Plan to Sell “Toxic Assets” Announced

Today in Washington the Obama Administration announced the new plan to deal with the so called “toxic assets” that have been at the root of the economic crisis. To free up lending, this new program plans to attract private investors by offering low-cost loans from the FDIC and the Federal Reserve.

The way the program would work is that a private investors would purchase of a bunch of bad mortgage loans by putting up 6 percent of the cost. The FDIC would cover 84 percent of the cost of a loan and the remainder of 6 percent would be taken from the $700 billion in Federal bailout money.

This new program appears to get the nod from Wall Street. Many people have wondered whether Treasury Secretary Timothy Geithner would be able to recover from his first failed attempt, on Feb. 10, to unveil a bailout initiative. There was a stunning disappointment from the lack of detail. Wall Street showed that disappointment with huge losses that day.

The Obama Administration wants to get the new program out there and test the success of the program before asking for more money from Congress. They put in a placeholder request of an additional $750 billion; however voters are not so keen on further bail outs after the AIG bonus scandal.

Nonprofits have seen the usually generous public pull back on gift giving due to fears about the troubled economy. Hopefully, this program will help to get the economy back on track and get the lending going again.

Will this program help nonprofits by shoring up public confidence? Tell us what you think.

Recovery.gov

In a video on President Obama’s Web site Recovery.gov (http://www.recovery.gov/) the president promises that “The American Recovery and Reinvestment Act will be carried out with full transparency and accountability.” This new Web site will be the centerpiece of that effort. President Obama describes how we can track the Recovery Act's progress. He promises to disclose full details in a “timely, targeted and transparent manner.” Once the money starts to flow we will be able to see how that money is spent. Here is an overall breakdown of the budget:

According to the timeline, Federal Agencies will begin reporting their use of the funds beginning today, March 3, 2009. By May 3rd, Federal Agencies will make their performance plans publicly available and will report allocations for entitlement programs.

The site encourages citizens to tell their stories about how the investments are working. They also want to know what is not working. As soon as the money begins to flow into the veins of the economic machine, we will be able to communicate our perceptions of how well it is really working. Obama has told us that he will try new things and get rid of ideas that are not working so this is our chance to really get involved in our democracy directly.

During his run for president, Obama used the web and technology to reach out to his constituents and raise an unprecedented about of funding for his campaign. This use of technology in his administrations has put information directly in the hands of the people and at an incredible pace. This kind of transparency is only possible because of the Internet.

There is an interactive map under the “Impact,” “Jobs” tab that allows you look at your own state to see how much money will be used to create new jobs. In the “FAQ” section they answer commonly asked questions with links to the actual “Recovery Act” documents.

Take a look at the site. Let us know how you believe this Web site will affect nonprofits like yours. Has the recovery program had adverse or positive effects on your organization? Let us know.

Obama Signs Stimulus Bill

Denver, Colorado - President Barack Obama signed the $787 billion economic stimulus package in Denver today after the Senate passed its version of the bill late Friday. We have been waiting, what seems like ages, for news of the plan passing meanwhile each day brought news of further job cuts and business failures.

In his weekly radio and Internet broadcast, Obama said, "I will sign this legislation into law shortly, and we'll begin making the immediate investments necessary to put people back to work doing the work America needs done."

He reminded us that, "The problems that led us into this crisis are deep and widespread, and our response must be equal to the task."

The struggle in the Senate lasted weeks, with lawmakers on both Democrat and Republican sides desiring to warm up the frozen credit markets and get lending going again. There are those who have begun to call some of the failing banks “zombies” because they seem lifeless and unable to get back to lending. It is everyone’s hope that this stimulus money will get the banks’ lending again.

The question is, what will it really take to get people spending? Opinions differ widely. However, this bill's tax cuts will come in the form of relief for 95% of Americans. The amount of $400 for individuals and $800 for couples will come in the form of diminishing payroll taxes by a small amount over time. Lawmakers believe that people will be more willing to spend the small addition to their paychecks rather than hold onto such small sums.

Also included in the stimulus was $70 billion to shelter upper middle-class and wealthier taxpayers from an income tax increase and two of Obama's initiatives; the expansion of computerized information technology in the health care industry and billions to create green jobs that will hopefully, begin to reduce our dependence on foreign oil.

The nonprofit sector will see billions infused into schools and local governments to help prop up jobs. Will this stimulus package restore our faith in the financial system? We wait with expectation to see if this new administration can begin to defrost the frozen economy. What are your thoughts?

I Have a Dream…

How far we have come since that day On December 1, 1955 when Rosa Parks was arrested for refusing to give up her seat on a bus in compliance with the Jim Crow laws that required black people to sit at the back of a bus and give up their seats to any white person requesting it. Rev. Martin Luther King Jr. spoke out against segregation and urged the people of Montgomery to Boycott the buses. That boycott ended in the United States District Court ruling in Browder v. Gayle that ultimately ended racial segregation in Montgomery, Alabama.

Today, January 19th, is the day the nation observes the birthday of Rev. King. He is remembered for his famous "I Have a Dream" speech, given in front of the Lincoln Memorial during the 1963 March on Washington. He said in that speech "I have a dream that one day this nation will rise up and live out the true meaning of its creed: 'We hold these truths to be self-evident, that all men are created equal.'" King’s assassination in Memphis on April 4, 1968 focused the civil rights movement and moved American’s to take more action against discrimination.

It seems fitting that Barack Obama, our first African-American president, will be sworn in tomorrow, Janaury 20th, in front of that same monument. According to National Public Radio, Barack Obama will enter the office of president with the highest rating in history of an incoming president, 80%. Perhaps the near collapse of our economy and the low approval rating of outgoing President George W. Bush have contributed to this optimism, but our country seems to be looking forward to the change.

We all have a dream of a brighter economic future for this country. How do you think Barack Obama is handling his transition? How do you think his policies will affect the nonprofit sector? What policies would help to improve your efforts to keep your organization going in these difficult times?

On the Brink of Change

It is difficult to spend much timing musing over the year 2008. At this time of year many of us look back on the year that has passed and try to make sense of it. Our mistakes, hopefully, will teach us what not to do or guide us toward trying things that worked for others. We reminisce over the fun and exciting events of the year with plans and goals freshly laid for the coming year. The last quarter of 2008 was fraught with daily upheaval and financial losses that caused many people to despair. I needn’t list everything that went wrong (it is a long, long list). I have had enough doom and gloom and 2008 can be summed up as a financial mess. So let’s step back to look only at those things that stand out as hopeful against this grim backdrop.

Most prominent was the election of a new President and the excitement, swelling around the globe, of his upcoming inauguration on January 20th. Obama has wasted no time organizing his transition and making appointments to his cabinet. All of Obama’s picks appear to have substantial experience and come from diverse backgrounds, they are:

• Senator Hillary Clinton as secretary of state - Clinton seems to be uniquely qualified to be secretary of state bringing her years as a senator and first lady in her husband's administration as important experience.
• Timothy Geithner as Secretary of the Treasury – has been the head of the Federal Reserve Bank of New York since 2003
• Larry Summers as Director of the National Economic council – served as The World Bank’s chief economist and treasury secretary under Bill Clinton.
• David Axelrod as Chief Advisor – served as Obama’s chief strategist during his campaign.
• Eric Holder as Attorney General – served as Bill Clinton’s deputy attorney general and as Obama’s legal advisor during his campaign
• Harry Reid as Senate Majority Leader – served in the house from Las Vegas and then moved to the senate in 1987.
• Tom Daschle as Secretary of Health and Human Services – was a congressman from South Dakota and minority leader in the senate until he lost his seat in 2004.
• Bill Richardson as Secretary of Commerce – has served as governor of New Mexico and as energy secretary.
• Robert Gibbs as Press Secretary – lead Obama’s communications team during his campaign.
• Paul Volcker as Chairman of the Economic Recovery Advisory Board – served as chairman of the Federal Reserve under Jimmy Carter.
• Robert Gates as Secretary of Defense – is currently serving as secretary of defense under George Bush.
• Rahm Emmanuel as Chief of Staff – is an Illinois congressman and was an aide to Bill Clinton.
• James L Jones as National Security Advisor – was a four-star general who served in the Marine Corps for four decades.
• Nancy Pelosi as speaker of the House and is the congresswoman from San Francisco.
• Henry Waxman as Chairman of the House Energy and Commerce Committee – is a representative in the house for Los Angeles and chairman of the committee on oversight of government reform.
• Janet Napolitano as Secretary of Homeland Security – served as Arizona’s attorney general and became governor of that state in 2002.
• Susan Rice as US Ambassador to the United Nations – was a Rhodes Scholar with a doctorate in philosophy, and held several positions during the Clinton administration including assistant secretary of state under Madeline Albright.
• Arne Dunkan as Secretary of Education – is the head of education in Chicago, the third largest education system in the US.
• Steve Chu as Head of the US Energy Department – is the Nobel-prize winning physicist from the University of California Berkeley.

Generally, Americans are looking forward to the change in government with anticipation. The nonprofit sector has suffered recent setbacks along with the rest of America but a reason for optimism shines as a beacon of hope for all of us. What do you think of Obama’s picks? How do you think these choices will affect your nonprofit?

Plenty of Money

When I was a student in primary school, I performed in a production of a play entitled “Plenty of Money”. It was a madcap musical production where a crazy old lady prints her own money to be able to give it to charities. As I listened to what Federal Reserve Chairman, Ben Bernanke has planned to get our economy going again; I was reminded of that crazy musical. We will just print more money!

In the old days, the gold standard, monetary system backed our paper notes with gold and those paper notes were freely convertible into fixed quantities of gold. That was a solid, rule-based system that protected citizens from hyperinflation and other abuses of monetary policy. In 1971, however, the representative gold system collapsed and nations of the world switched to the fiat money system in which paper notes are backed only by use of lawful force and debt payments are collected through taxes.

The Wall Street Journal reported the excitement that everyone but me was feeling about Bernanke’s announcement that the Fed’s would print more money. They said:

“Wall Street that day did handsprings. Even government securities prices raced higher, as if, somehow, Treasury bonds were not denominated in the currency with which the Fed had announced its intention to paper the face of the earth. Economic commentators praised the central bank's determination to fight deflation -- that is, to reinstate inflation. All hands, including President-elect Obama, seemed to agree that wholesale money-printing was the answer to the nation's prayers.”

I read that the root cause of hyperinflation is an unchecked increase in the money supply. So, the question is what is to protect us today from hyperinflation? Should we just print more money in order to keep our country’s businesses, including charitable organizations afloat?

Go Techno or Bust

After his successful presidential bid, Barack Obama still has $30 million left over. During his presidential campaign, Obama raised an unprecedented $745 million, $104 million of which came in the last five weeks immediately before and after Election Day.

Obama’s outspoken desire to change the way politicians raise money through special interest groups - opting instead to raise money on his own and not participate in the public funding system - fueled his record-breaking fundraising. Close to half of the funds raised were by private donations. What was the key to his success? The internet and Obama’s use of technology stand out as the single key factor in his successful fundraising.

Among the technical tools used were the following:

• Individual Fundraising - An easy web experience employing the tactic of keeping the donor on the fundraising web site throughout the entire contribution process, from initiation through authorization.
• Online Advocacy - These tools put users in a position to get information in the hands of policy makers. The idea is that when constituents participate - i.e. write their legislators reach out to news editors and opinion leaders, sign petitions - you get results.
• Outbound Email - There are many rules governing spam and there is software that can handle outbound email more effectively. With the proper emailing tools, you can stay in touch, raise money, and mobilize action - whether you have a thousand constituents or ten million.
• Social Networking - The power of social networking is extraordinary. These tools give your constituents a voice and ideas can be freely exchanged.
• Content Management - The ability to locate, reuse, repurpose and capture content is supremely important to a successful online experience. The tools are ever more sophisticated, but are also becoming essential.

It is clear that a new day has dawned with regard to fundraising. Fundraisers will not be able to compete for those important donor dollars without a technology plan for the future. What are your thoughts?

Yes We Can.

Election 2008 was a truly historic event with the victory of America’s first African/American President. Excitement filled the air and tens of thousands of Obama supporters gathered in Grant Park, in Chicago to hear his victory speech. The message was one of hope. Though there is much to do to get America back on track, we can pull together and through our hard work, look forward to a brighter future.

President-elect Barack Obama began his speech:

"If there is anyone out there who still doubts that America is a place where all things are possible; who still wonders if the dream of our founders is alive in our time; who still questions the power of our democracy, tonight is your answer…

…It’s been a long time coming, but tonight, because of what we did on this day, in this election, at this defining moment, change has come to America.”

The speech went on to tell the story of Ann Nixon Cooper an African/American woman of 106 years, who was born just a generation past the time of slavery. He told of the many times she was told “you can’t” in her lifetime. Conversely, the words “yes we can,” was the fitting climax to this hard fought victory that will hopefully put an end to racism in this country. These words of optimism brought tears to the eyes of many in the crowd.

Though there is much to do to repair our financial and political systems, there is great hope in the words of our new President Barack Obama. It is this spirit of optimism that propels nonprofit organizations to forge ahead in the momentous task of raising funds for so many noble causes.
The question remains, will those who make large donations hold back on their donations because of the battered economy? According to the latest study An Analysis of Million Dollar Gifts January 2000 – September 2007 from “The Center on Philanthropy” at Indiana University, “Self-made wealth holders make the most gifts. Just over forty percent of the donors making gifts of $1 million or more are ‘self-made’ millionaires. This includes entrepreneurs, investors, and real estate developers. ‘Self-made’ wealthy donors gave several times more, on average, than donors with paychecks or donors with inherited wealth.”Of course, 47% of those who voted in this election, voted for the Republican candidate, John McCaine. Will President-elect Obama be able to unite both his supporters and those who voted against him? On Tuesday, many believed the words of Barack Obama, that he could. What are your thoughts?

Making the call – Obama or McCain

As a result of the economic conditions, many nonprofits are facing unprecedented economic conditions that will affect philanthropy. In the next few days, we will each have to make our own call on who best represents our goals. When Sens. John McCain and Barack Obama debated on the campus of the University of Mississippi, they were asked by moderator Jim Lehrer of the NewsHour on PBS about what fiscal priorities they would “adjust” as a result of the current economic bailout:

LEHRER: …what are you going to have to give up, in terms of the priorities that you would bring as president of the United States, as a result of having to pay for the financial rescue plan?

OBAMA: Well, there are a range of things that are probably going to have to be delayed. We don't yet know what our tax revenues are going to be. The economy is slowing down, so it's hard to anticipate right now what the budget is going to look like next year.

But there's no doubt that we're not going to be able to do everything that I think needs to be done. There are some things that I think have to be done.

We have to have energy independence, so I've put forward a plan to make sure that, in 10 years' time, we have freed ourselves from dependence on Middle Eastern oil by increasing production at home, but most importantly by starting to invest in alternative energy, solar, wind, biodiesel, making sure that we're developing the fuel-efficient cars of the future right here in the United States, in Ohio and Michigan, instead of Japan and South Korea.

We have to fix our health care system, which is putting an enormous burden on families. Just -- a report just came out that the average deductible went up 30 percent on American families.
They are getting crushed, and many of them are going bankrupt as a consequence of health care. I'm meeting folks all over the country. We have to do that now, because it will actually make our businesses and our families better off.

The third thing we have to do is we've got to make sure that we're competing in education. We've got to invest in science and technology. China had a space launch and a space walk. We've got to make sure that our children are keeping pace in math and in science.

And one of the things I think we have to do is make sure that college is affordable for every young person in America.

And I also think that we're going to have to rebuild our infrastructure, which is falling behind, our roads, our bridges, but also broadband lines that reach into rural communities.
Also, making sure that we have a new electricity grid to get the alternative energy to population centers that are using them.

So there are some -- some things that we've got to do structurally to make sure that we can compete in this global economy. We can't shortchange those things. We've got to eliminate programs that don't work, and we've got to make sure that the programs that we do have are more efficient and cost less.

LEHRER: Are you -- what priorities would you adjust, as president, Senator McCain, because of the -- because of the financial bailout cost?

MCCAIN: Look, we, no matter what, we've got to cut spending. We have -- as I said, we've let government get completely out of control.

Senator Obama has the most liberal voting record in the United States Senate. It's hard to reach across the aisle from that far to the left.

The point -- the point is -- the point is, we need to examine every agency of government.

First of all, by the way, I'd eliminate ethanol subsidies. I oppose ethanol subsidies.

I think that we have to return -- particularly in defense spending, which is the largest part of our appropriations -- we have to do away with cost-plus contracts. We now have defense systems that the costs are completely out of control.

We tried to build a little ship called the Littoral Combat Ship that was supposed to cost $140 million, ended up costing $400 million, and we still haven't done it.

So we need to have fixed-cost contracts. We need very badly to understand that defense spending is very important and vital, particularly in the new challenges we face in the world, but we have to get a lot of the cost overruns under control.

I know how to do that.

Click here to see the complete transcript.

In a nutshell:
Obama would continue to place early-childhood education, science education, affordable college tuition, energy independence, fixing the health-care system, and rebuilding the country's infrastructure as his priorities.

McCain’s priorities would be an elimination of ethanol subsidies, cut costs in defense by eliminating cost-plus contracts and freeze spending on everything but veteran’s affairs, and Social Security.

Who best represents your nonprofit priorities?

Who will be our next President?

The economy was on everyone’s minds last week as the final Presidential debate between John McCain and Barack Obama got underway. McCain launched his attack concentrating on Obama’s $60 billion proposal to improve the economic problems in the U.S, suggesting that this plan would mean tax increases for many Americans. Both candidates spoke directly to “Joe the Plumber” who had confronted Obama Monday at a rally in Ohio regarding his tax policies. Joe Wurzelbacher, the plumber, suggested that Obama’s plan would increase his taxes. According to Obama, his plan would increase taxes on wealthy American’s making over $250.00, so “Joe the Plumber” must expect to do pretty well if he thinks he will be impacted. McCain asked Obama why he would want to increase anybodies taxes right now. “We both want to cut taxes,” Obama said. “The difference is who we want to cut taxes for.”

Obama fought back using his running mate, Sen. Joe Biden’s comment that McCain’s campaign advertising had been 100% negative according to a study by the University of Wisconsin Advertising Project that examined TV ad spending by the two candidates from September 28 to October 4.

According to the Campaign Media Analysis Group,"An analysis of campaign commercials aired over the last seven days shows Obama outspent McCain nationwide by more than 2-1: $21.5 million vs. $9.2 million. But just under half of the money Obama is spending is going toward negative spots, meaning the Illinois senator is roughly keeping pace with his GOP rival when it comes to negative commercials, in terms of cash spent," the story said.

Was there a clear winner in that debate? Which plan will offer the best hope for a bright future in the nonprofit sector? Let us know what you think.