The NonProfit Times - November 1, 2008 - (Page 15)

GENERAL RAMBLINGS PAUL CLOLERY Liquid Assets It’s time for foundations and endowments to get in the pool T he old joke is “a billion here and a billion there, before you know it you’re talking about real money.” There’s nobody laughing at the U.S. and world economies these days. Putting aside the disaster in the stock market for one moment, the credit market is of much more concern to the day-to-day operation of the charitable community. The $750-billion bailout of banks and investment houses by the federal government has ordinary citizens and business leaders in the lurch. Where’s the help -- note that word wasn’t bailout -- for folks for whom just $750 might make a huge difference? The ability of charities to apply for and receive loans from banking institutions is critical to mission and the tightness in the credit markets has become dangerous to the very fabric of the nation’s social safety net. Many organizations need simple bridge financing for the period between when a program starts and when a grant check arrives. Most charities and businesses have a line of credit that allows money to be drawn to get organizations through those lean weeks or months. Banks are beginning to close credit lines that are not in use and are making it more difficult for charities to qualify for those bridge loans. Charities don’t generally have much collateral that banks would be interested in. And, banks certainly don’t want more real estate backing loans on the books. Council on Foundations CEO Steve Gunderson has been calling on foundations and organizations of all types to change the concept of charity to a broader definition of philanthropy.Here’s his chance to step to the plate. According to the most recent figures from The Foundation Center, the top 10 foundations had assets of roughly $117.5 billion. According to the Digest of Education Statistics, the 10 largest endowments at colleges and universities totaled $118.2 billion, basically $700 million more than the top 10 foundations.That’s a combined $235.7 billion for those doing the math. Under the direction of the Council on Foundations, roughly 0.5 percent of those assets should be put into a cash account.That’s roughly $1.17 billion. Any foundation interested in joining the cooperative should be permitted to do so. A board made up of foundation and education executives,a dozen in all,would manage the money. The funds would be made available at 3 percent interest to cover processing and staffing costs.The office should be thinly staffed to keep overhead low enough to be covered by that 3 percent. These would be straight loans, shortterm, for a period not to exceed 24 months.The money would not be to construct new facilities or to pay down debt. It would be simple cash flow. No organization would be eligible to borrow more than $500,000, although multiple loans, not to exceed $500,000 total, could be made at the board’s discretion. The organization would go out of business 36 months after the last loan is approved. The total lifespan would be 60 months, the length of many car loans.The organization’s charter would clearly state that the 60-month window could not be extended. If the country isn’t out of this credit and cash crisis at that point, there’s a completely different set of needs that will be required and nobody wants to look into that abyss right now. There’s no doubt that the assets and endowments have suffered during these past few months and those numbers quoted by various reporting agencies have declined. But in the grand scale of the foundation and educational endowments, 0.5 percent of the collective asset is sand on the beach that could be squeezed into a diamond. It’s in the best interest of foundations and educational endowments to ensure that their respective communities remain strong. A short-term loan program for organizations that have nowhere else to turn will go a long way to keeping many organizations operational, delivering services to communities that need them. NPT NOTHING IN THE WORLD EVER CHANGES UNTIL THE RIGHT ORGANIZATION GETS A CRITICAL MASS OF THE RIGHT PEOPLE TO COMMIT TO THAT CHANGE. The Matale Line exists to help you become that organization. We are a collection of communications experts, versed in a range of disciplines, from strategy, branding and fundraising to advertising, interactive, public relations, direct mail and video production. Each of us believes that good intentions are never enough. That nothing in the world will ever change until the right organization gets a critical mass of the right people to commit to that change. Which brings us back to you. What change do you want to effect in the world? Who comprises your critical mass? And what exactly do you want them to do? Answering such questions accurately offers a real chance to put your organization into the role of catalyst—a true leader of social change. Dialogue. Debate. Maybe even a little discomfort. Are you ready? Call Bill, The Matale Line’s managing director, at 206.343.9000. Or email bill.toliver@mataleline.com Pr o g r e s s i ve co mmu ni cati o ns fo r no np r o fi ts. mataleline.com NOVEMBER 1, 2008 THE NONPROFIT TIMES www.nptimes.com 15 http://www.mataleline.com http://www.mataleline.com http://www.nptimes.com

Table of Contents Feed for the Digital Edition of The NonProfit Times - November 1, 2008

The NonProfit Times - November 1, 2008 Reach Out Community Investment Loans Agencies Aim For Back Office Savings Contents Page 4 Special Report: An In-Depth Study of America's Largest Profits Charity Accounts Foretold Ecomonic Meltdown Liquid Assets Groups Shaving Expenses With An Eye Toward ROI Green Is Good Governance Becoming Institutionalized National September 11 Memorial & Museum Finds Its Footing NPT 100 Groups Turning Real Estate Into Cash NPT 100 Investments Beat Broader Market The NPT Power & Influence Top 50 Gala Calendar NPT Jobs Resource Directory

The NonProfit Times - November 1, 2008

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