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Tax Day 2009 Cometh!

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Today is tax day. Whoo hoo! Or not… I’m only putting up a brief post this morning because I want everyone out there to keep an eye on their local media to see if the “Tea Parties” are covered. Some of the major cable news channels have been talking for a while about how Americans of all political parties will be taking part in “Tea Parties” today to protest the growing feeling of taxation without representation.

Granted, I don’t think that we are taxed without being represented, but we are definitely subjected to expenses (i.e. uses of our tax dollars) with which the majority of Americans would disagree. For example, when there is poverty in America, I’m confident that a majority of Americans would support using tax dollars to alleviate American poverty before alleviating poverty in other countries. That’s a random example, I know.

Anyway, keep an eye on the media to see if they have any coverage of these “Tea Party” events.

Will the Economic Crisis Affect Fraternity Membership?

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Back when I was the advisor for my local chapter of Sigma Pi Fraternity, I signed up to be on a listserv for fraternity and sorority news. Every once in a while I get an e-mail with an article attached to it talking about something in the fraternity world (and since the media is sensationalistic these days, the articles are generally filled with bad news).

A few weeks ago, though, an article was sent out that talked about why some students are choosing to go Greek these days and why others aren’t. One paragraph, in particular, stuck with me:

The current economic crisis has changed the way students think about money, and Fouts acknowledges that perceptions about fraternity and sorority dues are no different. Chapters and student affairs offices, she said, will have to be “line-item specific” as to what these dues are for and how they will be spent to the benefit of the student. She argued that interested students should not be brought to think of their funds as “paying for friends,” as many an old cliché of fraternity life states.

Let me offer some comments. First, joining a fraternity is not paying for your friends any more than paying to go away to college is paying for a new social network or that joining any other organization that requires annual dues is paying for your friends. That’s a tired ass old argument that is so fundamentally flawed in both its view and application that it’s not even worth getting into extreme details here.

Second, I hope that students WILL begin to question where their dues are being applied – both locally and nationally. When I became the President of my local chapter many, many years ago one of the first things that I did was review where our money was flowing…and it wasn’t pretty. We were robbing one group of guys to pay for the next group of guys and creating a ridiculous cycle while accruing a massive amount of debt (it peaked at $9,000+ at one point). It was horrible. The guys who came before me either knew about the problem and didn’t fix it or didn’t know how to dig our chapter out of the hole.

To make a long story short, in the two years that I was in charge, we paid off the entire debt and reorganized our accounts in a more professional manner. Things went from very bad to very good (a little self-promotion, why not?).

When I began as a volunteer and began to dig more into where the money was going at the national level, while I understood the immediate needs and uses of the funds (which were all being used in a responsible manner), I began to worry about the future. My main concern was not with today’s financial issues, but with the financial issues of 2020 and 2050. With that in mind, I changed my main set of volunteer activities from assisting undergraduates (which is a lot of fun and the most rewarding experience in the fraternity) to focusing on how to build the financial future of our fraternity.

Can fraternities and sororities survive the current economic crisis? Yes – if they prove their worth. Fraternities and sororities need to be prepared to show the value that a new member gets for their dollars. If that “benefit” or value is the ability to attend fraternity-only parties, then the fraternity which is selling that product is likely going to find itself in dire straits. Any college student knows that there is always a party if they know where to look. Fraternity and sorority membership should provide lifelong benefits such as a built-in professional network and a built-in emotional support system.

Those fraternities that can prove their worth in the current economic climate will not only survive, but I expect them to thrive.

Did You Miss The First Newsletter?

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Hey everybody! Did you miss the first edition of the JerseySmarts.com monthly newsletter? If the answer is yes, then you need to make it a priority to join our mailing list by filling in the short form on the right side of this website! See it? It says “Subscribe to JerseySmarts.com” right there on the side of the website. Go and sign up!

In all honesty, you probably didn’t miss too much with the first newsletter since it was basically a listing of links to the last few posts on the blog. However, I have plans to increase the newsletter-specific content that will be sent out to subscribers, so you might want to sign up while you can!

Nonprofits – More Efficient, More Cost Effective

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Long Branch has a few weekly newspapers, one of which is the Atlanticville. Generally, the Atlanticville doesn’t have many interesting guest opinion editorials (unless, of course, I’m writing one). This week, though, they printed one written by James Abruzzo of DHR International’s Newark office. Some snooping over at DHR International’s website shows that Mr. Abruzzo heads up the firm’s nonprofit searches. Sounds like an interesting job.

Anyway, in his op-ed, Mr. Abruzzo makes a statement that I think bears repeating on this blog:

Contrary to its name and to what many believe, the nonprofit sector is not non businesslike; in fact, compared to government and the commercial sector, nonprofits are better managed and more efficient. Yet, by providing services that would otherwise be unaffordable in the marketplace, the sector relies on contributions and grants and it is this that makes the sector vulnerable during the financial crisis.

Bravo, Mr. Abruzzo! This is the truth, people. Nonprofts are created to fill a gap. That gap can range from a social services gap to a gap in opportunity to access certain resources or even a personal gap left in one’s family after a person passes away from a specific cause. The point is that nonprofits fill a gap that otherwise would not be filled by the government or private sector. As Mr. Abruzzo suggests, many of the services provided by nonprofits are unaffordable in the marketplace and thus the sector must rely on generosity to succeed.

Which brings me to my first point of this entry – please try to continue to send your weekly, monthly, or annual donations to your favorite charities! I’m not asking you to go out and find a new charity and start making donations to it (though if you’re in the business of donating money to new charities, let me know and I can hook you up with some good ones in Morris, Monmouth, and Mercer Counties). What I am saying, though, is that if you can afford to continue your existing donations to your favorite nonprofit organizations, please do so.

My second point in writing this entry is to reiterate a point that Mr. Abruzzo makes in his op-ed, namely that the nonprofit sector is not non businesslike. In other words, nonprofit does not mean “no profit!” In fact, nonprofit organizations have begun using the term not-for-profit instead of nonprofit to describe their business activities. The basic difference between a for-profit organization and a not-for-profit organization is that for-profit generate profits which can be distributed back to its shareholders, not-for-profits are not allowed to do this as per IRS regulations. That’s the difference in a nutshell.

Do not expect a not-for-profit company to expect not to make money on its activities. In fact, you should expect the opposite. The best not-for-profit organizations are financially healthy despite the current economy since they are built on a fiscally responsible framework made for success. I’m glad that Mr. Abruzzo kept that point in his op-ed. The world needs to know that a good not-for-profit organization should generate profits and even bank some of those profits. A good not-for-profit organization will not, however, break the law and redistribute those profits to their shareholders.

Remember this if you ever deal with a not-for-profit company!

Bad News On Credit Card Payments

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Right at the end of January, USA Today published an article that talked about how consumers were paying less money each month towards their credit card balances. This is bad news. On the one hand it’s good to know that consumers are making their monthly payments, but on the other hand it’s horrible to hear that people are sticking closer to the monthly minimums than has historically been true.

Credit cards are great tools to help build a credit history, but they have to be used properly or they can demolish a person’s financial status. Anyone who knows how to use money to their advantage can tell you that not all debt is bad debt. Sometimes a person can use debt to their advantage (for example, the right types of student loans and home mortgages). Consumer debt, though, is a different story.

The right types of student loans and home mortgages are investments in the long-term future of you and/or your family. Consumer debt, though, is more of an investment in the here and now – this is why it should be used sparingly. Sure, everyone falls victim to the use of consumer debt to meet their immediate wants. Hey, I spent a great deal of money buying a television last month just because I wanted it! Well, the old television was broken, too, but that’s a different story. That said, though, I do not believe that people should avoid credit cards. I think each person should have one or possibly two credit cards, but no more. I keep one to both maintain a good credit history and just in case I need access to a large dollar amount quickly (since I don’t keep much cash in my checking accounts – the money stays socked away in the savings and investment accounts).

In any event, I thought the USA Today article was pretty good and wanted to share. Enjoy!