Dear Reader, I’m writing to you from Man About Town’s Brooklyn redoubt – where we have been spared from the very worst of hurricane Sandy. We never flooded, and we never lost power. Like so many of you, Mrs. Man About Town and I have been glued to Twitter, NY1, WNYC, the NY Times, and a host of other news sources trying to grapple with the scale of the devastation caused by surging storm waters and wind. And, like many of you, we’ve wept over the terrible loss of life, and been inspired by the ingenuity and dedication of emergency personnel, public leaders, and generous neighbors.
In my last blog post I spent a good chunk of time talking about the trend toward “complexification” in the nonprofit sector. There are plenty of small, scrappy, neighborhood based nonprofits around (as a matter of fact, that number continues to grow), but we’ve also seen the emergence of nonprofits with $100 million plus in annual revenues, hundreds of staff, sophisticated operational structures, and highly complex financial instruments built to conduct their business.
I argued that we’re past due in borrowing some tools from our for-profit colleagues, including stronger staff development and retention regimens, the ability to access substantial capital for opportunistic growth, shaping board relationships that focus on organizational development and not just fiduciary oversight, and developing a nonprofit sector trade association to lobby on the collective needs and issues of our sector.
We’re clearly entering a new era that will continue to blur the lines between for-profit and nonprofit. And let’s be honest: it’s a little scary. Why? Because we’re all very worried that we might somehow become like, you know, them.
New York City has everything, just like this bagel. Yum! The secret, as they say, is in the water. And water, as they say, is life.
But there’s a hole in the bagel, dear Liza, dear Liza.
When I first came to NYC, still wet behind the ears and tasked with helping distribute money from Deutsche Bank’s foundation, I was sent to meetings. Lots of meetings. Very interesting meetings, where the community development banking luminaries of the day would hold court: Carol Parry, Phyllis Rosenbloom, Mark Willis, Marc Jahr, Bob Rosenbloom, Michael Feller, Greg King, Hildy Simmons, Gary Hattem. Or other meetings, where the United Way, Ford or Rockefeller called the tune, and the jolly members of NYRAG would troop in to talk about the inner workings of domestic microfinance, workforce development, educational reform, financial literacy, homeownership, arts and economic development, you name it. There was a palpable core of philanthropic leadership really focused on the challenges of the city, and they held significant mass. Their effect was gravitational: where they led, others followed. They drove discussion, led thinking, catalyzed partnerships, commanded attention. You may not have loved what they thought, or how they went about things, but their presence was manifest, and their impact was broad.
New York City still has the strongest and most vibrant philanthropic community in the country. It’s still provides enormous leadership in social investment strategies, community development finance, building public / private partnerships, and program innovation. But something has changed. Over the years, there’s been a growing vacancy in the focus on New York City itself: on its systems, challenges, nonprofit leaders, and neighborhoods.
In short, despite the incredible presence of philanthropic leadership and resource, the attention has moved elsewhere. I’m not sure that most folks have even noticed. It’s been a creeping drift, a steady ebb. A spreading hole in the center of our little everything bagel universe.
Reposted from my guest blog on Rooflines:In the halcyon days of my youth, way back in 2006, I went to New Orleans. I traveled there at the behest of the corporation that I worked for at the time, as we had made a $2 million disaster recovery commitment to the city, and we were trying to figure out how to spend it.
Now, there’s two things you need to know about spending $2 million: (1) that’s a lot of money, and (2) it’s really not very much money at all. When you get right down to it, in dealing with a post-crisis situation of the scale of Hurricanes Katrina and Rita in the troubled city of New Orleans, spending that kind of money in a way that was both responsible and impactful was a damned hard thing to do.
So there I am, the well-meaning Yankee, fresh off the plane in my shiny city slicker best, traipsing through the Lower 9th Ward. I was there several months after the floods had receded, but it was still a silent, mud-stained, wracked and ruined wasteland. I remember picking up a dirty and detached doll’s head (Woody, from Toy Story – a memento I’ve kept with me always. He’s staring at me as I write this now), and thinking, well, I’ve got to start somewhere.
Happy New Year! And what better time to talk about my favorite ideas for getting us out of this fine mess of an economic jim jam we’re all bunched up in. But first, a recap of my previous two posts:
In Dear Mom (Part I) I talked about the absolutely bizarre and vitriolic discussion around what role US federal housing policy played in the collapse of the global economy. Basically, it played a very minor role, in spite of lingering (or, should I say, malingering) opinions to the contrary. When even the industry publication American Banker weighs with a super geeky online commentary saying pretty much what I already said in my blog post, I think we can all put this bugbear to bed.
In Dear Mom (Part II) I took a pretty heady Wall St Journal editorial by Republican dissenters to the Federal Crisis Inquiry Commission and broke down their top ten reasons for the economic collapse into plain English. I’m proud of this blog post, really. It works. And my mom says you should read it because it’s good for you.
But now that I’ve debunked the junk and laid down the ground, I owe it Mom and to you, dear reader, to put my money where my mouth is and talk about what my favorite fixes include. So to begin. Continue reading →
Wall Street greed, lax regulatory oversight, and excessive executive compensation fueled a global debt glut that finally imploded; and
Federal housing policies forced Wall Street financiers to provide high risk mortgages to unworthy borrowers, ultimately leading to an unstable housing market that finally collapsed and brought the economy down with it.
In my first post, I explained some of the background for these opposing views, and I also spent a substantial amount of time discussing why view #2 appears to be (a) freakishly out of touch with reality, (b) so freakishly out of touch with reality that even people who normally want to blame the government for everything can’t agree with it, and (c) in spite of (a) and (b), freakishly popular.
To add vinegar to gall, I don’t think view #1 really doesn’t do justice to the issues either. Continue reading →
My mom rocks. She’s the most big-hearted, intellectually curious, bright-eyed and good-looking mom in the world. Now, she and Pop came for a visit a few weeks back and Mom pulled out of her purse a couple of news clippings: Five Good Reasons Why Wall Street Breeds Protesters (USA Today), and Wall Street’s Gullible Occupiers (Wall Street Journal). She laid them down in front of me over a lovely brunch (at Kevin’s in Red Hook for you foodies out there) and asked in that demure Dayton, Ohio drawl of hers: which one should I believe?
Mom deserves an answer!
So, I’m going to give it my best shot. There are an awful lot of folks who have killed an awful lot of trees trying to sort this business out (and I will cite throughout this blog my personal favorites), and much black ink has been spilled. I’m going to try and give to you, in layman’s terms, what I believe the critical issues were and some ideas on how to address the current aftermath and future implications thereof. This may take a while. Ready? Continue reading →
As much about being evocative as it is about being provocative; and
That its central message (that the process is the message) will carry high resonance and should not be underestimated.
In my second post on November 15th (after the protestors at Zuccotti were evicted by the current administration) I wrote that I believed the protests were likely to escalate, and that stakeholders (elected leaders, police, institutional leaders, even the general public) would have to start choosing sides in ways that they hadn’t been forced to before.
Well, it’s been quite a week. There have been plenty of pretty raucous protests around New York City (with over 250 arrests), significant Occupy actions taking place in cities around the US, and now a viral video of students being casually pepper sprayed at UC Davis. Things have gotten uglier, and unfortunately I don’t think they are going to get better anytime soon.
Meet the New Boss, Same as the Old Boss (but different)
Now here’s the thing. I remember an old friend of mine who’s an active union organizer telling me a few years ago with a weary sigh: You know, protests just aren’t what they used to be. We have an understanding with the police. We avoid confrontation. We have planned routes, planned times, permits, speakers. Our rallies are carefully staged events. Real protest the way I experienced it in the 60’s is long gone.
Well, guess what’s back in fashion? Good old unscripted, spontaneous, angry, intelligent and chaotic protest. But there’s a catch: as a society, we’ve forgotten how to deal with it. Or, perhaps more accurately, we’re now seeing that we never really did know how to deal with it in the first place, and what we never learned is now coming back to haunt us. Turns out, you can’t just casually pepper spray seated protestors practicing civil disobedience and expect a crowd of about 200 folks armed with digital cameras to go along with the program. The viral video showing protesters telling police that the protesters are granting thempermission to leave shows just how powerful the collective voice behind this action has become. The people’s mic has entered our collective consciousness, and we know how to use it.
And there’s another catch: I think the Occupy movement represents a significant advancement in social protest: highly connected, carefully documented, remarkably resilient, and yet as flexible as a hot copperhead. The escalation that we’re seeing in efforts to repress/displace/control the Occupy movement, on the other hand, have not advanced. There are some new toys on the scene (did you catch the new pepper spray gun the cop wields in the video?), but the attitude looks awfully familiar and, oddly, old fashioned. Kind of fuddy duddy, if it were’t so damn vicious.
Magic 8 Ball Says: Concentrate and Ask Again
Time for prediction number 3: We are far from done with the Occupy movement, and nobody really knows where it’s going to lead. That’s the beauty of it, and it looks an awful lot to me like that’s scaring the crap out of the above-mentioned stakeholders. I don’t think our elected/corporate/institutional leaders really know how to deal with our friends the Occupiers. They all look so darn mad, don’t they? Like a really pissed off parent. With riot gear. And right behind that anger they look really embarrassed, as if the rest of the world were saying: “Can’t you keep your kids under control? They are very misbehaved. You must be a terrible parent.”
We’ve already seen our leaders react by taking a swing. Just a little smack to get those unruly beggars back in line. And it really is coming off to the Occupy movement as paternalistic, short-sighted, controlling, and dismissive. The Occupy movement certainly is not going to be dismissed, and that kind of leadership will only continue to stoke the fires of the resistance.
So, to our dear leaders: you won’t have the luxury of sitting across the table from an adversary in a suit as nice as yours, who understands the inner workings of the machinery you run, and who negotiates terms through a series of finely wrought horse-trades. Nope. If you want to come to terms with the Occupy movement, you’re going to have to get down and dirty. Big, messy meetings. Too many voices, too many opinions, too many impossible requests. There won’t be a clean outcome.
What you need to build, or rebuild, is trust. And that can only happen when people feel like equals. Building trust and equality is about process as much as anything else. And as process goes, it’s going to be mighty humbling. Still, if you ask me, it’s the only thing that stands a chance of creating a sense of unity of purpose, and of engaging the collective voice of frustration the Occupy movement represents.
Right now, if you’re strapped you can take a loan against your 401(k) through your workplace. You have to pay it back within five years with interest, but you’re paying it to yourself. About 85 percent of plans offer loans.
If you’re desperate, 89 percent of plans offer hardship withdrawals. Even though you don’t have to pay the money back, it’s a pretty bad deal: You have to pay income tax on the amount withdrawn and a 10 percent penalty if you’re younger than 59-1/2. For most people, it means at least 25 percent of the money withdrawn goes to penalties and taxes, not to saving a home from the bank.
But here’s where the plan backed by Isakson and Graves fails to the point of uselessness: It allows for outright withdrawals, not loans, but it only waives the 10 percent penalty — you’re still on the hook for taxes, ranging from 15 percent on up to the top bracket of 35 percent.
The plan also limits your withdrawal to a maximum of $50,000 or half of your account balance. So, if you withdrew $50,000 and were in the 25 percent tax bracket, you’d skip a $5,000 penalty but still pay $12,500 in federal tax, plus your state income tax. And unlike taking out a loan, all that money would be due April 15, and it would all go to the tax collector.
O’Connor goes on to point out that 401(k) funds are protected in bankruptcy, which is a point I want to highlight. Why? Because if you decide to declare a personal bankruptcy as a way to restart your economic life (which probably means you will lose your home), at least you can hold on to that nest egg in your retirement fund. That can’t be tapped in bankruptcy to satisfy your creditors.
I’ve already written in a prior blog about my experiences of foreclosure prevention in NYC: most homeowners are all too willing to run up their credit cards, poach the kid’s college savings fund, dip into their 401(k) and borrow from Aunt Tilly before they give up the home. This frequently leaves homeowners in a very precarious financial position, and (even worse) frequently does very little to address the underlying economic difficulties in their lives (usually loss of income). I think it’s just plain bad policy to provide further encouragement to distressed homeowners to act so clearly against their own self interests – especially when lenders and servicers have failed to similarly extend themselves and meet distressed homeowners halfway with timely, accurate and equitable workout solutions.
Personal as Political
And here’s what really kills me about this proposal: this solution essentially advocates that homeowners (AKA taxpayers, AKA workers, AKA consumers, AKA citizens) again make a substantial and unprecedented personal sacrifice in an effort to pay back a lender (AKA bank, AKA institution, AKA federal bailout recipient) for a home that is distressed, when that same lender (and the bank that controls it) have frequently failed to provide adequate servicing and support to the homeowner. This presumed “systemic” response (which as O’Connor notes would really provide very little value over a traditional early 401(k) withdrawal for most people) again puts the burden of attempting to resolve the foreclosure crisis on distressed individuals, and apparently does nothing to address either the problematic history of the mortgage bubble (and all the very messy ways that home mortgages were improperly extended, packaged and securitized), nor the myriad current problems within the mortgage servicing industry (such as problematic denials, improper foreclosure proceedings, and the lack of an effective appeals process).
It just really gets my Irish up. And I can’t help but point out that the maximum 401(k) withdrawal amount of $50,000 is the exact same amount that many distressed homeowners should have qualified for under the recent Emergency Homeowners’ Loan Program. In other words, the federal program which suffered from such enormous administrative ponderousness that it only disbursed $432 million of the $1 billion allocated for distressed homeowners should now be replaced by a meager incentive to allow those same distressed homeowners to sack their own retirement savings funds.
That is not really what I would call an effective systemic solution.
For now, let’s hope that the proposal by Isakson and Graves gets all the attention it rightfully deserves. We can do better.