Final Post – Goodbye!

This term we discussed healthcare, the environment, arts & culture, and so much more…but the one topic we did not discuss is $$$$$!!  Everybody has to learn how to manage money to survive in this world.  Lucky for all of us the financial services  industry is also a part of the nonprofit sector!  Read on to learn about the differences between for-profit banks and nonprofit credit unions!  I’ll spoil the ending for you…everybody should join a credit union

Banks vs. Credit Unions

Introduction
Nonprofit and for-profit organizations are often competing for resources within the same sector and the financial services industry is no different.  The main focus of this research paper will center on the question:  Is there a difference between nonprofit and for-profit enterprises working in the same sector?  The chosen sector is financial services and the focus will be on banks and credit unions. Both types of financial institutions provide the “basics” which include, but are not limited to: a safe place to store assets, checking accounts, credit cards, and various loans.  This paper will examine the differences, if any, between the two types of financial institutions.

Nonprofit vs. Not-for-profit
Banks are for-profit and credit unions are nonprofit organizations.  However, during research for this paper the term not-for-profit and nonprofit both appeared regularly in reference to credit unions.  It is important to distinguish if there is a difference between a not-for-profit and a nonprofit organization.  “Both types of organizations do have something in common. Both a nonprofit and a not-for-profit are allowed to make a small “profit” (or surplus) as long as that extra money is not given out to stockholders or private interests. Rather, that profit is turned back to the mission of the nonprofit or the not-for-profit. The Red Cross helps more disaster victims. The local animal shelter helps more puppies. The credit union returns it to their members in the form of lower interest rates on loans, lower fees, higher interest rates on savings and/or dividends”. [2] The terms not-for-profit and nonprofit can essentially be used interchangeably as the biggest difference is that individuals do not make donations to not-for-profit organizations.  “Every year, generous people donate money to charitable “nonprofit” organizations like the Red Cross or their local animal shelter. Credit unions are a “not-for-profit” institution, rather than a “nonprofit” organization. Credit union members do not make donations to their credit union like they might to their favorite charity”. [2]

What is a bank?
A simple definition of a bank is an “establishment authorized by a government to accept deposits, pay interest, clear checks, make loans, act as an intermediary in financial transactions, and provide other financial services to its customers”. [7]  “Banks are the most popular financial institutions. Most are run by a group of investors who have a large amount of capital, which goes into the funding for the bank. Some are nationwide – such as Chase Bank or Wells Fargo – while others are smaller, local institutions. Either way, a bank’s primary purpose is to make money for the investors and for the stock holders”. [6]  “Banks are federally insured by the Federal Deposit Insurance Corporation (FDIC). A paid Board of Directors makes all of the decisions for the bank, which are usually profit-driven and hold little benefit for the customers of the bank. Anyone, in any city or state, can open an account with a bank, and customers hold no voting privileges or decision-making power within the institution”. [6] Even though, “one in every three Americans belongs to a credit union” [1] banks are the dominant player in the financial services industry.

What is a credit union?
A simple definition of a credit union is “a non-profit financial institution that is owned and operated entirely by its members. Credit unions provide financial services for their members, including savings and lending. Large organizations and companies may organize credit unions for their members and employees, respectively. To join a credit union, a person must ordinarily belong to a participating organization, such as a college alumni association or labor union. When a person deposits money in a credit union, he/she becomes a member of the union because the deposit is considered partial ownership in the credit union”. [8]  “Since credit unions are not-for-profit organizations, the profits incurred by the credit union directly benefit the members after covering overhead costs”. [6] Similar to banks, credit unions are insured by the federal government but rather than the FDIC, credit unions are insured by the National Credit Union Administration (NCUA).  Different from banks, credit unions “are democratically controlled by the members. This means that members have more say in how the credit union is run, and hold decision-making power. Members elect a Board of Directors – rather than hiring one – who are chosen to fully represent the members in making decisions and upholding policies”. [6] Traditionally, people view credit unions as a small player in the financial services industry and they are as banks have more customers than credit unions but credit union membership has continued to increase as “there are about 7,950 active status federally insured credit unions. Almost 90 million members (89,854,941) with $679 billion on deposit (679,416,086,824)”. [4]

History of Banking
The idea of banking has been around for a long time and is widely accepted worldwide.  “Banking activities were sufficiently important in Babylonia in the second millennium B.C. that written standards of practice were considered necessary.   These standards were part of the Code of Hammurabi – the earliest known formal laws.   Obviously, these primitive banking transactions were very different in many ways to their modern-day counterparts.   Deposits were not of money but of cattle, grain or other crops and eventually precious metals.   Nevertheless, some of the basic concepts underlying today’s banking system were present in these ancient arrangements, however.   A wide range of deposits was accepted, loans were made, and borrowers paid interest to lenders”. [12]
“We can trace modern-day banking to practices in the Medieval Italian cities of Florence, Venice and Genoa.   The Italian bankers made loans to princes, to finance wars and their lavish lifestyles, and to merchants engaged in international trade.   In fact, these early banks tended to be set up by trading families as a part of their more general business activities.   The Bardi and Peruzzi families were dominant in Florence in the 14th century and established branches in other parts of Europe to facilitate their trading activities”. [13]  “Banks became an integral part of the US economy from the beginning of the Republic. Five years after the Declaration of Independence, the first chartered bank was established in Philadelphia in 1781, and by 1794, there were seventeen more.   At first, bank charters could only be obtained through an act of legislation. But, in 1838, New York adopted the Free Banking Act, which allowed anyone to engage in banking business as long as they met certain legal specifications”. [14]
History of credit unions
Credit unions have a relatively short history in comparison to the origins of banking and were established to fill a gap in the financial services market.  “From their origins, credit unions were unique depository institutions created not for profit, but to serve members as credit cooperatives. The earliest financial cooperatives date back to the beginning of 19th century in England. In the mid-1800′s, Germany was the first home of credit unions as we know them today”. [4]  “In 1850, he (Friedrich Raiffeisen) organized the first cooperative credit society, known as the “people’s bank”. [4] The idea of a cooperative credit society was hugely important because many individuals could not obtain credit from banks.  “Raiffeisen’s goal was to provide credit to farmers. He formed the Heddesorf Credit Union in 1864 to help German farmers purchase livestock, equipment, seeds and other farming needs”. [4]
The first credit union was established in Europe but it did not take long for this “new” banking concept to be accepted elsewhere as “the first American credit union was founded in 1909 in Manchester, N.H.”. [1] Political acceptance helped solidify credit unions were here to stay in the U.S. when “President Roosevelt signed the Federal Credit Union Act in 1934, forming a national system to charter and supervise federal credit unions. Credit unions grew steadily in the 1940s and 1950s and by 1960 credit union membership amounted to more than 6 million people in over 10,000 federal credit unions”. [4]
Political Activities
The financial services industry is arguably the most heavily regulated industry in the U.S. Both banks and credit unions have vested interest in influencing politicians as new legislative regulations impacting the financial services industry are created.  At times, banks lobby against credit unions “because of their not-for-profit, cooperative structures, credit unions are exempted from most state and federal taxes. Banks have convinced themselves this is an unfair advantage and have spent a lot of effort, plus a fortune in lobbying fees, trying to legislate credit unions out of existence, or at least limit who can join”. [3] As banks “attack” and try to eliminate credit unions a defensive lobbying effort will be made by credit unions to illustrate the importance of an alternative to traditional banks for the individual consumer.
Today, banks and credit unions both find themselves heavily involved in the lobbying process to influence the final outcome of an undoubtedly significant piece of legislation.  “Financial regulatory reform is reaching the legislative end game.  On May 22, 2010, the United States Senate passed the Restoring American Financial Stability Act of 2010 (the “Senate bill”) by a vote of 59 to 39. The Senate bill is the culmination of nearly a year of work by the Senate – including a month of floor debate – all designed to craft a comprehensive financial reform package.  It is heavily influenced by the Obama Administration’s regulatory reform package released last summer as well as the House of Representatives’ Wall Street Reform and Consumer Protection Act (the “House bill”), passed by the House of Representatives on December 11, 2009”. [9] As a result of the recent recession and “financial crisis” politicians have been very active over the past 18 months to put measures in place to prevent such a meltdown in the future and restore consumer confidence in the financial sector.  “The House and Senate bills represent the most significant and controversial overhaul of the U.S. financial regulatory system since the Great Depression”. [9]
Due to the significance of the proposed legislation and potential impacts to the financial services industry, large dollar amounts are being spent to influence politicians.  “Big banks and Wall Street financial firms have spent more than $500 million, or $1.4 million a day, since the beginning of last year in lobbying and campaign contributions, according to data from Center for Responsive Politics. Preventing stronger oversight and transparency in response to the financial crisis has been their number one legislative priority”. [11] The goal of the lobbying is to protect revenue streams for both banks and credit unions so they can continue to fulfill their missions, which are certainly different.  The mission for banks is to protect profits so they can continue to make money for shareholders and for credit unions the mission is to stay in business so they can continue to provide individuals with alternative to traditional banking.  “The tone of nearly all the television ads on financial reform — now totaling $23 million in ad buys to-date — has been to take action or to tinker on the margins”. [10] Regardless of the goal, both banks and credit unions are highly involved in this lobbying process.  “The Independent Community Bankers of America lobbying group deployed 500 bankers sporting “I (heart) Community Banks” buttons to Capitol Hill offices in recent days to ask for changes to the bill”. [10] Credit unions have taken a more traditional grassroots approach by encouraging credit union employees and members to write, e-mail, and call local legislators to influence changes in the upcoming legislative decision process but have also made funds available for lobbying efforts.
The table below illustrates the significance of the financial reform bill by the amounts of money being used for lobbying by various organizations within the financial services industry.  Credit union funds are a small fraction when compared to the funds used by the commercial banks.

Organizations                          Contributions               Lobbying                          Totals
Accountants                                   $5,197,550                    $14,271,648                     $19,469,198
Commercial Banks                       $7,335,845                   $50,834,495                     $58,170,340
Credit Unions                                $1,233,995                   $9,221,112                         $10,455,107
Finance/Credit Companies        $2,715,353                    $35,546,683                     $38,262,036
Insurance                                       $14,745,744                 $164,115,335                     $178,861,079
Real Estate                                    $25,941,525                  $67,347,930                     $93,289,455
Savings & Loans                          $246,110                        $1,190,000                       $1,436,110
Securities & Investment             $30,044,582                 $93,288,208                    $123,332,790
Total $87,460,704                   $435,815,411                   $523,276,115
*Source: Center for Responsive Politics [11]

Fees, service, and rates
Individuals may choose a bank or a credit union based on many of the distinguishing factors already presented in this paper.  While, “The single biggest difference between a bank and a credit union is the ownership structure,” says Welte. “Banks are either privately owned or public companies. Therefore, their primary function is to earn profits for their owners. (In credit unions) net income is earned only to the extent necessary to build sufficient capital reserves. Earnings over and above this are returned to members through adjustments to loan and savings rates or expansion of services”. [1] Although, the biggest difference between banks and credit unions may be the ownership structure the majority of consumers are not aware of this fact and it most likely will not be a significant factor in their choice of where to conduct their financial business.
Three themes that emerged during the research phase of this paper indicate that fees, service, and rates are distinguishable differences between banks and credit unions and may influence a consumer’s choice.  “A current trend among banks, which is sending more people to credit unions, lies in the charging of monthly fees. For example, if you have a checking account with Bank of America, you will be charged a monthly maintenance fee unless you have direct deposit from your employer or maintain a specified balance.  With a credit union, this isn’t an issue. Since credit unions aren’t in the business of making money as not-for-profit organizations, they don’t charge the high fees and finance charges of traditional banks”. [6]  “Any profits credit unions do make are distributed as dividends to their members. Contrast that with banks, which continually invent new fees and policies to boost profits”. [3]
Service is the second theme that emerged as a reason an individual may choose a credit union instead of a bank as “many people choose credit unions over banks because they like the fact that they are treated as a benefit to the institution, rather than “just another account number”. [6]  “When it comes to personal attention, high-quality service and low fees, credit unions continue to knock the socks off other providers in the financial services marketplace,” says Daniel A. Mica, president and CEO of Credit Union National Association. Americans seem to agree. Credit unions have topped the consumer satisfaction ratings in American Banker’s annual survey for 12 years in a row”. [1]
Finally, credit unions tend to offer higher rates on deposit products and lower rates on loans primarily because of their nonprofit ownership structure.  Better rates allow individuals to have more disposable income and that can equate to thousands of dollars over a lifetime.  The table below illustrates average interest rates at credit unions and banks.  Although, the data is not current for this year the chart illustrates the consistent difference in rates between credit unions and banks.

Product                                                    Credit Unions                  Banks
Credit Card                                                   11.64%                                   12.76%
48-month new car loan                              5.46%                                     6.91%
48-month used car loan                             5.72%                                     7.50%
36-month unsecured loan                          10.60%                                  12.47%
HELOC (home equity line of credit)         4.70%                                   4.90%
30-year fixed rate mortgage                        5.44%                                  5.58%
Regular savings account                              0.68%                                  0.44%
Money Market Account                               1.22%                                   0.62%
Interest Checking Account                         0.48%                                  0.36%
*Rates Comparison Source: Datatrac, December 2008 [3]

If credit unions consistently offer lower fees, superior service, and the best rates then why does anybody do business with a bank?  There are several factors that contribute to the overwhelming success of banks.  The first factor is that banks tend to be bigger so they have larger marketing budgets, which increases public awareness.  The second factor is that often time banks are “first to market” in regards to new products and services.  Credit unions tend to follow trends and not be on the cutting edge of new technology.  Another factor is that “banks have more branches and more ATMs.  They are on street corners and in grocery stores.  More outlets mean more convenience for their customers”. [5] Finally, “people don’t know they can join a credit union.  Essentially, credit unions have not done a very good job of publizing that most anyone can join a credit union.  Many people believe they do not “qualify” for membership”. [5]
Conclusion
”Everyone needs a place to store their money, and unless you plan on keeping it under your mattress or in the cookie jar, you’ll need to have an account with either a bank or a credit union”. [6] Credit unions and banks offer very similar products and services such as checking accounts, credit cards, and loans but that is where the similarities end.  The two organizations have vastly different missions, ownership structure, and philosophies about how to offer their products and services.  Since, everybody has to “deal” with money in his or her life it is critical to know what options are available to you.  The bottom line is that “Whichever you choose – a bank or a credit union – make smart decisions with your money and be sure that you’re getting the most out of your banking institution”. [6] In the end, the decision to choose between a bank or a credit union, similar to many decisions in life, will come down to your own personal self interest.

References
[1]  Bankrate.com (2010).  Own your own bank — join a credit union. (Updated: Jan. 29, 2003).  Retrieved from http://banking.about.com/gi/o.htm?zi=1/XJ/Ya&zTi=1&sdn=banking&cdn=money&tm=32&f=00&tt=14&bt=1&bts=1&st=34&zu=http%3A//www.bankrate.com/yho/news/cu/20021015a.as

[2]  Credit union blog (2010). Not-for-profit vs. nonprofit.  Retrieved from http://www.betteryourmoney.org/not-for-profit/not-for-profitvsnonprofit.php

[3]  MSN Money (2010). Ditch your bank for a credit union (Updated April 9, 2009).  Retrieved from http://articles.moneycentral.msn.com/Banking/BetterBanking/DitchYourBankForACreditUnion.aspx

[4]  National Credit Union Association (2010). History of Credit Unions.  Retrieved from http://www.ncua.gov/about/history.aspx

[5]  Thefinancebuff.com (2010). If Credit Unions Are Better, Why Don’t More People Use Them? (April 29, 2008).  Retrieved from

http://thefinancebuff.com/2008/04/if-credit-unions-are-better-why-don.html

[6]  Banklady.com (2010).  Credit Union Vs. Bank: Which is Best for You?  Retrieved from  http://www.banklady.com/credit-union-or-bank.asp

[7]  Businessdictionary.com (2010).  Retrieved from http://www.businessdictionary.com/definition/bank.html

[8]  Investorwords.com (2010).  The Biggest, Best Investing Glossary on the Web.  Retrieved from http://www.investorwords.com/1214/credit_union.html

[9]  The Harvard Law School Forum on Corporate Governance and Financial Regulation. Detailed Summary of Senate Financial Reform Bill.  Margaret E. Tahyar, Davis Polk & Wardwell LLP (Sunday May 30, 2010 at 9:13 am)
Retrieved from http://blogs.law.harvard.edu/corpgov/2010/05/30/detailed-summary-of-senate-financial-reform-bill/

[10]   TPMDC. Bank Lobbyists See Writing On Wall — Publicly Support Financial Reform.  Christina Bellantoni (April 28, 2010, 5:08PM).  Retrieved from http://tpmdc.talkingpointsmemo.com/2010/04/bank-lobbyists-in-tricky-spot—-theyre-calling-for-action-since-reform-seems-inevitable.php

[11]  Ourfinancialsecurity.org (2010). Americans for Financial Reform – Accountability, Fairness, Security.  As Senate Begins Financial Reform Debate, Industry Spends Tens of Millions to Influence Debate (March 22, 2010 – 1:11 pm).  Retrieved from

http://ourfinancialsecurity.org/2010/03/as-senate-begins-financial-reform-debate-industry-spends-tens-of-millions-to-influence-debate/#

[12]  “A History of Money from Ancient Times to the Present Day”, Cardiff, UK, University of Wales Press. Davies, G. (1994).  Retrieved from

http://people.brandeis.edu/~cecchett/Textbook%20inserts/A%20Brief%20History%20of%20Banking.htm

[13] “Banking Through the Ages”, New York, Dodd, Mead & Company. Hoggson, N. F. (1926).  Retrieved from http://people.brandeis.edu/~cecchett/Textbook%20inserts/A%20Brief%20History%20of%20Banking.htm

[14]  “Commercial Banking in the United States:  A History”:, Hinsdale, Illinois, Dryden Press. Klebaner, B. J. (1974).  Retrieved from

http://people.brandeis.edu/~cecchett/Textbook%20inserts/A%20Brief%20History%20of%20Banking.htm

Let’s Talk About The Environment

Recently in our class we talked about the environmental nonprofit sector.  Bob gave an interesting lecture on this sector.  First, some of the nuts and bolts about the sector.  First, I did not realize the short history of about 3-5 decades of environmental nonprofits. I was not surprised to find out here are about 27k nonprofits focusing on the environment in the U.S. and they represent a high-level of diversity.  The diversity is not surprising because the word environment is very large and wide reaching as a topic.  Some of the various components that can make up the environmental nonprofits as cited in class include, but are certainly not limited to:

• Global warming
• Recycling
• Wildlife & wildlands
• Air, oceans, and other forms of water

During the lecture two very interesting points were brought up that I would like to write about…

1)   What are the pros and cons of environmental nonprofits in seeking and accepting foundation funding?

This question is interesting but certainly not limited to just environmental nonprofits and can be applied to virtually all nonprofits accepting money from foundations.  The main pro that was discussed is the idea of being able to bring attention to your cause to build education and momentum for real change.  The other obvious pro is that you receive money, which is generally a necessity to sustain your organization.  Several cons were mentioned.  The first is that with many environmental causes it can be difficult to measure success, which can be needed for future funding.  Another con is the idea that the money received can come with “strings attached”.  The foundation may require parts of the money to be applied to things that are not a primary priority for the nonprofit organization.  The worst-case scenario is that the money represents a conflict of interest.  An example mentioned in class:  A big oil company donates money to an organization that focuses on cleaning oil spills or lobbies against big oil.  The reason this big oil company would make the donation is to restore or build their reputation as an “environmentally conscious” corporation.  One student even mentioned an article they read that discussed how some companies spend more money marketing their donation than the actual size of the donation.  This leads to the second interesting point discussed during the lecture…

2)   Should nonprofit organizations work “alone” or “partner” with the business sector to accomplish their goals?

Bob displayed some interesting charts representing different nonprofit organizations and their connections to for profit business entities.  The question is very interesting and overall I am in favor of nonprofit organizations working with the business sector.  A few reasons to support my position include… generally, for profit companies have more money, which means more available resources for marketing, employees, and research.  Another reason that would be beneficial for nonprofits to work with the business sector is that valuable information can be gained about the companies the nonprofit is trying to change.  Finally, if a nonprofit can show collaboration with a business and that business makes a change, especially if it is a big company than often times other businesses will follow suit.  The pressure of market competition can work to the advantage of a smaller yet influential nonprofit organization.

A Little Bit of This & A Little Bit of That

Guest Speaker: Jessica Matthiesen

Jessica shared various experiences she has had and is having involving the nonprofit sector.  Her passion for nonprofits was evident and it was enjoyable to hear about a variety of topics.  She began by discussing her current position at Volunteers in Medicine (VIM).  This is an interesting organization and I was not aware of this type of service.  VIM is a free healthcare clinic available to eligible individuals who are working but are currently uninsured.  In theory they serve individuals that don’t qualify for the Oregon Health Plan and don’t receive benefits from work and can’t afford private plans of their own.  The most staggering statistic she provided was that in 1999 there were 28k uninsured in Lane County and today there are around 66k.  A very sad and disturbing statistic!

Jessica then briefly discussed her time as a Board member for Parkside Daycare.  She was given the opportunity because her children had attended the daycare.  Although, she eventually stepped down from the position she said the experience was very valuable as the daycare was in an aggressive growth phase.  It was fascinating to hear about the challenges the daycare and Board faced as they grew from a little “mom and pop” shop with just a couple daycare providers to as many as sixteen providers.  Finally, she talked a bit about her role as a consultant for nonprofit organizations.  I did not realize there are consultants focused primarily on nonprofit organizations.  Her experiences and area that she really enjoys is focused on facilitating a Board retreat with an emphasis on strategic planning.  She explained her role as consultant/facilitator to lead discussion with the goal of identifying problems to then assisting the Board in coming up with solutions.

Arts & Culture

What a wonderful lecture led by Sarah regarding the arts and culture sector of the nonprofit world.  As a member of the “audience” it is always enjoyable to listen to a speaker discuss a topic that is fueled by their own individual passion.  I must be forthcoming and freely admit that the arts & culture are certainly not my area of expertise.  With that being said, I am curious and eager to learn more.  My thinking about the arts and culture is very limited so Sarah’s presentation was very thought provoking for someone like myself.  She provided many ideas and uses for art outside of what I would view as the “traditional” role of art.  When I think of art my mind instantly goes to expensive paintings, sculptures, and the like.  What intrigued me the most during her presentation was the idea of blending art with education.  Examples like providing art as an outlet for troubled kids or using a form of art to nurture someone with autism.

Thank you Sarah for providing me and the rest of the class with a whole new perspective toward the arts!  Even though you are clearly passionate and bias about this topic you did a great job of presenting “both sides of the argument” especially when discussing something that is a bit controversial or unproven still at this time like the benefits for troubled kids.

Research Paper Topic

The question I will be researching for my final paper is…

What is the difference between nonprofit and for-profit enterprises working in the same sector?

The reason I am interested in this topic for the research paper is because I work for a not-for-profit credit union and am interested in further researching the differences between banks and credit unions.  I also want to better understand if there is a difference between nonprofit and not-for-profit.  I will also probably research day care organizations and possibly hospitals.  Below are a few websites I encountered during my preliminary research:

http://www.associatedcontent.com/article/571747/forprofit_versus_nonprofit_childcare.html?cat=25

http://en.wikipedia.org/wiki/Credit_union#Not-for-profit_status_and_the_need_for_a_surplus

http://www.keepourhospitalshealthy.org/non-profit-vs-for-profit-hospitals/

!?! Healthcare !?!

Picture this…beautiful, sunny, spring day in the Great Pacific Northwest!  I mean so beautiful that I am out working in my yard at 8am on a Sunday morning in shorts and a t-shirt.  We have had a few sunny days sprinkled in with the rain…April showers bring May flowers!  Yesterday was one of those spring days that feels like summer!!  What in the heck does this have to do with anything…especially healthcare?  Keep reading and you will find out.  The weather was so beautiful and I had my whole day planned out in my head.  You have time to think when you are on your hands and knees pulling weeds.  I was going to finish weeding the flower beds, edge and mow the lawn, and refill the bird feeders…. then take my wife out to eat on some sunny patio followed by a bike ride to burn off the calories.  Well, healthcare got in the way…change of plans for the day!

I was on the back deck enjoying a cold refreshing beverage (lemonade) taking a moment to rest before I resumed my yard chores.  I hear the doorbell ring.  Ok, no big deal.  Probably just another kid cruising around the neighborhood asking for money to support a fundraising event for school or summer camp.  To my surprise it was my neighbor from next door.  She had come over to inform me that the huge hedge separating our property was going to be either removed completely or trimmed down to four feet.  Keep in mind this couple has lived in their home for over 30 years and actually planted this hedge. The hedge is probably about 35 feet long, 15 feet high, and 4 feet wide.  As I asked: “Why would you want to do that?” She answered over the next 15 minutes that they were not healthy enough to maintain it any longer and that they quite simply could no longer afford to pay for someone to maintain the hedge.  The reason?  The cost of keeping her and her husband alive! They essentially live on social security and just the costs of their medications are $1200.00 more a month than what they bring in.  This difference is simply eating away at the money they have worked so hard to save over the years.  As I stood there listening to her I felt several emotions.  I was first and foremost sad as she explained that they should be taking little vacations or the cruise they have always dreamed of and won’t be able to enjoy.  Then, my sadness quickly turned to anger because this is the reality of healthcare for so many people in our country.  My neighbor explained that for right now it is about not going on vacation or paying for landscaping but soon she will start having to make even more difficult decisions about whether to buy medications or buy food.  So, I spent the next 4 hours trimming the hedge because they did not want to see it go but she felt she had no choice.  I went to bed last night feeling good that I could at least prolong one difficult decision for my neighbor…sunburn and all!

Quick story: My mom has been home for three weeks recovering from triple bypass surgery.  She had amazing care during her 7-night stay in the hospital.  Her surgeon was wonderful and from what everybody told us; unbelievably talented!  End result is that my mom will probably live a longer and more enjoyable life because of the advancements that have been made to this procedure since her mom was a pioneer patient at Sacred Heart about forty years ago.  However, without insurance (which million of Americans do not have) my parents would be looking at medical bills in excess of $300,000!

Finally, last September my wife and I were fortunate enough to spend a couple of weeks exploring Europe.  Because the healthcare topic was so heated in the United States when we left I took the opportunity to ask as many people as I could what they thought about healthcare.  The overwhelming sentiment was that healthcare for them and their family was great!  I was not asking wealthy people.  I was asking tour guides, small shop owners, and waiters.  One even expressed his response by saying: “Healthcare is not an issue for us.”  WOW, can you imagine finding low to middle class citizens in the U.S. making that statement?  If you can…let me know because I can’t find them.  The Obama administration has worked really hard to bring healthcare reform to reality.  However, because the political system is such a mess the new healthcare legislation is just that…legislation…not reform!  It is a step in the right direction and I hope true reform and solutions will evolve from this legislation but I won’t be holding my breath!

I’m not smart enough to know the solutions to our current healthcare situation but I do know this…IT’S BROKEN!!

Education is important for Everyone!

Hello to all my dedicated readers and THANK YOU for being a dedicated reader!!

This week’s topic regarding the nonprofit world is education.  A topic that generally sparks interest, passion, and debate amongst many individuals and I hope it does for you too!  This past week we read chapter 6 from Michael O’Neill’s Nonprofit Nation and had discussion & lecture from both Bob and Sarah on the topic of education.  In my past couple of writings I have been pretty deliberate about separating the different categories of information as it was presented to me.  This week I am going to simply discuss the topic of education by blending the information.
First, let me tell you about my own personal education background so you will have an understanding of the perspective I am presenting.  I attended a public elementary school, and then two private schools to get me through middle and high school.  I then attended a public community college and am now attending a public university.  My mother taught for over 10 years at a private K-8th grade school and everyone in my immediate family has at least attended college.  We have several doctors in our family including my grandfather, uncle, and my father so education has always been stressed as important.  The debate around the table at family gatherings in regards to education has always centered on private vs. public.  As O’Neill points out: “twelve of eighteen American presidents in the twentieth century attended a private college or university” so maybe there really is not much of a debate.  My older brother and I graduated from private high schools but my younger brother graduated from a public high school but even my younger brother attended a private school for K-8th grade.  The debate has NEVER focused on the value of obtaining education!
I feel so fortunate that I was raised to value education.  In class during one of the discussions several comments were made by fellow classmates about how they are the first in their family to attend college and one even commented that they are frequently faced with disparaging comments about why they are “wasting money” attending college.  It is easy as a college student to think “everybody” is getting a college education as you navigate through what sometimes feels like a crowded campus or sit through an introductory level class with 250 other students.  Bob helped put a different spin on that perspective by making several comments during discussion about how we, as college students, are truly in an elite class especially when put on a “world” perspective.  Individuals with a college education are certainly the minority in the global workforce.
Well, that is enough ranting about the value of education and my personal background regarding education…thanks for bearing with me!  What gets me so fired up about education is that in my opinion it is one of the most single important things in the world yet it always seems to be the first to get cut, reduced, or ignored when it comes to balancing state and federal budgets.  Shorter school years, reductions in already low pay for teachers, and programs such as music, art, and financial literacy continually being cut from school curriculum just to name a few examples.  How do these decision get made?  And worst yet…how do they get approved?  Why can’t our local and national “decision” makers see just a little bit into the future?  These decisions to make reductions in the quality of education will impact society negatively at least ten times more in the future through lack of future innovation in all sectors, increased costs in healthcare, and social agencies will have greater demand to meet the needs of individuals who will need help.  Part of the answer was given during Sarah’s brief presentation on how the education “system” is so disjointed.  Who does make the decisions?  The local communities? The state? The federal government?  Difficult questions to answer since it appears many of them are not working with each other.  Many a campaign has used education as part of their platform but real education reform is hard to identify in the past few years.  No Child Left Behind…No Comment!!

Can you feel the interest, passion, & debate in this post?  I hope you can…support your local teachers and schools…our future depends on it!

Religion, Social Service, & More…

Hi all & welcome back!

In this post I will be writing about the last week, which includes lecture, a new assignment, and chapters 3 & 4 in the book, Nonprofit Nation.  This last week we had one class dedicated to lecture and one class dedicated to learning about different websites that will be used as resources to learn more about nonprofit organizations.  The lecture focused on the various structures of nonprofit organizations in regards to the IRS and filing and the structure of the organization.  I work at a local credit union and was informed that state chartered credit unions are classified as a 501(c)14.  The primary focus for the course will center on 501(c)3 organizations, which are public charities, and private foundations, which easily make up the bulk of nonprofit organizations that are required to file with the IRS.  The lecture stimulated a lot of great questions!  Who is the Board of Directors?  What is the role of the Board?  Can the Executive Director be on the Board?  The Board of Directors provides strategic direction for the organization and depending on the size of the organization may include 3-5 members and as many as 15-30.  During the lecture we were informed that it would be beneficial for the Board to represent various parts of a working organization.  For example, it would make sense to have a lawyer, marketing representation, accounting knowledge, and an individual with a background in human resources.  It is especially important to have individuals who are business savvy and have fundraising experience because often times the staff of nonprofit organizations may be so focused and passionate about the “cause” they may lack focus on making and/or raising money to keep the doors open.  Although Bob (professor) mentioned it might be a conflict of interest for the organization to have the Executive Director on the Board because ultimately it is the Board’s responsibility to hire and fire the Executive Director, he noted that some organizations are structured this way.
The second class was dedicated to learning how to navigate various websites for our first assignment.  The assignment is a “scavenger hunt” to find certain pieces of information pertaining to a nonprofit organization of our choice.  We must locate various items including, but not limited to, their mission statement, the number of employees, the pay of the Executive Director, and sources of income which can be located on the Form 990.  The Form 990 is the IRS required paperwork for all nonprofits.  Organizations with less than $25k in revenue are only required to file the report every three years.  I will be doing my assignment on KIDSPORTS and am excited to learn more about this organization.
Religion, the oldest and largest part of the nonprofit sector and is the focus of chapter 3 in the book, Nonprofit Nation.  Although, we know that religious congregations and organizations make up the largest part of the nonprofit sector it is difficult to obtain accurate information and statistics because they are not required to file the Form 990.  Many do decide to file so they can be eligible to receive donations that are tax-deductible for the givers.  Giving seems to go hand-in-hand with religious involvement.  Since over 80% of the population claims to have some sort of religious affiliation the amount of money being given is staggering.  It is also important to note that money given through religious organizations has the potential to impact many other areas in society including help for those living in poverty both locally and internationally, and contributions toward education and healthcare.  It is impossible to ignore the many positive impacts that religious organizations can and do have on our society regardless of your personal beliefs.
The title for chapter 4 is Social Service and author Michael O’Neill refers to social service agencies as arguably the most widely accepted and admired part of the nonprofit sector.  He lists several well-recognized social service organizations, such as the Red Cross, YMCA, and Salvation Army.  Social service organizations have many different targets for providing help including the elderly, drug and alcohol addicts, and the homeless just to name a few.  Generally, these types of agencies are small with 69% having revenues of less than $500k.  The positive impacts of these agencies on our society are well documented but how much larger could the impact be if several of these small agencies with similar missions merged?  Or would just the opposite be true?  Would they then become too big?  Filled with too many layers of bureaucracy?  The fact that the government has an ongoing “relationship” with funding many social service agencies (three-fifths of nonprofit social service revenue – p89) because more can be accomplished through a nonprofit than through a government run agency begs the question:  What is the best, most effective, and efficient structure for an organization with a focus on social service?  Currently, millions of individuals and families are helped by nonprofit social service agencies but with better structure could we change that number from millions to billions?

More to come…we are just getting warmed up!!!

Hello world!

The purpose of my blog is to explore, educate, and enlighten readers about the nonprofit sector and the challenges these organizations face to fulfill their vision and mission.  In future posts I will write about specific nonprofit organizations, positive community impacts directly associated with nonprofit organizations, and ways for individuals to become involved with nonprofit organizations.  This blog directly connects with the PPPM 280: Introduction to Nonprofit Sector course I am currently enrolled because the purpose of the course is exposure to the nonprofit sector. I will share my thoughts, experiences and expand on the information presented in the course.
Who the heck am I and why am I writing this blog?  Currently, I am employed at a not-for-profit financial organization and am on the Board of Directors of a local nonprofit organization.  Making a difference in my community is a big priority in my life.  It is important for me to be able to lay my head down on my pillow at night and feel good about my contributions for the day.  I am taking this course to learn more about the nonprofit sector and to discover future opportunities.  I am most interested in the challenges that nonprofit organizations encounter.  I am also curious about the inefficiencies that exist within this sector.  Are there ways for these organizations to better themselves through increased collaboration…increase their buying power?  Better utilize volunteer efforts through a shared database of volunteers?  Increase fundraising initiatives through partnerships?  From the outside it appears many nonprofit organizations are “fighting” for a similar cause and competing for the same resources (donations, volunteers) as stand alone organizations and may be able to better maximize their efforts through increased collaboration.  Is my observation fact or a myth?  I hope to uncover answers to these questions in the following weeks and provide insight to you!
This week we were asked to read the first two chapters in a book titled:  Nonprofit Nation: A New Look at the Third America written by Michael O’Neill.  In the following weeks I will provide thoughts, questions, and hopefully answers pertaining to the readings from the book.  The goal of my thoughts regarding the book will be to avoid a boring, dry summary of all the details in the particular chapters but rather to extrapolate interesting tidbits and ask a few thought provoking questions related to the reading with the hope that you will respond and provide additional insight from your perspective and experiences.  One of the best ways to learn is through sharing experiences!!
Chapter 1 provided an overview of the nonprofit sector including definitions, types of organizations, revenue, and some interesting statistics.  I did not realize how big the U.S. nonprofit sector is as illustrated from page 12:

•    Accounts for 5 to 10 percent of the nation’s economy
•    Generates revenue that exceeds the gross domestic product (GDP) of all but six foreign countries: Japan, Germany, the United Kingdom, France, Italy, and China
•    Accounts for 8 percent of the nation’s noninstitutional civilian employees

Chapter 2 essentially asks the question:  Why do nonprofit organizations exist?  Why are people so compelled to volunteer?  Why do the activities fall into the nonprofit sector and not a different sector? The chapter explores several theories surrounding the nonprofit sector.  Ideas like religious diversity, humanitarian motivation, and “the anthropological perspective explains the existence and behavior of voluntary associations as a response to certain needs that seem to be met more effectively outside family, kinship, and governance structures” (p. 37).  The chapter concludes by stating there is no “grand unified theory” that will completely encompass the nonprofit sector.  What are your thoughts about the theories surrounding the nonprofit sector?  I sincerely hope you will become an active participant of this blog!

I hope you enjoyed reading the first of many posts to come exploring the world of the nonprofit sector.