pic by Eli the Bearded

In January the savings rate rose to 5%.  The highest rate in about 14 years.  To the degree possible each of us should have three months worth of expenses saved for emergencies.  The same is true of any business.

The recent credit freeze on businesses only underscored this truth.  Credit lines are available at the discretion of the financial institution.  The use of savings and credit lines together are the best tools for businesses to have.

Nonprofits seem to be doing a better job  in cutting costs and adjusting to the market place than than government.  The government should learn to work more like nonprofits before they owe too much.

pic by dullhunk

The taxpayer over two decades paid billions to create the software used to run the electronic medical record system of the Veterans Health Administration. This public domain software is utilized in 1,400 Veteran facilities.  The use of the federal stimulus money should only support an approach that utilizes this free software. Thereby, the only added cost is hardware and the services of a company to implement and maintain the system. 

Why create ones own rat race towards the electronic record when it is already done and free.  What a great way to automate health care records cheaply.  There is no more excuse that automation is unaffordable when software exists that is part of the public domain for free and it is being used in 1,400 facilities. 

pic by PBS Hawaii.org

President Obama asked his Cabinet members to identify $100 million dollars in savings over a  90 day period.  Critics found it to be an opportunity to pock fun and promote their opposition to the stimulus bill.

Building a sound budgeting process begins one dollar at a time and one program at a time.  The first $100 million , the next $100 million and the next $100 million, etc..  all eventually add up to a figure that makes a substantial impact.

The budgeting process for 2010 will begin soon to cut programs that have historically been over budget or failed to deliver adequate results.   Organizations need to be able to measure outcomes for the funding they receive during and after their use of said funds.

Below I have provided a few suggestions for cutting costs or gaining revenues.

1. No more Saturday mail service
2. Create kiosks in malls for online paying of government services
3. Require each school district to utilize advertising on buses/vans to offset transportation costs.
4. Require all public schools to affiliate with arts and music programs base on a standard for all students.
5. Require a % of funding to arts and music organizations go to serve public school students as a first priority.
6. Turnover conservation and maintenance of all parks to nonprofits in the business of park and recreation services.
7. Discharge those in prison for minor drug offenses  and give them community service.  The average cost of $20,000 for incarceration is so inefficient.

pic by lisashort staff 333

Check out the Kindle by Amazon as a solution to increase the accessing of knowledge by students.  It is also a resource to create a reduction in the budget of the cost of textbooks for schools, it has an ability to search content, it has an ability for students to write notes in the margin and no back pain for the students from being loaded down with textbooks.  As an electronic instrument set up for individual needs and interests the IT unit of the school can ensure the tools for each student is one step away from them.

Great idea for businesses and foundations to support their local public schools and see an immediate result.

cartoon by katherineelizabethtaylor

The main ingredient to the economic recipe for success is people.   In the past the emphasis was on increasing the productivity of people.  This has lead to a decreasing  pool of qualified individuals available in the workforce. However, all is not lost.  There has been a recognition that a nation of educated people creates a strong economy.  There has been a recognition that an educated work force creates a stronger foundation which strengthens the nations ability to confront the ills of the economy. There is the recognition to use the skills and assets of government and its policies to promote positive change.  There is a recognition that health care costs, education costs and reliance on foreign fuel hurt the economy.

Regulations and investments by government enables businesses and individuals to participate in the economy in a fair manner.

Nonprofits as one of the largest employers in the country needs to continue to be accountable to the public.  As businesses exempted from paying taxes on income nonprofits need to stop complaining about why they should pay high compensation to compete for talent.  Nonprofits need to modify their behavior on compensation policies to reflect their accountability as public charities.  Instead of comparing salaries to for-profits of similar revenue size salary comparison should be limited to government salaries of agencies dealing with the service sector the nonprofit represents.

So have your board make drastic modifications to compensation policies and support capping compensation for management.

posted on Flickr by King

Most individuals like to complain about where their money goes when it comes to government.  One area of complaining is about the disposal of trash.  It is a cost to government that continues to grow and yet very few want to pay more for government services.

Individuals and companies are the consuming the products and creating the waste.  Just because it is out of sight does not rid anyone of their responsibility for appropriately paying for their waste disposal.

The effective way to best way to clean up the mess and to adequately fund waste disposal is to have regulations that require the creators of the product build into the price the cost of waste disposal.  The harder it is to recycle the product the higher the price.  No product should be exempt.This will provide a market incentive to produce products that can more readily recycled and at cheaper costs.  It will discourage the production of high environmental toxins because their price to compete will be higher.

This will create new jobs in local manufacturing to create more environmental friendly and easy to recycled products for the next century.   This will create incentives for new entrepreneur businesses to form to meet this need.

Like for-profit entrepreneurs it is an opportunity for new nonprofits to evolve to address similar concerns.  For the current nonprofit community it is an opportunity to revolve as well to embrace ways to deliver their products and services.

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.

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 daniel</geek)

Congress has done its piece.  Prepare now by partnering with other nonprofits, foundations, donors and businesses to maximize the federal dollars to go even further.

(pic by daniel</geek)

Investors should be considering Nonprofit and government Bonds.  Citigroup sold 12 billion dollars in bonds at 3.25%.  The reason for the buying was it was backed by a guarantee of FDIC and it paid 1% more than Treasuries.

What investors forget is much of the tax exempt bonds are also government backed, but not by the federal government.  The federal guarantee needs to be offered for nonprofit bonds, especially in the area of affordable housing, education and energy conservation.  Promote nonprofits as a great investment.  Show how the organization is not speculative in its venture and its long term commitment to the venture fits the mission.

It is time to build those bonds with investors.