Recent court rulings are showing that a person mortgage sold to an investor may not truly be own by the investor since they never truly took possession of the loan.  The term is called an assignment which is a transaction that a buyer of the mortgage securities has to do for each loan.  Courts have ruled that unless the assignment document was completed the entity filing for foreclosure may not have the right to do so.

In addition, the federal government is trying to have the industry freeze rates of individuals who meet certain guidelines.  This bailout does not attack the problem in which loans were provided that should not have been created.  If the terms of a loan are bad and the entity knowingly is processing them should that be allowed?

Foreclosure is a punishment to the investor and to the degree it hurts all the better when the terms were inappropriate.   However, if the owner of the property could have afforded said property under the right conditions and those conditions result after a foreclosure, I would suggest to the many housing advocates, buy the properties cheaply and provide affordable loans to the families and individuals.

The vacant buildings shows that  the nonprofit housing community, federal and state governments are providing more talk then housing.  Talk is cheap.  Let the investors take the losses and gain affordable housing.

Nonprofits who have the funds, invest in housing that is affordable for your employees.

Businesses, cities, towns and states help support teachers and nonprofits provide affordable housing to these employees in the community in which they work.

Credit Unions are nonprofits and owned by their members. These organizations, while functioning as banks, are not making business decisions to maximize investors’ returns. They are making business decisions to maximize their ability to serve their members.

Micro-lending by banks is a profitable area. It is even more profitable overseas. The interest being charged approaches in many cases 80% plus with fees. Micro-lending is projected as an option to help out individuals who are motivated to break out of poverty.

Credit Unions should get into the field and make a difference for many people and provide more reasonable rates. The nonprofit community is especially use to many of its employees sending money to their overseas family members. The nonprofit community knows what it takes to make a difference with those in poverty looking to start small businesses or buying an item. Many individuals in poverty pay cash and do not carry credit cards. Credit history is their word and reputation. Today, traditional banks have lost the “know your neighbor” banking.

Credit Unions are the institutions closest to the true meaning of community banking.

Most organizations do not function seasonally but seem to make raising money a seasonal focus.  Thereby creating donor fatigue during the November and December months.  I have received 19 solicitation since I began counting November 1st.  I have kept three to think about and one I sent a donation. 

The one pattern I have begun to use to separate among nonprofits are those that have large endowments and pay large salaries to its management compare to those that have low salaries and little or no endowment. 

Harvard University will get no donations until they stop using loans in the financial aid packages for many students.

Salvation Army has one of the largest endowments and does not report its information via guidestar or as a 501 c 3.  It hides behind the fact that churches arenot required to file a 990. 

Red Cross pays lots of high end salaries and is too general on what services they actually provided in a state.  I got the neighbor solicitation, while I would support my neighbor and community, the Red Cross solicitation does not keep it local.  There are plenty of local groups that will better serve the effort.

So what’s an organization to do?  Be specific about whom your going to serve, the outcome your trying to achieve, and communicate more often then once a year. 

Nonprofits service millions of people each day.  The government gives a break on fuel costs to millions of individuals each day but not to nonprofits.

While non profits are exempt from paying property taxes and income taxes, they are required to pay gasoline taxes and fuel taxes and to reimburse employees for transportation costs. 

So I challenge the nonprofit community to show the government how much it contributes annually in fuel and transportation related taxes.

As the largest employer sector in the country, you make a big difference and get little credit.

Stand up and be counted.  Being part of an Association is one way to be that voice. 

An Association is usually incorporated as a 501 (c) 6 organization. It works on behalf of its members. The strength of an Association is based on its membership. The larger the membership, the more success the Association will have in producing greater results. A nonprofit or individual should pay a membership to join an Association if there are clear and measurable benefits to being a member.

The most simple measure is, “Will my organization save money or obtain additional funds by the actions of the Association?” Group purchasing is the quickest and easiest way to see results immediately. These actions create more funds by decreasing costs.

Property insurance, health insurance, dental insurance, visioin insurance, utilities, billing services, retirement plans, human resource services, accounting services, consulting services, development services, office supplies, security, bottled water, food, equipment, web services, information technology services, banking services, audit services, construction, and employment assistance programs are just a few examples where group purchasing can decrease costs.

The other part of an Association’s effort is lobbying and clearly educating elected officials. A key role they play is providing a clear voice on the economic impact of their member organizations and the criticial areas of concerns.

So take advantage of Associations where it makes sense. Make sure you never pay more than it costs your local, state or federal government for a service or product.

Insurance companies calculate the likelihood that an organization will file a claim.  They calculate how likely it is that an individual will file a claim. 

Federal and state authorities are responsible for certifying the safety of a bridge.  When a bridge is considered not sound, they weigh the likelihood of its failure.

The FDA calculates the acceptable risk to any individual, if the greater public would benefit over a few. 

Whether going to the beach, going boating, driving a car, traveling via a plane, taking a shower, sitting in the sun, skiing, eating foods, etc.; each action requires a level of risk.

Death and injury are never positive outcomes.  The human body is not invincible.  Even sitting still in one location and being frozen in fear of risk is unhealthy.  Each individual’s genetic make up, environmental conditions, and actions they take create the level of risk for any activity. 

So what can a person do?

Make yourself aware by being an informed consumer.

So what should an organization do?

Decide how to run the organization at a level of acceptable risks.  Plan ahead by creating a Risk Management Plan.  Having a plan lessens the likelihood that critical steps are not missed. 

Risk Management for your organization is not about predicting.  It is about having an ability to respond in an appropriate manner.  It is about appropriately training your staff on how to respond.  Your plan provides staff the base tool on which to be trained.

To the degree staff learn an organization’s risk management plan, they will learn valuable skills for helping their family members.

Risk is everywhere and should not paralyze an organization or individual. Be proactive, create your plan and review it with staff. 

The Wall Street Journal reported this week six banks will pay more than 5% on six month, one year CD’s or money market accounts.

AMTrust Direct

6-month CD: 5.36%

1-year-CD: 5.31%

E-Money Market: 5.31%

Capital One

6-month CD: 5.00%

1-year-CD: 5.00%

Money Market: 5.00%

Countrywide Bank

6-month CD: 5.5%

1-year-CD: 5.5%

Savings Link Account: 5.5% (on balances of $10,000)

IndyMac Bancorp

6-month CD: 5.25%

1-year-CD: 5.5%

On line Money Market: 5.75%(on balances 25,000 plus)

ING Direct

6-month CD: 5.15%

1-year-CD: 5.15%

Washington Mutual

6-month CD: 5.5%

1-year-CD: 5.1%

On line Savings: 5.0%

How’s that for giving you a safe return on principle during the turbulent market?

See if your local Bank will match the return.

In your cash flow management it may be prudent to take advantage of these types of six and 12 month CD’s. For financial Institutional Management and Retirement Plan Management I refer you to Fisher Investments which I previously mention in an earlier Blog. I would suggest John Wasiejko at Fischer Investments john@fischerig.com 603-361-4540