• Jan Masaoka

    This is the kind of questioning about unintentional consequences that we need more of. Thank you, Rick!

    This article also serves as a reminder that our nonprofit sector sorely lacks a financial institution of its own. Pamela Davis (of the Nonprofits Insurance Alliance Group) and I are working to start a finance co-op for nonprofits: a financial institution using the traditional framework of a credit union to pool nonprofit and foundation deposits, make credit available to nonprofits, and return profits to the members.

    Every dollar we have in a bank such as the Bank of America or Chase is a dollar that is making money for the Bank of America or Chase. We should have an institution of and for the nonprofit community where the profits are returned to nonprofit organizations.

  • Diana Waters

    Rick,
    Excellent article. Nonprofits sometimes don’t have the complete skill sets or tools that for-profits do to analyze investments, including their banks. For those Foundations, Endowments, and other Nonprofit who are Large Depositors, and any Nonprofit that invests in banks, that might like to know more about how to easily and reliably anticipate BANK RISK, and possibly select stronger banks, we would be happy to provide an educational demo of the most accurate predictor of bank risk, bank quality, and counterparty risk. At over 97% accuracy, for many years, Institutional Risk Analytics (IRA) provides an economical single password sign-on, no software to download, subscription that typically flags a problem in a bank 9 months in advance, well in advance of the financial press, and includes data your banks may not telling you about themselves, including Hot Money, Moral Hazard, and CAMELS, and data and insights not available anywhere else. IRA is not a ratings agency, but a risk analytics company, and is not prevented from use like S&P and Moody’s are per Dodd Frank. IRA provides the platform the SEC uses to look at all the US Banks and US Bank Holding Companies and is the knowledge engine behind the MoveYourMoney campaign (Huffington Post). IRA’s products are much utilized by F1000 firms, University Endowments/ Investments, Banks, Family Offices, M&A, and other Financial Advisers. Our mission is to MAKE BANKING TRANSPARENT. We welcome the opportunity to educate and provide information to Nonprofits. We also have advisory services, but usually a small economical subscription is adequate in helping to avoid bank risk. I can be reached at [email protected], and am happy to email you a sample bank risk report, or answer your questions.

  • Jill Farrow

    Rick, thank you for such a great informative article looking at both the investor and investment receiving interests of foundations and nonprofit organizations. Your readily accessible definition of terms and links are especially helpful. One other angle of opportunity for investment seeking nonprofits comes to my mind too: the federal Community Reinvestment Act (CRA) requires that depository institutions meet the needs of the communities in which they operate including low to moderate income neighborhoods. Large banks are evaluated on their lending, investment and service activities across their markets. The CRA investment test criteria include the dollar amount of qualified investments, whether the investments are complex and innovative, also the responsiveness to community development needs. Community development commonly includes community services targeted to low and moderate income individuals. Thus large banks’ CRA programs may be a source of investment funds for nonprofits. As an example, a nonprofit school serving a majority of low to moderate income students that has a goal of completing a school construction or renovation project may find that their financial institution or a bond broker is delighted to work with them to apply for a federal Qualified Zone Academy Bond (QZAB) and then to buy that bond as a CRA investment. The federal government then covers the bond interest costs in the form of federal tax credits, thus substantially reducing the borrowing costs to the nonprofit school.

  • Jim Toscano

    Superb summary! A seminal piece for those in the field. j

  • Michael Anderson

    Hi Jan,
    Where can one learn more about and also track the progress of your efforts to create a finance co-op for nonprofits?
    Thanks,
    Michael

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