Friday, April 5, 2013

Money and Life | A story about money that will change your life.

http://moneyandlifemovie.com/

Be Nice. Fund Results. Minimize Hassle. Help Out.

SSIR Opinion & Analysis

By Kevin Starr

A few weeks ago we had a meeting of our poverty-solutions funding group, Big Bang Philanthropy. As a group, we're committed to the idea of high-impact, low-hassle funding. The high-impact part requires high-quality due diligence; the low-hassle part means doing it efficiently and respectfully.

To inform our meeting, I asked a bunch of people who do the real work on the ground what it means to fund well. I ended up with thoughtful responses from a range of high-performance organizations. Here is what they had to say.

Be nice.

This isn't as simple as it sounds. There is a profound asymmetry of power in social sector funding, and it manifests in myriad ways. Out-and-out discourtesy and disrespect are not common, but they are not as rare as they should be. What is common is the simple thoughtlessness of the unaccountable: the unreasonable deadlines, the artificial urgency, the unexplained delays—all the stuff that we can get away with and they can't. All they want is for us to treat them like we'd want to be treated—to respond with the same alacrity we expect from them, return emails and calls, be on time, and generally not jerk them around.

Be clear on your process.

They need to know up front how you make decisions: exactly what you need from them, what the process looks like, and how long it will take. Communicate it clearly, and stick with it. They know you have to do your job, and they're not unsympathetic, but they need you to get it done. They'd rather get a clear and reasoned "no" than a long, mystifying, and unproductive process that comes at the expense of other opportunities.

Use what they've already got.

Writing one-off material diverts staff from more productive work and is a huge time suck. Often the thing you want to know is in the material they already sent you, or you can easily find it in other materials they've produced (such as quarterly reports). They need us to understand how hard it is to continually produce funder-specific material: Everyone realizes that good due diligence sometimes requires very specific material, but a lot of what foundations ask for can feel like job security. Also, having to write proposals for small-to-medium grants is a real drain on organization resources—and please, please keep your proposal format is simple as possible.

Fund results.

These guys want funding based on impact. As one put it, they don't get hassled enough about results, and they get hassled way too much about indirect costs and overheads. Without the context of results, the whole discussion of overhead is meaningless. They want to be judged on the basis of overall bang for the buck and given unrestricted funding to get the work done in the way they see fit. And unsurprisingly, if they're hitting the ball out of the park, they'd like multi-year funding commitments so that they can actually plan for the future.

Dig deep.

Read the stuff they send you; ask the hard questions. They don't mind being grilled; what's painful is when funders jump to rapid and fixed conclusions, settle for superficial impressions, or prematurely abandon important lines of questioning. While it's always hard to hear "no," it's a lot worse when it feels like the funder didn't really understand what you do.

Don't promise what you can't deliver.

When decision-makers and their field representatives are not well aligned, the most well-intentioned funder can lead organizational leaders down an extended and unproductive garden path. It's great to be able to show genuine enthusiasm in the field, and it feels really good to offer the prospect that you will fund high-quality work will be funded, but it's all too easy to give cash-strapped organizations a false sense of the odds. Be realistic with yourself and with them about what lies between your current enthusiasm and eventual cash in their bank account.

Fund their idea, not yours.

Understand their work, and fund it if you like it. Don't try to persuade them to do something else—or worse, offer them money to do it your way.

Give feedback.

The only way they'll get better at raising money is if we give honest feedback, and besides, it sucks to get turned down and not know why. We're their only window into the mysterious world of funding, and whether or not a given process leads to funding, they'd like to hear about how they could do it better—even if the truth is a little painful.

Connect them to other funders.

We are their best connection to other funders—by far. If we believe in those we fund, we ought to introduce them to other good prospects. It's a hugely valuable service to both doer and donor.

While I've tried to keep front and center in all that our Mulago Foundation does, this little project helped me see specific ways that I could be doing a better job. This stuff is reasonable and there's really no excuse not to do it. The truth is that impact is a lot harder to come by than money, and we whose job is to fund impact should be profoundly grateful to those who can create it. We're every bit as dependent on them as they are on us: Our money means nothing unless someone turns it into real impact. We would do well not to forget it.

Sent with Reeder


 (verzonden vanaf tablet)

Only a Tiny Percentage of Americans Opposed to Breaking Up Big Banks

The Big Picture

50% In Favor of Directly Breaking Them Up … Many More In Favor of Stopping Artificial Support and Letting them Shrink On Their Own

A new Huffington Post/YouGov poll finds:

Sixty-one percent of respondents said that banks and other financial institutions have become too large and powerful ….

A Rasmussen poll conducted last month found that:

A new Rasmussen Reports national telephone survey shows that 50% of U.S. Adults favor a plan to break up the 12 megabanks, which currently control about 69% of the banking industry. Twenty-three percent (23%) oppose breaking up the largest banks, while another 27% are undecided.

While polls show that Democrats favor breaking up the big banks more than Republicans, many Republicans point out that the big banks would fail on their own if the government stopped bailing them out. Indeed, a Harris poll from last year shows that 87% of Republicans are against bank bailouts. In other words, the percentage of Americans who favor breaking up the big banks – either directly through government intervention or indirectly by pulling the plug on their taxpayer life support – is probably more like 90-99%.

The 27% of Americans who don't yet have enough information to decide whether they are for directly breaking up the big banks may want to note that the following top economists and financial experts believe that the economy cannot recover unless the big, insolvent banks are broken up in an orderly fashion:

  • Current Vice Chair and director of the Federal Deposit Insurance Corporation – and former 20-year President of the Federal Reserve Bank of Kansas City – Thomas Hoenig (and see this)
  • Former Federal Reserve Bank of New York economist and Salomon Brothers vice chairman, Henry Kaufman
  • Dean and professor of finance and economics at Columbia Business School, and chairman of the Council of Economic Advisers under President George W. Bush, R. Glenn Hubbard
  • Former chief economist for the International Monetary Fund, Simon Johnson (and see this)
  • The leading monetary economist and co-author with Milton Friedman of the leading treatise on the Great Depression, Anna Schwartz
  • Economics professor and senior regulator during the S & L crisis, William K. Black
  • Professor of entrepreneurship and finance at the Chicago Booth School of Business, Luigi Zingales
  • The Director of Research at the Federal Reserve Bank of Dallas, Harvey Rosenblum
  • Director, Max Planck Institute for Research on Collective Goods, Bonn, and Professor of Economics, University of Bonn, Martin Hellwig

And the head of the New York Federal Reserve Bank – and former Goldman Sachs chief economist – William Dudley says that we should not tolerate a financial system in which certain financial institutions are deemed to be too big to fail.

Federal Reserve Board governor Daniel Tarullo also backs a cap on the size of banks, and Former Treasury secretary under Reagan and George H.W. Bush, Nicolas Brady, says that we need to put a cap on leverage.

The undecideds may also want to note that many top bankers are themselves calling for a break up, including:

  • Former managing director of Goldman Sachs – and head of the international analytics group at Bear Stearns in London- Nomi Prins
  • Numerous other bankers within the mega-banks (see this, for example)
  • Founder and chairman of Signature Bank, Scott Shay
  • Former Natwest and Schroders investment banker, Philip Augar
  • The President of the Independent Community Bankers of America, Camden Fine

Click here for background on why so many top bankers, economists, financial experts and politicians say that the big banks should be broken up.

Sent with Reeder


 (verzonden vanaf tablet)

Foundations and Impact Investing: What Is Really Going On?

The CEP Blog

Impact investing has been hailed as potentially transformational by nonprofit sector, corporate, and foundation leaders. Elizabeth Littlefield, President and CEO of the Overseas Private Investment Corporation, has called it "the game-changer we need in the quest to end poverty" that will allow us to "solve many of the world's social problems while making attractive financial returns."

The difference impact investing will make has been compared to venture capital's impact on the private sector, something that Ronald Cohen and William A. Sahlman argue "will bring much needed change to the social sector."

I'll admit that, though I am excited about the promise of more capital deployed to do good, I find myself looking for some hard data to back up these assertions.

At this point, I simply have too many questions. What is impact investing, exactly—and where is the data on its performance? And, given that it sounds almost too good to be true, should we be worried that maybe it is?

Perhaps most relevant for us at CEP, what is the role of foundations?

In many of the accounts heralding impact investing as the potential solution to the world's ills, foundations, with their more than $300 billion in assets, are featured prominently. They are portrayed as leaders, or likely leaders, in this new realm. A story on American Public Media's Marketplace reported:

Private foundations have always been legally allowed to invest their considerable endowments in social causes. It's just that most of them chose not to, preferring to separate the Wall Street side of the organization that handles bank accounts from the Skid Row side that handles charitable giving. That's done in the form of grants, usually around five percent of assets each year because that's what the IRS requires. The Wall Street side earned money, the grants side gave it away. That's changing. Foundations increasingly see for-profit investments as a tool to do their social good, sometimes as a better tool than grants.

But it is unclear to what extent the claim in the Marketplace story is true; that is, whether there is a broader trend among many foundations to practice impact investing, or simply media interest in a few important, but isolated examples?

Clearly, there are some major foundations that have taken significant and important steps into impact investing, such as the W.K. Kellogg Foundation (see CEO Sterling Speirn's excellent post on Kellogg's experience for the CEP Blog) and The Greater Cincinnati Foundation. But, beyond a handful of much discussed examples, it is unclear how much of the talk about impact investing is just that—talk—and how much is reflected in actual practice. (Disclosures: Kellogg is a grant funder and client of CEP's; Greater Cincinnati Foundation is a client and its CEO, Kathy Merchant, is our board chair.)

On the other hand, I have heard many foundation CEOs and board members eschew the idea that they'd ever seek anything other than maximum returns for their foundations' endowments.

A little hard data would be nice, at this point, to bring the prevalence of this practice into focus.

CEP has been gathering some data on this, most recently in a broader survey of CEOs we will share results of at our conference next month and in a report we'll publish later in the year. What we know at this point seems to indicate that a majority of our respondents (foundation CEOs with grantmaking budget of $5 million or more; 45 percent response rate—total of 211 responses) are either doing "impact investing" or considering it. Thirty-five percent say they are doing it; 23 percent are considering it. And 42 percent say they aren't doing it and aren't considering it.

So perhaps my skepticism is misplaced and the Marketplace story's idea that the practice is becoming more widespread is correct. But, frankly, we don't entirely know what to make of that data—because definitions of "impact investing" vary so widely and because this was a broad survey that covered a range of equally important topics covering a range of topics.

To be sure, the responses to our survey question seem to indicate that something is happening—meaning there is much more still to understand. That is why we at CEP are planning a major study on foundations and impact investing. In it, we'll ask much more granular questions, about definitions, about whether impact investments are coming out of the grants budget or endowment investments, and about amounts deployed. We'd also like to get a sense of their performance, both in impact terms and with respect to financial terms. In short, are impact investments living up to the hype?

That's also the question that will be at hand during a session at our national conference May 21-22, which will bring together leading thinkers and practitioners, as well as a skeptic, for a robust discussion. Kathy Merchant and Sterling Speirn will be a part of the session. Also speaking will be Nonprofit Finance Fund CEO Antony Bugg-Levine, and co-author of the book Impact Investing: Transforming How We Make Money While Making a Difference, and Social Finance CEO Tracy Palandjian.

Just how big is the impact investing trend and what difference will it make?

To us, the answers remain unclear. But we're working toward clarity, and we hope you'll help us get there.

 

Phil Buchanan is President of CEP. He is also a regular columnist for The Chronicle of Philanthropy. Follow him on Twitter at @philCEP and join the conversation on Pursuing Results at #CEP2013.

Sent with Reeder


 (verzonden vanaf tablet)

Thursday, April 4, 2013

I thought you'd find this interesting...

Check out this article:Ex-Goldman Trader Was Going To Be Paid $2 Million At Age 29 But He Wanted To Boost His Rep So He Amassed An $8.3 Billion Bet ( http://www.businessinsider.com/matthew-taylor-compensation-at-age-29-2013-4 from businessinsider.com )--DoenDenkers®

Tuesday, April 2, 2013

China in Africa: Really Rubbery Numbers

China in Africa: The Real Story
An article in the South China Morning Post "Rubbery Numbers Add Up to Big Role for China in Africa," (March 29, 2013) illustrates the pitfalls of journalists relying on "experts" who parrot the conventional wisdom but don't really know what's going on. Here are three examples:

According to "expert" #1:
the cumulative Chinese investment in sub-Saharan Africa totals US$220 billion.
I hope the reporter simply got this quote wrong. It's actually quite close to the figure for China-Africa trade for 2012. But FDI?! 

The Chinese official figures are around $16 billion for cumulative investment in Africa. This is certainly an underestimate, but the real figure is nowhere near $220 billion! Even the figures provided by Derek Scissors' China Investment Tracker at Heritage, who tracks the value of all deals at $100 million and above (i.e. the expected value, not the actual investment flows), has a value of about $40 billion. It's silly figures like this that continue to create a distorted image of a frighteningly enormous dragon hoovering up resources across the continent.

Then we hear from "expert" #2: "There had been anti-China sentiment in African countries like Zambia, because of the Chinese workers brought in for large construction projects."

Yes, there was anti-China sentiment in Zambia, but it was largely over labor and safety standards in Chinese mines (Zambian workers were protesting this) and the presence of Chinese traders. It was not about Chinese workers brought in for construction projects, because most of the workers on those projects are Zambian. The film "When China Met Africa" illustrates those conflicts beautifully.

The SCMP article ends with this quotation from "expert" #3:
"The problem for China is it prefers to cultivate relationships with African leaders who kowtow like deferential courtiers. When the people in these countries feel left out and vote out their disconnected leaders, what will China have?"
It's a good sound-bite. But what evidence do we actually have that "China" prefers to cultivate relationships like this? And what evidence do we have that regime change away from governments friendly to the Chinese leads to losses for "China" or its businesses? 

I'm not sure how we should measure the cultivation of relationships in Africa: frequency of visits by top leaders? Size of economic engagement? From frequency of visits, the top countries are Egypt, Tanzania, South Africa and Morocco -- they've each had four visits from China's top leaders (president or premier) since 1995. From the economic data, it looks as though China's largest economic relationships in Africa are with Angola, South Africa, and Algeria. These don't strike me as countries led by China's "deferential courtiers". 

And contrary to the assumption in this quotation, when governments viewed as friendly to the Chinese have been voted (or thrown) out, the Chinese do not seem to experience business losses. Zambia, Ghana, Niger, and Guinea are all good examples of this. On the other hand, the Chinese have had huge losses in Libya, but they had a very sour relationship with Gadaffi, so this doesn't fit the assumption either. Reporting that confirms prejudices rather than investigating the reality of a situation does no service to our understanding of this complex relationship.


Sent with Reeder


 (verzonden vanaf tablet)

Sunday, March 31, 2013

The Ten Best Employers To Work For

The Big Picture

Charle Hugh Smith is an author. He blogs at Of Two Minds.

~~~

The insecurity of self-employment can generate a far more resilient life and mindset. There are all sorts of "10 best companies to work for" lists, but I've assembled a slightly broader list: The Ten Best Employers To Work For. Without further ado, let's go to number 1:

1. Yourself

Surprised? Expecting Google or Zappos? The National Security Agency? Nope, not even close. It's you–yes, you, Bucko. You're the best employer to work for. OK, on to the rest of the list:

2.  Yourself
3.  Yourself
4.  Yourself
5.  Yourself
6.  Yourself
7.  Yourself
8.  Yourself
9.  Yourself
10. Yourself

Aren't you glad I didn't make this a "100 best employers" list?

Before you start nitpicking the list: yes, there is only one of you, so the list is somewhat repetitive.

And yes, there are some downsides to working for yourself. For example:

1. There's no point in leaving a snippy note on the fridge to the sneaky co-worker who stole your bagel: oops, you ate it during coffee break #3 without noticing. Dang, accepting responsibility sucks.

2. When you launch a full-blown rant against your psycho, control-freak, demanding boss, you're doing so in front of a mirror. Sigh–it's just no longer fun blaming the boss.

3. Excuses don't fly too far with clients and customers.

4. Nobody cares when you show up or how productive you are except you.

5. Shouting "Take this job and shove it" isn't quite as satisfying.

All those stupid regulations you chafed under: gone. All those impossible demands that stressed you out: gone. All those shiftless, incompetent co-workers: gone. Time cards: gone. Staff meetings: gone. People to blame for your troubles: gone. Paycheck: gone.

Do you really miss anything but the last item? But really, wasn't that paycheck the chain that bound you to serfdom?

Here's the dirty little secret of the U.S. economy: you're already working for yourself now unless you're in the Armed Forces or a civilian equivalent. The clock is ticking on all those promises of pensions and benefits for life you think separate you from the self-employed entrepreneur. Maybe the promises pay out for a few more years, maybe even a decade, but they are impermanent for the simple reason that the promises made (and the nation's debts) far exceed the economy's ability to pay those promises and debts in dollars retaining today's purchasing power.

Either the promises will be broken/defaulted, or a $2,000/month pension will buy a loaf of bread and a gallon of gasoline. There is no other end-state other than default or inflate-away-the-debt/promises.

You already know how "valued" you are by your corporate/agency employer. All that rah-rah "team-building" stuff is nice for the younger employees who are still naive enough to believe the propaganda at face value, but once the layoffs start again (if they ever stopped), then all that rah-rah cheerleading loses its sparkle.

Many employees are waking up to find themselves in 1099 nation: no benefits, no tax withholding, no matching 401K, no status as an employee, just a contract and a 1099 statement at year end.

In a sense being self-employed simply means stripping away the artifice that somebody else is going to take care of you or give you "free money." Once we understand the promised security is bogus, self-employment doesn't feel so risky–it feels like embracing the risk that is hidden behind the flimsy facade of team-building, "guaranteed" pensions and all the rest of the unpayable promises.

The self-employed person generally trades "security" for job satisfaction. The compensation may be higher or lower, but it will likely be lower. The earnings will likely be more sporadic and uncertain.

People Are Beginning To Realize Self-Employment Isn't All It's Cracked Up To Be

But ironically, perhaps, the insecurity of self-employment can generate a far more resilient life and mindset. Instead of counting on Big Brother in one form or another to provide retirement, the self-employed person builds their own human, social and financial capital. Those who rely on Big Brother are terribly vulnerable should Big Brother fail to make good on on his extravagant promises to 310 million people.

Gaining power and control over your life doesn't come cheap. Does anything really worthwhile come cheap? Knowledge, tradecraft, experience, networks of trusted suppliers, expertise: none of them come easy or cheap. All must be gained the hard way.

No wonder self-employment is down. It's tough to scratch out a living as an entrepreneur. It can be wearisome, but never as wearisome as a job you loathe.
Fewer people choose to be self-employed (USA Today, 9/11)

 

In August, 14.5 million people were self-employed, down 2.1 million from the most recent peak in December 2006, according to Bureau of Labor Statistics data.The number of "incorporated" self-employed workers — those who incorporate to gain legal protection and other benefits — began its decline in 2008. Last month, 5.1 million people were in this category, down 726,000 from August 2008.

Unincorporated self-employed — at 9.4 million last month — has changed little since last spring. It's hovering at its lowest level in 25 years, says BLS economist Steven Hipple.

Working for others is a good idea while you're building skills and networks. By all means, work for someone else while you're learning the ropes, and give them 150% value on the paycheck they hand you. Heck, if you find a decent employer, work part-time for them while you build your own income streams/career. You might even work part-time for several like-minded people and yourself on the side.

Interestingly, this survey found that the self-employed often see their work as helping society. How many employees feel that? I mention this as an example of the intangible benefits of working for yourself.

Take this Job and Love It (Pew Research)

The Rise of The 1099 Economy: More Americans Are Becoming Their Own Bosses (Forbes, 7/12)

 

According to research by Economic Modeling Specialists International, the number of people who primarily work on their own has swelled by 1.3 million since 2001 to 10.6 million, a 14% increase.This rise is partially reflective of hard times, and many of the self-employed earn only modest livings in fields such as childcare and construction. However the shift to self-employment is likely to accelerate in the future, and into higher-paying professions, for reasons including the ubiquity of the Internet, which makes it easier for some types of business to use independent contractors, as well as the reluctance of large firms to hire full-time employees with benefits.

How can self-employment be falling and rising? It depends on how you count the self-employed. The Bureau of Labor Statistics (BLS) divides the self-employed into two categories, incorporated (about 5 million) and unincorporated (about 10 million). Incorporated self-employed people are often professionals such as doctors, accountants and attorneys who value the legal benefits of a corporation or LLC (limited liability company).

To further confuse things, the BLS counts the incorporated self-employed as "wage earners" because they draw paychecks from themselves. So right off the bat we find a confusion between 14.5 million (total BLS self-employed) and the 10 million (the unincorporated self-employed) reported by the BLS as self-employed.

Self-employment in the United States (BLS)

The private research firm mentioned above clearly counted those getting 1099s as self-employed, even if they are contract workers laboring alongside employees, as is often the case in Corporate America. It appears there are about 7 million people in 1099 nation, hence the other total of self-employed you see in print, 22 million.

So the conventional self-employed may be declining while the involuntary self-employed (those getting a 1099 instead of a paycheck) is rising. Of course it's rising: the ObamaCare neutron bomb is about to go off, making employee benefits unaffordable to businesses large and small.

ObamaCare: The Neutron Bomb That Will Decimate Employment (February 22, 2013)

Right now the self-employed–an enormously diverse mix of everything from micro-sized eBay businesses netting a few thousand dollars a year to professional corporations–comprise about 10% of the workforce (14.5 million self-employed, a total employed workforce of about 142 million). Add in those now getting 1099s instead of paychecks (7 million) and perhaps 14% of the workforce is self-employed (or at least responsible for paying their own quarterly taxes and healthcare insurance–slick move, Corporate America!).

For reasons I will discuss tomorrow, this number is very likely to rise.

But why, you ask, is working for yourself so great? I'll tell you why. Where else will you find a boss who knows your foibles, flaws and strengths so well? Where will you find a more forgiving boss, one who really understands what makes you tick? What other employer will give you the day off to go fishing because you really need a break? What other employer is going to let you keep everything you earned for the enterprise? And best of all–where else can you be boss and not have to deal with employees?

Sent with Reeder


 (verzonden vanaf tablet)