Thursday, March 24, 2016

10 Incredible Solutions to Poverty You Might Be Ignoring

(Image: Juhan Kuus)
Hunger is a symptom of poverty, not the other way around. Many charitable organizations have been fighting hunger for decades, often feeding ‘the same peoples’ over and over again. And a primary goal or mission for some organizations is to enroll as many people as possible onto government social benefit programs, like SNAP (food stamps).

The reason why these solutions above are not sustainable, is because they are focusing on a symptom (hunger) instead of the root cause of that symptom, i.e. poverty.

In our quest for sustainable social impact, Memory Trees offers these 10 solutions:

1. Education
No, not school. Not even books. Education means skills, thought leadership, confidence, an ability to know one’s value, learning how to contribute, and more.

2. Entrepreneurship
Manufacturing and mining jobs are gone. They’re not coming back. The good news is that anyone has the ability to turn stuff (incl. skills) into cash. We teach people how. Maybe you can do the same?

3. Sustainable Food
When we feed someone who is hungry, we solve a near term problem. Usually for a few hours. If we are lucky, maybe for a day. Necessary, but ineffective longer term, definitely not sustainable. Learn about sustainable food. There is an abundance of resources available on this topic.

4. Urban Farming
Look around you. Admire the $$ millions spent on beautification. Open fields with manicured lawns, trees swaying in the breeze. Now imagine all that ‘wasted space’ used for growing something to eat, like fruit trees lining city sidewalks, providing beautification, colors, shade... and food!

5. Micro-Lending
Do you know how little money one needs to start a small business? I am not talking about multi-level marketing scams, or the cost of creating a new social media web application. I am talking about, for example, a cutting board, a chef’s knife, containers, and access to clean water… the micro capital you might need to sell something that you have grown from seed.

6. Food Donations
Emergency relief agencies have this down pat. In fact, some are so well funded and organized that they are building their own little fiefdoms… because he who controls the food, often controls the people. Fortunately, emergency relief agencies do wonderful work. So please keep doing what you’re doing. But, also read # 3 above.

7. Self-sufficiency
Ah, the old “teach people to fish” philosophy. Recently I presented a workshop to nonprofit owners and this was one of my topics. Afterwards, a member of the audience challenged me by saying, “You can teach people to fish, but they still need a rod, reel, tackle and bait…” True. Please see # 5 above.

8. Family Health
I used to call this “Empowerment of Women.” During another workshop, a lady angrily stood up and loudly stated, “Men have a role to play in this too.” Then she walked out. In another session, an irate fundamentalist accused me of supporting "a woman’s right to choose." Both were correct. That is why I changed this header to “Family Health.” This change represents my entire contribution to 'the PC movement.'

The United Nations and other leading research organizations offer studies with facts supporting the direct correlation between female empowerment, and a reduction in poverty levels and/or family income.

For example, Bangladesh was one of the poorest countries on earth. Women of the previous generation had 7-8 kids, on average. Now, their daughters are having 1-2 kids. These mothers and their daughters are learning to become doctors, lawyers, etc. They busy themselves by opening retail stores, or clothing factories where they can employ other women. These employees manufacture the cute clothes you purchase at H&M and Forever 21. It is not perfect, and working conditions are often atrocious… but the ongoing community revitalization efforts are light years away from the previous supressive, patriarchal system where men ruled unequivocally, and with absolute power, before.

9. Social Change
Many people resist education, science, and facts while clinging to long-held beliefs learnt at an early age. Evolution greatly assists in this change management effort, even if superficially viewed as a system that offers humankind “out with the old, in with the new.” Some of our greatest obstacles to embracing change are old adages like, “It's always been this way,” or “That’s not how this works.” Fortunately the earth will ultimately shake off people who resist change... much like a dog might shake off water after a delightful summer frolicking.

10. Public/Private Collaboration
If you really think that your job is done when you have voted for your favorite politician, you might also be surprised “that nothing ever gets done.” No, rather identify and focus on people working for public entities that support your mission. And be persistent in order to get things done. For many people, their primary objectives may include job preservation and recognition. You might not be able to ensure they keep their jobs, but if they help you do yours, you surely will be able to allow them the benefit of receiving (all) the glory and recognition for their great contributions!

At Memory Trees, we are proud of the people who support our efforts... because they get promoted!

Sunday, January 17, 2016

Charity vs. The Market

I am responsible for the performance of assets under management (“AUM”) for a few clients and my own, personal investments.

Asset management is not my primary job.

But, I like doing it. My methodology is replicable and simple and my performance has been pretty good since inception. Well, better than the returns posted publicly by many hedge fund managers anyway. No-one really beats 'the market' unless they get lucky. In gambling terms, 'the market' is the 'house.' The house never loses.

I’m not sure whether my achieved returns afford me bragging rights though, because hedge fund managers are often more adept at managing their earnings, rather than client returns. Their objectives can also be referred to as personal Key Performance Indicators, or KPIs.

I have a friend whose father has been managing retail investment portfolios for his clients for many years. He, my friend, recently shared with me that every time the market posts a correction or significant downturn, his father has to spend hours talking his clients ‘off a ledge,’ proverbially speaking.

What does all this have to do with charity?

Well, the thing is this… in general; wealthy people support charities generously. But, the generosity of wealthy people is either limited, or otherwise linked to a large degree, to the performance of ‘the market.’

In a bull market, everyone happens to look like astute and smart investors. Giving is easy when one is receiving (plenty of profit/cash)!

When the market turns negative, as it has been for the last couple of months, charitable generosity is also slowly eroded. Or fast, depending on the severity of the correction!

For example, a local foundation has about $200 million in AUM. This year to date (1/13/16 - at the time of writing the Dow was down 7.5% YTD), their investment portfolio may be down about $15 million. Last year the Dow finished negative overall, meaning that their January losses have exacerbated their investment losses suffered in 2015.

Even if their asset managers placed their portfolio entirely in cash, they would have lost money… at least in inflationary terms, in addition to having to fund their operations from their ever declining cash resources.

When a foundation generates less income (from investments), it needs to reduce costs in order to stay in business, or find new investors. I do apologize if that last bit sounded a little Ponzi-like.

Cost cutting, like letting go of staff, moving to more humble premises, etc. may be viewed as undesirable, especially near term. Not good optics. A less offensive option would be for the foundation to portray everything as ‘business as usual.’ Although they may simply be offering and/or making less grant funding available to the nonprofit agencies that rely on them for financial support, in order for them to do their charitable work.

The above offers at least one sound reason why nonprofit corporations should be managed - just like for-profit corporations - with a focus on financial sustainability, first and foremost.

‘Business as usual’ allows foundations to e.g. host a breakfast at a nominal fee to supporters; and then posting these events and activities to social media sites, or sharing updates via press releases, etc. This presents an opportunity to remain relevant and visible and in the forefront of philanthropy in a respective community. Handing out certificates to large groups of individuals as recognition for community services delivered, also attracts media attention, at very little expense to a foundation.

One of the directors serving on my nonprofit corporation’s board once said, “It’s easy to find a project, but difficult to source funding… manage the business accordingly!”

Being charitable requires a reasonable market return! If you would like to learn how your corporation would be able to achieve a return to profitability, drive net/new (organic) revenue and learn financial sustainability best practices, contact me for a free, no obligation chat.

I do not want to - nor do I have a need to - manage your personal and/or corporate investments… I am simply being charitable!