The economy is tumbling. Will philanthropic donations follow?
The latest victims of the sagging economy: charities. In May, the annual gala of the Robin Hood Foundation, an event at which a few thousand hedge-fund magnates and leveraged buyout titans conspicuously display their wealth and commitment to social justice while rocking out to A-list musical guests (Shakira, John Legend, Sheryl Crow), raised $56.5 million, down 21.5 percent from $72 million the year before. No surprise here. Many of the regulars have seen their net worths crushed in the past year.
But it's not just the charities of the swank that are suffering. The Salvation Army caters to a somewhat different crowd, tens of millions of middle-class Americans. And while it had a good Christmas—"since the first of the year, we've seen some slippage," said Major George Hood, a Salvation Army spokesman—overall donations are down compared with 2007, and donations of used clothing and furniture to thrift shops have fallen by 20 percent. While natural disasters typically inspire a spike in donations, Hood says the earthquakes in China, the cyclones in Burma, and the floods in the Midwest have yet to generate such an outpouring.
It would be unfair to say that Americans—whether they are accountants in Kansas City, Mo., or bond traders in Greenwich, Conn.—are becoming stingier. Rather, philanthropy is a pretty large industry. Charitable giving in 2006 was $295.2 billion, according to Giving USA 2006, about 2.2 percent of gross domestic product. For comparison's sake, Wal-Mart has annual sales of about $350 billion. And like every other industry, philanthropy is tethered directly to the health of the overall economy, and in particular to the health of the upper-middle-class consumer. If the past is any guide, it's likely to be a lean year for nonprofits.
Tuesday, June 17, 2008
Monday, June 16, 2008
Happy Father's Day
Finally, this weekend is father's day and I want to take a moment to wish all of the fathers out there a happy weekend.
So, whether you're a father, son, or daughter - enjoy the weekend and relish the time you share with each as much as you can. Life is short and, in the end, that is all that truly matters. Happy Father's Day!
Thursday, June 5, 2008
Need some inspiration?
KID CAN DO IT ALL ON ONE LEG
Baseball, football, soccer -- nothing slows him down
Adam Bender slips a chest protector over his Astros jersey, buckles a shinguard to his right leg, positions a mask atop his head, grabs his catcher's mitt and hops out of the dugout.
Adam has his game face on. Or at least what passes as a game face for an 8-year-old. His eyes are serious. His freckled nose is crinkled with determination.
It is a cool, breezy Saturday morning at Veterans Park, which is already buzzing with activity. Baseball games are being played on three diamonds within a pop-up of each other. Parents are clustered in and around the stands, chatting and cheering. Players of all ages, wearing uniforms or team T-shirts, swarm the place.
Hardly anybody gives a second glance to the catcher in the Southeastern rookie league deftly playing on one leg.
Adam Bender is just another kid playing ball, which is exactly how his parents, Michelle and Chris, want it.
"I was a little hesitant when we first brought him up here for baseball," Michelle said. "I thought his spirit might be crushed if he got out every time. Then I thought, who am I to micromanage his feelings? He's going to have to learn how to deal with this stuff.
"The more I shelter him, the more he'll think, 'I'm fragile.' I don't think I'll ever tell him he can't do something."
Adam is amazing to watch. He takes his position behind the plate, resting on his right knee.
When a runner rounds third looking to score, Adam jumps up and holds his ground.
He suffered a mild concussion on one collision and missed a practice or two. But he recovered and was ready for action in the next game. At one point this season he led the rookie league in put-outs at home.
At bat, his athletic skill and balance allow him to take a full swing, and he usually makes contact. He hops to first base as quickly as he can. If he's safe, he uses crutches to run the bases. When he gets thrown out, he hops dejectedly back to the dugout.
He's a competitor, and not just in baseball.
Adam, who lost his left leg to cancer when he was 1, has played soccer for a couple of years. He uses crutches, and is a whirlwind on the field in Centenary United Methodist's "I Am Third" league.
He played YMCA flag football last fall for Bruce Rector, who has coached against Adam's baseball team.
At first, Rector wasn't sure if Adam could play football. "Then I slept on it. Having seen him play baseball, I knew he'd find a way to make it work," Rector said. "Sure enough, we put him at quarterback (using no crutches) and used a shotgun snap. He threw a lot of touchdown passes."
Adam lobbied to line up at receiver at least once so he could have a chance to score. On a conversion play, Adam hopped 5 yards down the field and made a diving catch in the end zone despite being double-covered.
"That's what I mean when I say if you turn him loose, he'll find a way," Rector said.
Adam shyly deflects question about himself. He admits that he "loves baseball" and "loves catching," but he doesn't think he's doing anything out of the ordinary.
Astros coach Dan Wyse said he went out of his way to get Adam on his team "because he's a good kid, a good catcher, and what he brings attitude-wise, he's an inspiration to everybody."
Michelle Bender appreciates the effect her son has on people young and old.
"Adam has helped other kids see that a person with a disability can be fun to hang out with, and play with, and they can still be a part of a community or part of a team. It's developed the kids' compassion.
"And if he can inspire even one family to allow their kid to try something they normally might not try, that's great."
Adam tried using a prosthesis but didn't like it because he felt it slowed him down. He is adamant about not using a wheelchair.
"He wants to play ball like everybody else," Michelle said. "He's always had that 'nobody's going to stop me' attitude."
Chris Bender thinks his son's "attitude and energy" channel naturally into sports. "He pops out of bed at 60 miles an hour and doesn't quit until he collapses at the end of the day. He's always wanted to do everything."
Doing everything that his older brother Steven and younger sister Morgan do is what pleases Adam's dad the most.
"The best thing about it is the normalcy," Chris said. "There will come a day when Adam will no longer be able to keep up. But he's had some measure of childhood where he's just like everybody else.
"He doesn't have to sit and watch his brother and sister play. He's out there playing with them."
And teaching a life lesson to everybody who's watching.
Rector does motivational speaking and leadership training, and he regularly relates Adam's inspirational story to adults.
"The lesson he teaches is that you need to let talented people with great heart get out there and do their thing," Rector said. "There's no such thing as an insurmountable obstacle for Adam. He's a winner."See video of Adam hitting and playing catcher in a baseball game.
Five Things You Need to Know About the U.S. Dollar
The greenback just can't catch a break.
Despite recent positive comments (or, at least, less negative comments) from George Soros and a reasonable rebound off the March lows, the dollar is still doomed, according to conventional wisdom.
So what's really going on with the dollar? And why do we care whether it goes up or down in value? Isn't the dollar I'm holding today the same as it was yesterday? Why can't the Fed just print more of them? Let's take these questions one by one and see if we can reach an investment thesis that runs contrary to conventional wisdom.
1. Q: What is a dollar anyway? What does it mean?
A: The dollar is simply a banknote issued by the U.S. government that is mandated by law to be used as legal tender for all transactions. Although the dollar was once backed by gold, today it is backed simply by the government's promise that it will be convertible in an exchange. Got faith? Good, you'll need it, because faith is the only thing that separates a blank sheet of paper from a dollar bill that is exchangeable for, say, a banana.
2. Q: OK, I've got faith aplenty. So where do all our dollars come from, and why can't the Federal Reserve just print more?
A: The Fed can print money. And it does quite often. But every dollar created dilutes the value of a dollar already in circulation, causing it to weaken. Of course, we don't notice this dilution immediately unless we travel outside the country, and if everything we consumed was produced in America, we probably wouldn't even notice a weak dollar at all. But the reality is we still buy many goods from overseas producers and spend more dollars on those goods than we receive for goods produced in the U.S. That's called a trade deficit.
3. Q: So, we're spending more than we're making, and the Fed is printing money to make up the difference. How does the Fed do it?
A: The Fed "prints" money through three mechanisms. The easiest way is through the Fed's open market operations, through which the Fed literally buys and sells Treasurys that are trading in the "open market." If the Fed buys Treasurys, then the dollars it uses to buy them become available to banks to lend. If it sells Treasurys, the dollars get taken back.
The second mechanism is lowering the percent of deposits banks are required to have on hand, thereby increasing the pool of available money to lend.
The third is through its "discount policy." The discount rate is the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility. The Fed can grow money by reducing the discount rate.
Dollars are literally printed by the Bureau of Engraving and Printing.
4. Q: Trade deficit, weaker dollar -- I kind of get it -- the Fed has to print more money. But the more money it prints, the weaker the dollar gets, right? So who is paying for all of this and what's the connection with foreign central banks?
A: As a group, we Americans spend more than we save, both individually and collectively as a government, so that money has to come from somewhere. This raises a serious question. Because the more money the Fed creates, the weaker the dollar gets, how do we get all these dollars to spend without collapsing the currency?
One way is through the purchases by central banks of countries like China and Japan. We have to "sell" our Treasury bonds to countries willing to buy our debt, paying them interest for financing our spending. Foreign governments all over the world also use the dollar as a foreign exchange reserve, allowing them to control their own currency, increasing or decreasing it compared to other currencies, and to maintain the stability of their currency in the event of an economic shock.
Because the dollar is perceived as the most stable currency in the world (note: the key word here is "perceived"), countries are willing to finance our spending by purchasing dollars and bonds. But, if they begin to perceive they are not being adequately compensated for the risk of holding our debt, or if their dollars are depreciating faster than they like, these countries will demand a higher interest rate to buy our bonds. So, a weak dollar can actually lead to higher interest rates! That affects you, Mr. or Ms. Homeowner-Credit Card Spender-Business Professional-Student!
5. Q: Here's the bottom line: In the simplest terms, what are the advantages or disadvantages of a stronger or weaker dollar, and how do I play it?
A: Here's a summary:
Weak Dollar: Advantages
It's easier for U.S. companies to export goods because foreign currencies can buy "more" against the weaker dollar.
Tourism increases because foreign visitors find it less expensive to visit.
To an extent, foreigners will view U.S. investment opportunities more favorably because they can buy more for their yuan/yen/euro/pound, etc.
Weak Dollar: Disadvantages
Consumers see higher prices. We don't notice this because the Chinese yuan is tied to the dollar in a tight range. And most of our imports come from China.
There are higher interest rates, i.e., higher cost of money to consumers.
It's more expensive to travel abroad.
Strong Dollar: Advantages
The prices for imported goods are lower.
U.S. investors can buy foreign assets and investments at lower prices.
Strong Dollar: Disadvantages
It's harder for U.S. companies to compete abroad.
It's more expensive for foreigners to visit the U.S.
So how do you play a strengthening dollar? It used to be that unless you were a currency speculator, dollar strength and weakness involved an indirect play via companies with strong international sales.
Now there are many more alternatives. Two exchange-traded funds that allow investors to make short-term bets on the dollar's direction are available through PowerShares. The DB U.S. Dollar Bullish Fund (UUP) , as the name suggests, allows you to bet on the dollar appreciating, while the DB U.S. Dollar Bearish Fund (UDN) allows you to bet against the dollar.
Despite recent positive comments (or, at least, less negative comments) from George Soros and a reasonable rebound off the March lows, the dollar is still doomed, according to conventional wisdom.
So what's really going on with the dollar? And why do we care whether it goes up or down in value? Isn't the dollar I'm holding today the same as it was yesterday? Why can't the Fed just print more of them? Let's take these questions one by one and see if we can reach an investment thesis that runs contrary to conventional wisdom.
1. Q: What is a dollar anyway? What does it mean?
A: The dollar is simply a banknote issued by the U.S. government that is mandated by law to be used as legal tender for all transactions. Although the dollar was once backed by gold, today it is backed simply by the government's promise that it will be convertible in an exchange. Got faith? Good, you'll need it, because faith is the only thing that separates a blank sheet of paper from a dollar bill that is exchangeable for, say, a banana.
2. Q: OK, I've got faith aplenty. So where do all our dollars come from, and why can't the Federal Reserve just print more?
A: The Fed can print money. And it does quite often. But every dollar created dilutes the value of a dollar already in circulation, causing it to weaken. Of course, we don't notice this dilution immediately unless we travel outside the country, and if everything we consumed was produced in America, we probably wouldn't even notice a weak dollar at all. But the reality is we still buy many goods from overseas producers and spend more dollars on those goods than we receive for goods produced in the U.S. That's called a trade deficit.
3. Q: So, we're spending more than we're making, and the Fed is printing money to make up the difference. How does the Fed do it?
A: The Fed "prints" money through three mechanisms. The easiest way is through the Fed's open market operations, through which the Fed literally buys and sells Treasurys that are trading in the "open market." If the Fed buys Treasurys, then the dollars it uses to buy them become available to banks to lend. If it sells Treasurys, the dollars get taken back.
The second mechanism is lowering the percent of deposits banks are required to have on hand, thereby increasing the pool of available money to lend.
The third is through its "discount policy." The discount rate is the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility. The Fed can grow money by reducing the discount rate.
Dollars are literally printed by the Bureau of Engraving and Printing.
4. Q: Trade deficit, weaker dollar -- I kind of get it -- the Fed has to print more money. But the more money it prints, the weaker the dollar gets, right? So who is paying for all of this and what's the connection with foreign central banks?
A: As a group, we Americans spend more than we save, both individually and collectively as a government, so that money has to come from somewhere. This raises a serious question. Because the more money the Fed creates, the weaker the dollar gets, how do we get all these dollars to spend without collapsing the currency?
One way is through the purchases by central banks of countries like China and Japan. We have to "sell" our Treasury bonds to countries willing to buy our debt, paying them interest for financing our spending. Foreign governments all over the world also use the dollar as a foreign exchange reserve, allowing them to control their own currency, increasing or decreasing it compared to other currencies, and to maintain the stability of their currency in the event of an economic shock.
Because the dollar is perceived as the most stable currency in the world (note: the key word here is "perceived"), countries are willing to finance our spending by purchasing dollars and bonds. But, if they begin to perceive they are not being adequately compensated for the risk of holding our debt, or if their dollars are depreciating faster than they like, these countries will demand a higher interest rate to buy our bonds. So, a weak dollar can actually lead to higher interest rates! That affects you, Mr. or Ms. Homeowner-Credit Card Spender-Business Professional-Student!
5. Q: Here's the bottom line: In the simplest terms, what are the advantages or disadvantages of a stronger or weaker dollar, and how do I play it?
A: Here's a summary:
Weak Dollar: Advantages
It's easier for U.S. companies to export goods because foreign currencies can buy "more" against the weaker dollar.
Tourism increases because foreign visitors find it less expensive to visit.
To an extent, foreigners will view U.S. investment opportunities more favorably because they can buy more for their yuan/yen/euro/pound, etc.
Weak Dollar: Disadvantages
Consumers see higher prices. We don't notice this because the Chinese yuan is tied to the dollar in a tight range. And most of our imports come from China.
There are higher interest rates, i.e., higher cost of money to consumers.
It's more expensive to travel abroad.
Strong Dollar: Advantages
The prices for imported goods are lower.
U.S. investors can buy foreign assets and investments at lower prices.
Strong Dollar: Disadvantages
It's harder for U.S. companies to compete abroad.
It's more expensive for foreigners to visit the U.S.
So how do you play a strengthening dollar? It used to be that unless you were a currency speculator, dollar strength and weakness involved an indirect play via companies with strong international sales.
Now there are many more alternatives. Two exchange-traded funds that allow investors to make short-term bets on the dollar's direction are available through PowerShares. The DB U.S. Dollar Bullish Fund (UUP) , as the name suggests, allows you to bet on the dollar appreciating, while the DB U.S. Dollar Bearish Fund (UDN) allows you to bet against the dollar.
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