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Who is fundraising now?

January 20, 2012 by Shaula

A company I talked to recently was using the excuse that they were fundraising quickly because they wanted to have a good showing in their SEC filing before the tech press spots their Reg D filing and outs them.   I hadn’t realized that Reg D filings had become so visible but indeed they have (if you know what to look for).  It took a few minutes of hacking the completely obtuse search protocol, but I ended up with something that seems worth sharing. There’s a good bit of fundraising going on.

I figured out I could go to the SEC Edgar database boolean search page and use this search string:  State=WA and type=D.  There were also a few under State=WA and type=D/A.  (form D amended)

http://www.sec.gov/cgi-bin/srch-edgar?text=State%3DWA+and+type%3DD&first=2012&last=2012

You can click through each company, and click their document and you’ll find out who the officers are, what their contact info is, how much they are raising and how much they have raised.  Neat stuff if you didn’t already know it.

After a little more digging on EDGAR, I found a page with more help on formulating searches.  It gives the tip that you can narrow by industry using SIC codes, but since those codes are ancient it’s of limited utility. I tried to guesstimate what kind of search I might set up as a member of the Northwest Energy Angels, but after some head scratching I found a study on renewable energy companies by the Wa State Department of Commerce where the researchers concluded “Based on discussion with several energy researchers, we determined that using SIC codes for most sectors was not a feasible analytic approach, given their lack of specificity regarding many energy efficient and renewable energy technologies. Additionally, the two state agency databases we used to obtain employment and revenue data classified companies by four-digit, rather than six-digit, SIC codes, which are insufficient to distinguish most categories of energy efficiency and renewable energy companies. “  So so much for that.

For a scraped and formatted version you can check out FormDs   http://www.formds.com/locales/seattle

Posted in Uncategorized | Leave a Comment »

The Value of Wall Street

February 26, 2011 by Shaula

A girlfriend sent me an article from last November’s New Yorker (Thanks jonathan for pointing out I mislabeled this as NYT initially) by John Cassidy that I’ve finally gotten around to reading, and as I ctrl+N my fourth email to tell someone about this article I realize it’s time to just blog.  It’s one of those articles that reinvigorates my desire to have a meaningful portion of my portfolio dis-intermediated – IE invested as directly as possible in entrepreneurs and enterprises that generate value and not in the markets.

The article is about capital market dysfunction and how the financial services industry has expanded to absorb more than a quarter of all U.S. profits.  Yeah, that’s pops my eyeballs a bit too.  The article then goes on a tour of how much of that is “rent-seeking” – the official economics term for capturing value rather than generating it.

One longtime financial industry insider is sufficiently concerned about the problem that he endowed the Paul Woolley Center for the Study of Capital Market Dysfunctionality at the London School of Economics in 2007.  The center publishes research like “Trading Frenzies and their Impact on Real Investment”.    The New Yorker article mentions a 10-point manifesto that Dr Woolley released in May of 2010. It is advice to giant pension funds designed to restore efficiency to the public markets and shift investment emphasis away from rent seeking.  Cassidy mentioned Wolley’s recommended cap on annual turnover, but my attention is drawn by his demands for total transparency of underlying investments and a commitment to only investing in publicly trading securities and refusing to make alternative investments.  To ask large funds to do this is essentially trying to drive the private capital markets public.  I think that would be a great thing and it seems likely to me that it would greatly improve market efficiency, but it’s hard to see how it can be a voluntary drive – it only works if a big enough segment of the market does it so it’s hard to be led by a few.   Like the accusation oft made of “socially responsible investing” its goals seem realistically implementable only by regulation.

Two parts of his “manifesto” leapt out at me because they’re points I’ve heard friends locally make:

  1. (Larina) that there’s a fundamental principal/agent problem where agents (the banks & investment agents) have better information than their customers and their interests are not sufficiently aligned.
  2. (Leslie – check this guy out!) “Understand that all tools now used to manage risk and return are based on the discredited theory of efficient markets”.

There are lots of great quotes in Cassidy’s New Yorker article about the scourge of financial innovation: “’But these types of things don’t add to the pie. They redistribute it—often from taxpayers to banks and other financial institutions.’” attributed to Gerald Epstein at the University of Massachusetts.   Citigroup is described as making a shift from trading significantly on their own account to emphasizing relationships with their clients.  The fact that putting their client’s interest ahead of their own is a novel business strategy is a great illustration of how the financial industry has become a product industry instead of a service industry.  And yet, what exactly is the added value of what they make?

It also touches on the shocking quick return to profitability of the Wall Street Banks -something that resonates particularly today with the recent headlines about GM.  I almost need physical therapy for whiplash I feel on the short ride between the WSJ grousings about  oppressive government interference and the triumphant crowing over profits.  There’s also reinforcement for the argument that short-termism is a root problem – in this case because traders get compensated on short-term results despite the risk that the long-term results can destroy their employers. Heck, if the bonuses are big enough, even that’s not the trader’s problem.

Definitely a compelling read, too bad it seems to be cultural news more than policy. http://www.newyorker.com/reporting/2010/11/29/101129fa_fact_cassidy?currentPage=all

Rent-Seeking defined by Wikipedia: https://secure.wikimedia.org/wikipedia/en/wiki/Rent-seeking

The Woolley Center for the Study of Capital Market Dysfunctionality: http://www.lse.ac.uk/collections/paulWoolleyCentre/Paul%20Woolley%20Centre%20in%20the%20News/Default.htm

Paul Woolley’s Manifesto: http://www.lse.ac.uk/collections/paulWoolleyCentre/word/giantfunds.doc

Posted in Capital Thoughts | 3 Comments »

Inventory Stories

February 1, 2011 by Shaula

I’m working with a small coffee shop on profitability and I’ve been working on managing inventory.  At MBA school we learn standard inventory management methods and how important it is to track, but it’s not so easy to implement where the dollar meets the register.   For starters, perpetual inventory with food is really challenging – we’d need a super detailed POS system which is expensive.  I’m starting to see why my banking school instructors said they think 50K is a minimum for starting a successful business.  Without technology your business can’t be very efficient, and you’re competing against businesses that do have technology.  It seems the only other option is to be such a small business that one person can track most of it in their own head and have really good intuition.

That leaves me with periodic inventory, which I don’t mind except that Quickbooks seems to handle it poorly.  So I’m currently in a bit of a chasm between what I’m able to do with Excel pivot tables and what we know how to do in Quickbooks.

I do see a purpose for the oft taught “reorder point” setting even in our small-inventory setting.  It would help us generate the weekly shopping list.  I’m also discovering an inventory challenge I didn’t learn about in business school – how to construct a minimum order.  As a very small business we are challenged to meet vendors minimum orders – in some cases to order at all, in other cases to get at least a first level price break.  For example:  as a coffee shop we order all our flavored syrups and some other products from a single vendor.  We’re running out of our most-used syrup so we need to make an order. Just ordering a case or two of that syrup doesn’t meet their minimum order, so what else should we order, and in what relative quantity?  I’d like to analyze the relative consumption of goods that we order from that vendor and construct an order to the minimum amount that matches our needs.  Anyone know of a quickbooks plugin (or other inventory package) that can do that?

Another challenge – like any good business we work to keep our inventory thin. Well, we don’t have to work too hard at it, we have neither the physical space nor budget to get too fat.  However it seems to be a fairly common occurrence (every other week maybe?) that some item we use is not in stock when we go to purchase it.  I’m learning that Cash & Carry seems to be a sort of discount supplier that will always have some variant of a product available, but it will vary: IE sometimes the napkins will be bleached and sometimes they’ll be recycled.  Ditto for the paper bags of the size we like.  That is a problem I’m sure larger businesses deal with as well, perhaps by padding inventory, or by getting big enough to have better relationships with their suppliers.

Another suffering of the very small business – data entry.  To track all this requires hours of typing in numbers from paper receipts.  Where’s the EDI interface for Cash & Carry or Costco?  No wonder so few business owners do it, but without it you’re missing a key advantage.  I’m beginning to think that broad support for data and analysis for small business owners would be a huge support for economic development.  It amazes me what a lock QuickBooks seems to have on the market.  Small suppliers don’t seem to offer much in the way of Electronic Data Interchange,  but I’m just beginning to look.

Posted in Along the Way, economic development, Where the dollar meets the register | Leave a Comment »

Why to seek more profit

January 19, 2011 by Shaula

Fellow BGIer Brian Setzler posted an interesting 3 minute video by Mark Albion that sweetly illustrates the pointlessness of profit maximization as a pure goal.  Here.

I think Brian’s post (and Mark’s video) neatly capture the problem of the shallow nature of business. Brian also has a clear articulation of how it is a system that can produce negative results despite being comprised of mostly well intentioned people.  I see a parallel in social justice organizing: people know how to organize marches and demonstrations and we’re imitating the form of the great work of the ’60s, but we’re not generating the same success because we’re only copying the visible parts, we’re missing the less visible ways those parts connected to deeper purpose.

In business we know how to get more efficient and focus on the bottom line but in our specialization with those trees we’ve lost sight of the forest -the why of it.  The video is totally about that but I think can leave viewers at the wrong answer: stay a fisherman.  I think the right answer is fisherman needs to partner with a sustainable MBA like Brian or me to say: I can help you grow your business not to build a private empire but to generate broad wealth in your community;  grow your business so you don’t just provide employment for yourself but some of your neighbors too.  Further I’ll create a workplace that invests in learning healthy conflict resolution skills and project management so when you come home from work you’re a better neighbor too, you’re enhanced not drained. That’s why the  fisherman should grow his business.  MBA skills are merely Means that accidentally have become Ends.

Posted in Uncategorized | 1 Comment »

Anatomy of a Food Intolerance experience

December 20, 2010 by Shaula

It starts like the lighting of a pilot light at the base of a furnace – what has probably been a building discomfort nudges over the edge into mild pain and into my consciousness.  Its light creeps into my sleep and I become awake, feeling it in the pit of my belly.  “What’s this,” I think in dismay.  I’ve been so good lately – cycles of cooking and cleaning up and cooking and cleaning up and hosting people for meals instead of going out so that I can have complete control of what I’m eating.  I’ve been so good – I shouldn’t be feeling this.  My mind races backwards over my recent eating and spins to a halt at a single See’s Chocolate Candy that I caved on after dinner.  It was dark chocolate covered almonds.  I could have gotten up, walked around a dining room table and across a kitchen to read the ingredients on the box, but I rationalized that in a mixed box I wouldn’t be able to tell what was what.  I could have just skipped it, I have plenty of high quality chocolate at home. Milkfat is an increasingly common ingredient in mass-market dark chocolate – it’s in Hershey’s and Ghirardelli (owned by Hershey).  My formerly favorite Divine dark chocolate with currents & almonds also has butter –apparently cooking the almonds in butter has a preservative effect. But I didn’t look, and now my tummy is telling me I should have.   I wonder what time it is, probably 2 am.  I open my eyes for a peek…3:30.  Not bad, maybe I can tough my way through and back to sleep but the light is burning more persistently now.  My mental reverse spin hits another highlight:  after dinner, despite feeling very full, I stuffed down an extra piece of (homemade gluten-free dairy-free) cake.  At the time that I did it I knew I didn’t physically want it but I felt a powerful urge and indulged it.  That could have been a clue there – I am noticing that when I’ve eaten something I shouldn’t I will often begin compulsive overeating within an hour.  It’s as if my body responds to an intestinal irritant by wanting to load up material and push the irritant through.  Unfortunately the response I have come to expect is that instead the system will shut down, usually for a couple days, as if the downstream flesh has gotten a whiff of what’s coming and wants no part of it.  I will go drink some of my new favorite chasers before returning to bed and see if we can skip that part of the ritual this time.

So, drumroll, does See’s have milkfat?   Let’s go to their site and see if we can find ingredients.  Hmmm– they have a posting of “Allergen Information”  – something that is increasingly common on the web.  Interesting, rather than listing ingredients, they go by section:  “These products are egg-free”, “These products are soy-free”, etc.  While that might seems like a strange approach, there are eight FDA-labeled “Major Food Allergens” that companies are required to identify on their labels, so there is a limited list to be enumerated.  The eight allergens are:  Milk, Eggs, Fish, Crustaceans (shellfish), Tree Nuts (almonds, walnuts, etc), Peanuts (they’re technically a legume), Wheat, and Soybeans.   Scrolling down See’s list, I come to the section on “Dairy-Free”.  None of the items on the list have chocolate – they’re all jellies and sours. Damn.   I check the next section, on Gluten.  In that section they explicitly list the few products that do contain gluten and my indiscretion is not among them.  Not that I expected it to be, but I’m learning that in the land of processed food, you can’t expect safety, you must always verify.

Why is milkfat increasingly in dark chocolate?  FDA regulations do not allow fats (other than cocoa butter) in products labeled “chocolate”, however milkfat is explicitly allowed as a substitute in Title 21, Chapter 1, Subchapter B, Section 163.123 of the FDA Code of Federal Regulations.  At least one article I read suggests, like how Divine uses butter, milkfat can help extend the shelf-life of chocolate.  In 1999 the European Union allowed substitution of up to 5% of cocoa butter with other fats and the product can still be called “Chocolate”.  The Italians responded with a “Pure Chocolate” law, creating a label specifically for chocolate products that have only cocoa butter as their fat. Unfortunately in 2010 the European Court of Justice ruled that they’re not allowed to create that as a defined label.  All makers still have to list any ingredients they include, but there’s not a label for the front of a product that ensures pure cocoa butter.

In the US, if it contains vegetable fat it can still be sold, just not labeled “chocolate”.  Have you ever had those cheap Palmer easter bunnies and eggs?  If you look at the label they’re not called chocolate, they’re called “milk chocolate flavored”.  In 2007 seven food producers associations, including the Chocolate Manufacturer’s Association, the Grocery Manufacturer’s Association and the Snack Food Association, filed a petition with the FDA that would allow the substitution of vegetable fats; ostensibly because they’re significantly less expensive than cocoa butter.  It seemed to cause a bit of a stir, the trails of which are difficult to still find on the web, and the FDA has not acted.  That likely wouldn’t help me, chocolates that have milkfat now would likely continue to have milkfat and substitute out their cocoa butter.  Even if they did substitute out the milkfat, odds are that like the Palmer easter coins, it’s chocolate I wouldn’t want to eat anyway, though I’d then also be less tempted into trouble.

I used to consider myself a foodie.  At one event I had people introduce themselves by name and favorite restaurant.  When it came back around to me I realized that my favorite restaurant was whichever one I hadn’t yet tried.  That’s no longer the case – eating out has really lost its joy for me as I feel like a waitperson’s worst nightmare and what I actually receive to be a crapshoot at best.  More and more people are on various elimination diets. I see increasing numbers of gluten-free and dairy-free products in the marketplace, it seems this trend is on the rise.

Are we better at diagnosing it or is it more common?  I’ve seen references to a study done on preserved blood samples from 1950′s Air Force recruits that suggests that gluten intolerance is actually more common now, it’s not just that we’re diagnosing it more often.  Why?  Two theories I’ve heard :  the increase in monoculture due to our industrialized food system means we’re all eating a narrower variety of wheat; the way our food system stores wheat allows growth of some kinds of mold that people are sensitive to.  I don’t really know, I only know what my tummy tells me.  Diagnosing allergies and intolerance seems to still be a fuzzy science – blood tests can reveal antibodies but it’s not black-and-white what the antibodies are being produced in response to.  There’s clearly a growing market in this segment, which for better or for worse I’m getting early exposure to.

4:57 am.  I drank my chaser at about 4.  I initially felt a mild intensification of discomfort, as if inner organs were stiffening in response to the additional stimulus, but now things are easing off and I think I’ll be able to sleep.  Let’s have at it.

Posted in No Reservation | Leave a Comment »

Creative Project Funding

November 26, 2010 by Shaula

The spouse pointed me to an interesting site: Kickstarter.  It’s crowd-sourced project funding for creative projects: film, theatre, art, design… stuff like that.  You can search by city or by project type to find projects you want to help fund.   The site creators are very explicit that this is NOT an investment, the creator retains 100% of the rights to their work.   It’s also not a donation, unless the creator is a 501c3, but they don’t want the site used for fundraising – it has to be about funding projects.  It seems to me it has to come under the auspices of a sale.  The project creator defines “reward levels”, very much public-radio style – this level you get a CD, this level you get the CD and a t-shirt, etc.

The site creators seem to work pretty hard to leave the tax status at the risk of the project creator – the site uses the terms “promise” and “reward”.   Most of the projects are raising a couple thousand dollars or less, so this seems to be flying on the “nobody complains, nobody gets hurt” theory. The way it makes sense to me is as a pre-sale of product or experience, but the artist/project person would need to be paying sales taxes.  The closest the site comes to a suggestion of that’s how it should be viewed is in their FAQ, if the person is unable to complete their project as listed… “If you fundamentally change your project, are unable to fulfill the promises made to backers, or decide to abandon the project for any reason, you are expected to cancel funding. A failure to do so could result in damage to your reputation or even legal action on behalf of your backers.”    Your backers, IE your customers, could take you to small claims court.  But who is going to do that for $25?  If you’re pledging more, hopefully it’s because you know the person.   On the couple projects I browsed it looked that way, an organized way to raise money from your friends and family.   The FAQ suggests backers “use your internet street smarts”.

People do this kind of thing informally all the time – help each other out, support friends doing a cool project, it’s the informal economy.  So it’s interesting to watch us use the web to formalize it.  On one had it’s improved – more transparency and a little more accountability – the projects are set up that backers make a pledge and the funds are charged and transferred only if the funding target is hit.  It’s pretty loose though – it’ s up to the project funder to post a budget or not, and they’ll let projects “overfund” if they can within the originally allotted time.  I find that a little disconcerting – it encourages people to under-budget so the can effectively break escrow, but then keep fundraising.   Project creators post updates about their projects and can choose to make them visible only to backers.  Some of the rewards are fun – tickets to an opening, or in two projects the creator offers to make dinner for backers at that level!  The opportunity to make new connections seems like a great one.  At least one place on the site used the word “patronage”.   However the downside of formalizing the informal economy is it creates sticky questions around things like tax status and regulations – to some extent these things are done informally because they’re just too small to bear the overhead of compliance.  Often taxes formally exempt projects below a certain amount, but it’s very local jurisdictional.

We looked at a couple projects that seemed like products effectively fundraising via pre-sale.  That seems really cool because you can effectively demonstrate market demand before you manufacture the product.  The question remains, can you follow through?  That’s where it gets tricky. For a $5000 project it’s probably not the end of the world. For $500,000 projects maybe there’s a way to pair this mechanism with something more formal that could do deeper due diligence on the team and the project.

very cool, check it out!

 

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ForProfit v NonProfit Fundraising

October 26, 2010 by Shaula

A frequent question in the arena of social enterprise is what legal structure to be:  for-profit, non-profit or hybrid?  The question is sufficiently confusing that Criterion Ventures has been successfully touring the country for over a year hosting day-long “Structure Lab”s to give folks some tools sort out the issues.  I took one and found it practical and helpful.  One of the issues to think about is fundraising – where will your funding come from and what are its constraints?  That may put constraints on your structure.  While folks in your lab may be helpful beyond that, note: they don’t give specific legal advice at the workshop. So let’s walk that through informally now: earned revenue can go either way;  any structure can take debt;  equity returns require a for-profit.  A tax-writeoff can be interesting – if there’s a non-profit intermediary willing to take expenditure responsibility (and your organization legitimately accomplishes a 501c3 compatible purpose) it could be possible to be a for-profit and get support from someone who wants to make a donation, definitely if that donation is to a community development loan fund who turns around and loans to the for-profit.

Perhaps you see how the hybrid model can get squishy, particularly when there’s a non-profit raising funds and contracting with a for-profit.  A dear reader got me started on this post (Thanks Tony!) with an article from today’s NYT “Hybrid Model for Nonprofits Hits Snags”.  That article talks about how GlobalGiving, a non-profit, had a for-profit subsidiary called ManyFutures Inc, that was trying to provide a technology platform to GlobalGiving and commercialize it.  In this instance, the founders (who founded both organizations) lost money on the for-profit. Since they didn’t benefit at all it’s difficult to suggest they benefited unfairly.  Still, close relationships raise the spectre of private inurement:  “providing excessive benefit to a person who is close to or has a controlling interest in a nonprofit — though tax law says nothing about how much is too much”, according to the NYT.  Periodically the media has raised the issue of “too much” – Minnesota Public Radio came under fire in the early ’90s because of high salaries at its for-profit subsidiary which handled the retail side of public radio.  Dan Palotta, created the for-profit Palotta TeamWorks, and raised millions for charity by organizing sporting events (and earning revenue for doing so) until he came under fire for personally profiting too much.  He’s written a book about how he believes the charitable model is broken, called “Uncharitable”.

So in the boom time, we got to see what happens when hybrids do well – we raise the issue of “how well is too well?”  Now in the bust the NYT questions if hybrids are particularly vulnerable to failure.  Are they?  Are social mission enterprises in general?    Getting away from hybrids, why choose for-profit vs non-profit for an earned revenue social mission?  The current wisdom seems to be that it’s easier to raise money for a for-profit than a non-profit, especially when you’re looking at big dollars.  People will commit more when they’re self-interested.  Kevin Doyle Jones (also quoted in the NYT article) used to talk about “two-pocket thinking”  -the investment pocket and the charitable pocket.  In my experience consistently the investment pocket is bigger.  The current economy raises another possible factor…

I’m feeling very aware  of how many for-profits (not necessarily mission-related) I’m invested in are themselves largely charitable enterprises right now- many companies are losing money in this economy and we investors are ponying up in the hope of making good on our existing investments.   Losing money and struggling to find traction for the business model like Many Futures, Inc doesn’t seem unique to hybrids or social enterprises to me.  Maybe the biggest difference between these social enterprise models and for-profits is that when we donate to a non-profit, or even invest but with low return expectations (and therefore somewhat charitably) in a for-profit, we “write it off” both mentally and literally at the time of the investment, so it doesn’t have the lure of… I’ll call it “Salvag-ation”.  In the for-profit investment where we hoped (or planned) to reap a reward, our difficulty in recognizing sunk costs and our hope of an eventual recovery perhaps keeps prior investors coming back to prop up a flagging enterprise through a couple extra difficult years.  Perhaps that commitment, intentional or not, is what gives for-profits an edge in building a sustainable revenue stream.  In fact, that reminds me of a quote I first heard during the Long Term Capital Management days though I see now it’s attributed to J. Paul Getty:  “If you owe the bank $100 that’s your problem, if you owe the bank $100 million, that’s the bank’s problem”.   In a for-profit,  financial self-interest binds us together.

Posted in Capital Thoughts, Nonprofit Practice | 1 Comment »

Finance and Economic Development

September 26, 2010 by Shaula

Andy Sack is highlighted in this weeks Puget Sound Business Journal for the work he’s doing building an entrepreneurial runway that funds and supports companies from startup to later stage, “ As the leader of TechStars Seattle (seed-stage investments), Founder’s Co-op (early-stage investments) and Revenue Loan (later-stage investments), there’s hardly an Internet deal that goes unnoticed by Sack or his team of angel investors.”  You hopefully can read the full article here.    I totally support that approach with different levels of support and opportunities for funding, so why am I not trying to jump on Andy’s bandwagon?  Because I’m concerned that internet companies don’t actually create that many jobs, in my experience those jobs are primarily available to a culturally narrow pool of people, and finally the venture model is dependent on exit by acquisition (in our current broken IPO markets especially) which wipes out half the jobs, most particularly the less elite ones.  To riff off a quote from Andy in the article, this is not a knock on the great work they are doing, I’m just looking for the pool of people interested in taking that kind of approach with a different focus.

For starters, I don’t think a venture model can apply to the kind of labor and capital-intensive businesses that I think will create the kind of jobs I want to support, so I’m looking for players that are willing to take concessionary returns in return for social returns.  Such players quite reasonably will want some measurement of those social returns, as do I.  That field is nascent but evolving, I’m hopeful about what I might learn this year at SoCap.

As a COMPLETE aside, I notice that there is a quote from Andy that appears differently online than it does in the paper.   Apparently the PSBJ digital crowd is less vocabulary sensitive than the paper crowd

Posted in Uncategorized | Leave a Comment »

Nuts and Bolts in Financial Education

September 15, 2010 by Shaula

I wrote this roundup of opportunities to supplement with finance-specific education for the social business types I know.  As I work to figure out where social investing meets social enterprise I’ve identified one key gap:  the skills taught for wealth/portfolio management are covered in CFA/CFP type courses and do not overlap AT ALL with banking.  Community Investing and Community Economic Development pools are all banking.  So a barrier to increasing community investing (take note, Social Investment Forum!) is that most wealth managers have no ability to assess the opportunity.  Calvert Community Investment Notes are the one intermediary I know of that links the two by building a pool of funds, doing the underwriting, and wrapping it up and selling the notes like traditional securities.   Otherwise, so far, Community Development Finance Institutions are restricted to Banks and a few daring foundations for funding.

Here’s my roundup:

CFA – Certified Financial Analyst
https://www.cfainstitute.org/pages/index.aspx

The best advice I’ve gotten on this one: if you want to help people with financial planning, become a CFP, if you want to create or evaluate financial products, become a CFA.  A CFA manages portfolios and analyzes stocks/bonds/funds to decide if they’re good investments.

Many traditional MBAs get a CFA in tandem with their MBA because of the overlap between an MBA accounting/finance curriculum and the CFA study program.  To become a CFA you have to study for and pass 3 tests.  You also have to work in the field.  The tests are offered every December and every June and the prep courses run about 18 weeks.  After reviewing several and asking advice I’m currently leaning towards Stalla.  Seattle U offers a Saturday course that starts in the fall, they use Schweser.  Seattle has a very active CFA society chapter with frequent lectures, a book club and some community service.  My experience to date is they have little to no SRI component or awareness.

CMA – Certified Management Accountant

A CMA is focused on the skills you want within a single firm to not just do tax reporting (CPA) but make management decisions about efficiency and profitability and controls.

This seems to be a 2nd tier certification – note that Stalla and Schweser have prep courses for the CPA but not the CMA.  A friend who had it said it’s more recognized on the East Coast than here.  There are local chapters  of the IMA (Institute of Management Accountants) in Bellevue and Seattle (and looks like they’re merging right now, so that could be good). It’s the Mt Rainier Chapter in Tacoma that makes me think “These people and what they do rock!”. OMG I had my mind blown at their “Excel Geeks Rejoice” meeting last March.  The CMA just switched from a 4-exam to a 2-exam system.

Banking & Financial Services –

Banking  is a different animal than financial management – lending, loan pools, tracking the performance of a single company and estimating their ability to repay debt and pricing risk and then how does that impact the performance of your whole loan portfolio.   CFAs do wealth management but have no idea how to evaluate the risk/return of CDFIs, which as I noted above I’m finding is a barrier to more investment in community development financial institutions/loan funds.

Boston University has a graduate certificate in banking & finance.  I found it online, I have no idea how good it is, but it gives a sense of the topics covered and how they’re different than investment topics.

http://www.bu.edu/online/online_programs/graduate_degree/master_management/banking_finance_management/

Community Development Finance

If you want to do community development or urban planning, there’s yet another financial world – that of tax credits and finance!   I’ve found a few different programs here.

NeighborWorks
http://nw.org/network/training/training.asp

NeighborWorks is a national organization focused on strengthening local community development programs with an emphasis on housing.  They have a number of certificate programs including “Housing Development Manager Certificate”, but also “Community Economic Development” and “Community and Neighborhood Revitalization”.   I attended one institute and took 2 of the 5 courses needed towards the “Community Economic Development” certification.  As someone with a strong math background I found them a little weak, but the perspective on what makes a main street work and how to support local businesses was still interesting.   In general NeighborWorks programs are geared towards nonprofit employees who are primarily community focused.     They’re also very East Coast focused – most of their training institutes are in Philly or DC, sometimes Dallas or Chicago. I lucked into one they had in Portland or I might not have bothered.

National Development Council
http://nationaldevelopmentcouncil.org/index.php/site/training/category/introduction/

While I was in the NeighborWorks 2-day class, folks in that class spoke with intimidation (ooo, sounds good!) of a similar but more intense 5-day training course given by the National Development Council.

They offer certifications as an “Economic Development Finance Professional”, a “Housing Development Finance Professional”, and a “Rental Housing Development Finance Professional”.     For the Economic Development certificate they have four 5-day courses: Economic Development Finance, Business Credit Analysis, Real Estate Finance and The Art of Deal Structuring.   They also offer a revolving loan fund course, focused on how to be compliant with Community Development Block Grants.

Council of Development Finance Agencies

http://www.cdfa.net/cdfa/cdfaweb.nsf/pages/traininginstitute.html

They offer a Development Finance Certified Professional designation: “The DFCP Program is designed to produce graduates with a comprehensive knowledge of development finance concepts, tools and applicability as well as a deep understanding of the entire development finance spectrum.”  Courses in tax increment finance, the New Markets Tax Credit program, bond financing, and revolving loan funds. They also don’t make it up to the northwest, San Diego is where I’ve thought I might go sometime.

Angel Investing/VC

You regular readers have probably already figured out that I think the hype and attention GREATLY outweighs the success/usefulness of angel investing.  I don’t think this is a good way to learn how to build sustainable businesses. But in the interest of completeness…

The Angel Capital Association is the national association of angel groups and so has good information on how to create/develop angel groups

http://www.angelcapitalassociation.org/resources/angel-group-overview/

The Kauffman Foundation developed and forked off a number of resources including a series of courses on angel investing (who got rich in the gold rush – was it the miners… or Levi’s?)  http://www.angelcapitaleducation.org/ I’ve taken a few and they offer good advice (step 1: you need to build a portfolio because so many individual deals will fail).

Another program that spun off is a kindof VC internship/Fellowship.  It seems mostly aimed at taking people with deep industry experience and bringing them into VC firms.  Read the bios of the current class to get a sense of who gets into this.  http://www.kauffmanfellows.org/fellowship.aspx

Philanthropy/Wealth Management

Rounding out my roundup of “how to understand money”  I’ll add these:

Institute for Private Investors – https://www.memberlink.net/ twice a year they offer a week-long Wealth Management Program on how to manage your money & assorted pool of advisors.   Once with Wharton and once with Stanford (august).  10K for the course, but if you need it, you can afford it.  They have a bunch of ongoing stuff but focused around SF and NYC.

The Philanthropy Workshop – http://www.tpwwest.org/ a year long program with a series of retreats to help wealthy folks develop a focus/plan for effective philanthropy.

Conferences/Associations of potential interest

The Community Development Venture Capital Alliance http://www.cdvca.org/ has an annual conference that I found interesting (though it was in DC and so half the conference was about lobbying – I ran into that with AEO as well, I think now for conferences that move around I’d skip the DC incarnation if you’re there to learn.)  They have a book worth buying called the CDVCA Equity and Near-Equity Investment Primer.

Association of Enterprise Opportunity www.microenterpriseworks.org – while I mentioned it.  A trade association for microenterprise lenders and training organizations.    They have an interesting annual conference – lots of info about how to run your microenterprise nonprofit – managing loan pools, helping people with credit repair, financial literacy stuff, software platforms to manage your loan portfolios. that kind of stuff.

Opportunity Finance Network – http://www.opportunityfinance.net/ the trade association for Community Development Financial Institutions like Enterprise Cascadia or Community Capital Development.   They’re also an East-Coast focused org but in Nov. 2010 their conference will be in San Francisco!

Thanks to Alex Moore for suggesting I take this BGI-internal post and share it on my blog.  He’s a pretty fine blogger on these topics himself.

Posted in economic development, Homework RePost | 1 Comment »

A test of the FDIC system

August 20, 2010 by Shaula

Regular readers may recall that one of my SRI investments is a deposit with ShoreBank.  Prudently kept below the FDIC limit, that deposit is now on a ride to a new bank, Urban Partnership Bank. As an electronic banking customer, it was fairly easy for the FDIC to just email me directly. How efficient.

Important Message from the FDIC – ShoreBank – August 20, 2010

On Friday, August 20, 2010, ShoreBank, Chicago, Illinois was closed by the Illinois Department of Financial and Professional Regulation, Division of Banking. The Federal Deposit Insurance Corporation (FDIC), as receiver, arranged for the Urban Partnership Bank, a newly chartered bank, to assume the banking operations of ShoreBank, including all of the deposits. There is no immediate impact for deposit customers. Depositors can continue to access their accounts as they normally would, including writing checks or using ATM or Debit cards.

There is no need for customers to come to the bank. All of the information customers should need is included in the referenced Question and Answer Guide <http://www.fdic.gov/bank/individual/failed/shorebank_q_and_a.html> . The FDIC encourages customers to read the Guide and contact the FDIC Call Center at 1-800-523-8503 with additional questions.

Bank activity will be business as usual. Deposit accounts remain insured up to $250,000. The FDIC encourages bank customers to use all traditional methods to conduct bank business.

Please be advised that you will not receive notification from the FDIC, the Receiver, or ShoreBank to claim/unlock/unsuspend your account or to provide any private information. Be wary of scams to obtain information by individuals or entities indicating they are acting on behalf of the FDIC or ShoreBank.

The new bank seems to have been formed primarily by the very investment group that was trying to invest in Shorebank to boost its assets.  I honestly have not followed the details of why Shorebank in particular was in trouble, given the number of bank failures it’s hard for me to single them out as particularly poorly managed or signifying something strongly unusual.  However their salvage plan included $75 million in TARP funds which became politicized and withheld.

The irony of this is that the seizure and transfer will cost the FDIC an estimated 367.7 million, as the new bank gets to purchase the old deposits at .50 on the dollar.  Ah politics.  The next question is… how does this impact our local affiliate, ShoreBank Pacific?  I found an interesting tidbit here:

ShoreBank Pacific, the separately chartered bank unit based in Washington state focused on lending to “green” businesses, won’t be included in the new operation. Its CEO, David Williams, said last spring that he was in talks with outside investors in the event that ShoreBank failed.

Unclear for now is what will happen to ShoreBank’s non-profit units and for-profit microlending operation in poor foreign countries. They aren’t expected to be part of the new unit.

I think I’ll check their website tomorrow.

Posted in Capital Thoughts | Leave a Comment »

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