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More federal money for California?
January 6, 2010; Investor’s Business Daily | In a continuing effort to monitor the freefall of state budgets affecting social programs and nonprofit services, we note California’s trail-blazing ways. Although it received $8 billion from the federal government’s stimulus program in 2009, Governor Arnold Schwarzenegger called for additional federal assistance to help balance the state’s current and upcoming budgets. It’s not a bailout, according to the muscular governor, just “federal fairness” (the state contends it gets only 78 cents on every dollar of taxes it sends to Washington). According to the governor, “the budget crisis is our Katrina.” But the solution may not be a multi-billion dollar bailout, because the federal government is in hardly better fiscal shape. The bigger problem is that every state wants the same kind of federal cash infusion. The governor also took issue with national health insurance reform, declaring it a “disaster” for California unless the state gets “the same sweetheart deal that Senator Nelson of Nebraska got for the Cornhusker State,” referring to Senator Harry Reid’s promise to Nelson that the federal government would pay for the state portion of Nebraska’s Medicaid costs as a trade for Nelson’s commitment to vote for the health reform legislation. Take the California position as a harbinger of the future budget free fall.—Rick Cohen
Clothes Bins Trashing Up the Cape
January 7, 2010; The Cape Cod Chronicle| In the used clothing collection bin world, there’s a big difference among the various charity sponsors. On Cape Cod, local officials are upset by the proliferation of used clothing collection bins. It’s hard for them to really take big whacks at Goodwill Industries or the Salvation Army, that donate a large portion of their clothing in-take to needy families and, in the case of Goodwill, provide employment to disabled persons. These groups are distinct from Planet Aid, founded by a cult leader from Denmark, which claims to meet a “global mission.” The Chronicle doesn’t report on the fact that many countries have kicked out Planet Aid—the organization has been criticized for how little of its collected clothing and shoes actually goes for charitable purposes, and the founder’s unusual purchases of homes on vacation islands while avoiding subpoenas and warrants. Dumping all of them into one charitable “bin” is a misclassification of some legitimate charities with one of questionable provenance.—Rick Cohen
City Steps in to Keep a Community Theater Going
January 7, 2010; Journal Gazette Times Courier | In our ongoing monitoring of what’s happening in arts organizations, we thought this was an interesting story. The city of Effingham, Illinois purchased the Rosebud Theater, which closed in December after only two years of operation. The Arts Connection of Central Illinois, the nonprofit responsible for the theater, will have to pay back the city a total of 3.3 million dollars in twenty years with the city making the first two payments. There is talk of trying to create a tax on food and beverage to fun the theater but if that is unsuccessful, the group will have to pursue other revenue sources. The Journal Gazette/Times Courier reports that “Effingham Mayor John Lange said the city wanted to lend its support to the theater because it has served as an important source of arts education and as an economic driver in the community.”—Kristin Barrali
Microfinancing in the U.S.?
January 11, 2010; Time | Thirty years ago Muhammad Yunus, the founder of the Grameen franchise, started lending small sums to poor entrepreneurs in Bangladesh to help them grow from a subsistence living to a livelihood. His great discovery was that even with few assets, these entrepreneurs repaid on time. Yunus and Grameen have a Nobel Peace Prize to show for their work. Now the microfinancier is looking to the U.S. But is there a role for a Third World lender in the world’s largest economy? Grameen thinks the venture will be successful here thanks to 9 million U.S. households untouched by mainstream banks and another 21 million using the likes of payday loans and pawnshops for financing. Also, he says, his group-lending or peer-pressure model of lending is effective. Costs are kept down by having borrowers vet one another, tying together their financial fates and eliminating expensive loan officers entirely. Since 2008 Grameen has collected 1,700 borrowers in New York City, and last June it opened a second branch in Omaha, Neb. Other cities in its sights include San Francisco, Boston and Charlotte, N.C.—Aaron Lester
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