other ingredients you prefer to avoid.

How much could you save?  How valuable is money to you or your organization? Is saving $400 worth it?  Is saving $1,000 worth it?  What if an employee doing this you could use the money their savings for retirement?  What if the employee could use that money to save for their child’s college fund?  What if an employee could use that money to buy pampers for their infant?  What if your organization could save thousands of dollars each year, teach individuals the skill to maximize their dollar on food costs and use that money to cover the increase in fuel costs?  What if possibilities do not have to be a dream?   Make a plan, implement it and watch the dreams become reality.

Photo by Molito66

You thought you were exempt from paying taxes because you got tax exempt status from the IRS?

Photo by Sage

Not paying payroll related taxes and fees can end in bankruptcy and personal liability. Know your fiduciary responsibility.

According to the General Accounting Office 1.6 million businesses owe $58 billion in unpaid payroll taxes.

25% of the unpaid total is from businesses with more than three years of unpaid payroll taxes.

In recent reports on the nonprofit companies there has been lots of discussion of the viability of many organizations to survive during an economic downturn.  The choices that a nonprofit has to make between services and expenses at times can be difficult.  It is important to note that while not paying bills to certain creditors may be an option, if Management and/or the Board make such a  decision not to pay taxes, you can become personally liable for said decision.  Consult an authority before taking such an action.  Late is one thing, not paying is another.

The cheapest way to save money is to take a little time and clip coupons that come out weekly with your local paper. If you plan meals around the coupons that meet your dietary needs you are guaranteed money. For a family of four this is easily a $20 savings each week. Nonprofit organizations can save 100’s. You can prepare during the commercial breaks when watching TV. For those of you willing to do some research try the Internet and contact the manufacturing of products you like or coupon sites.

According to the Wall Street Journal and checking out some web sites myself, there are two web sites which I feel offered the best return for coupons and worth checking out to save money.   The web sites are:

http://www.thecouponclippers.com/

https://www.centsoff.com/default.asp

Just because some things cost a lot of money does not mean you can not buy it. By saving your small money each week it adds up to big money. When you buy the thing you want you feel like a genius. After you do that you feel proud of your self.

Money just takes time.