Archive
Small Business Financing May Suffer From Obama’s Proposed Budget and Political Wrangling
Jerry Chautin
Business Mentoring
Posted: 02/21/2012 10:11 am
Lenders are concerned that President Barack Obama’s proposed 2013 budget and the political scuffling in Congress may leave the U.S. Small Business Administration and U.S. Department of Agriculture with inadequate loan-guarantee authority to satisfy the needs of small-businesses owners. If that happens, and “guarantee coffers are low, the borrower needs to worry if their loan will be approved before the program runs out of money,” says Mike Rozman, co-president and chief strategy officer of BoeFly.com. The New York City-based company matches borrowers with lenders online. Of further concern, he notes that “there is still limited conventional financing for start-ups.”
Before the financial meltdown and the Great Recession, start-ups were able to get financing when the applicant had related experience, invested approximately 20-percent equity into the venture and pledged collateral. That has changed drastically and fledgling entrepreneurs are left with few, if any alternatives. For more mature companies, however, “we’ve seen an increase in conventional lending over the past six months for existing profitable businesses seeking to expand or refinance debt,” Rozman says.
Kraig Kramers, a management consultant and consummate entrepreneur who turned around such Fortune 500 Companies as Snapper-brand lawn mowers, has advice for surviving economic turmoil and a possible tightening of credit. “Stay close to lenders and prospective investors long before you need them,” Moreover he says, “You must have prior happy relationships with those who will provide the cash timely when you really need it.”
He also coaches business owners to drill down “into cash management with tools you can introduce into your business to accelerate incoming cash.” Additionally, “Delegate these tools to those managers and employees who can do the best with them.”
Borrowing an idea from “a Fortune 500 company,” he says, “Look at a detailed balance sheet, yes, to the penny.” As a result, “we found a half-million-dollar stock certificate that had been forgotten.” But the technique is not just for large corporations. Kramers also found “recapturable deposits in several smaller businesses this way.”
Equally as important, cleaning up your financial statements, footnoting the most important line items and highlighting key financial ratios, prepares you for making a loan application. Furthermore, include an extensive discussion telling the loan officer and her committee how you arrived at the forecast for the next 12-month’s proforma.
Rozman adds that if customers get the cold shoulder from their exiting bank, the borrowers will need to be “aggressively seeking alternatives.” BoeFly’s 1,500 participating lenders pay subscription fees in order to view applications from entrepreneurs seeking financing. In addition to conventional loans, some of the lenders make loans that are partially guaranteed by SBA and USDA and may consider start-ups — especially for franchises.
SBA’s 7(a) loans are suitable to finance real estate, equipment, machinery, working capital, and to purchase an existing business. The agency’s 504 program is for fixed assets and most suitable to build, expand or purchase real estate. More recently, SBA initiated a temporary 504 program to “rescue” borrowers who have existing loans with balloon balances coming due and find that take-out lenders are scarce.
The basic 504 program requires job creation or retention and does not include working capital. But the temporary refinancing program waives the job-creating requirement. And it also allows some working capital for projected operating expenses.
USDA’s Business and Industry Loan Program is similar to SBA’s 7(a) but the businesses must be in rural locations. Sometimes, sparsely populated locations on the fringe of urban areas are approved. Unlike SBA’s loan limits of $5 million for 7(a) and approximately $10 million for 504, USDA’s B&I program tops out at $25 million under certain circumstances. And the loans may go up to $40 million for rural cooperative organizations that “process value-added agricultural commodities,” according to USDA’s web site.
Small-business owners are holding their collective breaths as the Obama Administration’s proposed budget wends its way through the politically-charged Congress. It is as much the chief executive’s opening salvo, as it is his wish list. But if the budget that survives includes large reductions of SBA and USDA guaranteed loans, you need to be prepared.
To test the water, talk to your bank’s loan officer about your chances of getting financing. It is better to see if your loan officer tap dances and stutters now than before crunch time. And if you don’t get a positive reply, start looking for other funding alternatives.
Jerry Chautin is a volunteer SCORE business counselor, business columnist and SBA’s 2006 national “Journalist of the Year” award winner. He is a former entrepreneur, commercial mortgage banker, commercial real estate dealmaker and business lender. You can follow him at http://www.Twitter.com/JerryChautin
Copyright © 2012 Jerry Chautin — All rights reserved
Huffington Post readers are permitted to distribute with attribution to the author
Follow Jerry Chautin on Twitter: www.twitter.com/JerryChautin
States with highest foreclosure rates shift
Posted 02/17/2012
December, 2011 unemployment: 9.9% (6th highest)
Home price change (2006Q3-2011Q3): -49% (3rd largest decline)
Processing period: 135 days
2. New Jersey—
2011 foreclosure rate: 6.4%
December, 2011 unemployment: 9% (13th highest)
Home price change (2006Q3-2011Q3): -22.6% (14th largest decline)
Processing period: 270 days
3. Illinois—
2011 foreclosure rate: 5.4%
December, 2011 unemployment: 9.8% (7th highest)
Home price change (2006Q3-2011Q3): -29% (7th largest decline)
Processing period: 300 days
4. Nevada—
2011 foreclosure rate: 5.3%
December, 2011 unemployment: 12.6% (the highest)
Home price change (2006Q3-2011Q3): -59.3% (the largest decline)
Processing period: 116 days
5. New York—
2011 foreclosure rate: 4.6%
December, 2011 unemployment: 8% (23rd highest)
Home price change (2006Q3-2011Q3): -13.6% (23rd largest decline)
Processing period: 445 days
Related articles
- Foreclosure activity edges higher in January (usatoday.com)
- Foreclosures and a Small Sign of Housing Recovery (247wallst.com)
- Foreclosures climbed in January (money.cnn.com)
- Chicago Foreclosure Activity in 2011 Indicates Hot Foreclosure Market in 2012 (prweb.com)
Start-up CEOs at AlphaLab Answer the Question, “Why Pittsburgh?”
Image via Wikipedia
By Ben Kamber On November 18, 2011 · In ImaginePittsburgh
When President Obama traveled to Pittsburgh last month to meet with his Council on Jobs and Competitiveness, entrepreneurship and the potential it has to drive America’s economic revival were on the minds of many. Less than a week after the death of Apple CEO Steve Jobs, the President remarked at the IBEW Training Center in the South Side, “The story of America’s success is written by America’s entrepreneurs; men and women who took a chance on a dream and they turned that dream into a business, and somehow changed the world … that spirit of entrepreneurship and innovation is how we became the world’s leading economic power, and it’s what constantly rejuvenates our economy.”
America’s entrepreneurial success relies on risk-takers who make up their minds to imagine and innovate. The Pittsburgh region has no shortage of such visionaries, and a select group of them call 2325 East Carson Street home – at least for 20 intensive weeks as they fast track the launch of new companies by participating in Innovation Works’ AlphaLab program. AlphaLab provides mentorship, office space and funding to help incubate up to 12 tech start-ups annually. There are two AlphaLab cycles each year. Since its launch in 2008, this tech-accelerator program has incubated 39 companies with 100+ individual entrepreneurs taking part.
Representing a diverse array of companies, the most recent class of dynamic AlphaLab entrepreneurs are pioneering innovations ranging from software that helps those with diabetes better manage their healthcare to an iPad app that allows people to create customizable jewelry. At the end of October, all six of these tech start-ups presented their products and ideas at AlphaLab’s Demo Day – a biannual event which gives investors and civic leaders an opportunity to engage with the latest class. This round of tech companies was most impressive. They include:
8020select – a company that aims to provide small businesses, with limited resources, a wide range of graphic design offerings. They achieve this through the creation of a web-based design community, tailored to businesses on a budget that need high quality but affordable graphic design work.
Makercraft – an Art Institute of Pittsburgh spin-out, this customizable jewelry company is tapping into the estimated $69 billion global market for fashion jewelry. With its jewelry design iPad app, Makercraft allows users to design their own highly customizable jewelry.
VitalClip – through the development of an integrated iPhone platform, VitalClip offers users a real-time health management tool, which enables individuals to better manage their well-being. With an initial focus on the management of stress, VitalClip allows users to monitor and track a number of physiological factors that account for stress and develop ways to better control them.
Krowder – a company that seeks to solve delivery shipping and issues associated with purchases made via website such as Craigslist. By harnessing the power of crowd-sourcing, Krowder wants to achieve greater convenience and lower costs in the shipment of second-hand goods.
Comvibe – for frustrated property managers and tenants alike, Comvibe has created an innovative web- and mobile-based solution to help streamline and consolidate the property maintenance process. Through a sophisticated software application, tenants are able to access an easy-to-use system for making maintenance claims, which in turn provides landlords with a centralized way to follow up with the requests.
PHRQL (pronounced “freckle”) – by way of smart phone integrated software, PHRQL has developed a solution to help users who are diabetics manage an array of factors related to their health and wellbeing. With a focus on user engagement, PHRQL wants to ease the diabetes management process while reducing the overall costs associated with the condition.
Imagination and innovation are indeed alive and well in Pittsburgh. AlphaLab and its entrepreneurs are proof positive.
Learn more about these break-out companies by watching the video below to hear each of their CEOs talking about their innovations and answering the question, “Why Pittsburgh?”
Learn more about what AlphaLab is all about by watching a video interview with Terri Glueck of Innovation Works.
Tagged with: 8020select • Allegheny Conference • AlphaLab • Art Institute of Pittsburgh • Carson St. • Comvibe • Council on Jobs and Competitiveness • Demo Day • entrepreneurship • IBEW • innovation • Innovation Works • interview • Krowder • Makercraft • Obama • Pennsylvania • Pittsburgh • South Side • start-up • Terri Glueck • VitalClip
Another Small Business Success Story
CIN ALERT
October 27, 2011
For many of us, the idea of starting a small business is a lifetime goal. In fact, the chance to be your own boss by providing a product or service ranks right up there with homeownership as one of the true American dreams. Despite tough economic times, the environment for starting a small business in many parts of the country is better than you might think, particularly in view of the various assistance programs made available for small business owners.
An enterprising business owner can be very successful, but it takes a lot of work. (And usually a lot more time and money than the business plan calls for.) Christy is an individual who knows the score. A Registered Yoga Teacher, she has been helping people achieve healthier lifestyles through massage therapy, group exercise, yoga, and Pilates for over 17 years. However, success had rendered a problem for her: the small storefront she used for years in a downtown Midwest city is just too small for her growing clientele. She faced a daunting task: Find a new location that would be a lot larger — yet also fit into her operating and personal budgets.
Driving to work one day through town, she noticed that ‘for sale’ signs had just been posted in front of a small one-story home nearby. All along Christy had been thinking about finding a larger storefront or office. Suddenly, the idea of conducting her instruction classes in a small home made sense. The next several weeks were consumed with meetings and communications with the local town officials, realtors and the chamber of commerce, to be sure that the zoning was correct and that she could have access to some small business assistance programs.
That was three months ago, and the bottom line today is: Christy has much more room in brand new surroundings, her customer base is growing by the week and it all fits into her budget very nicely. Things are looking up now for her.
All told, there are an estimated 15 to 17 million small businesses operating in America today. Small businesses are still the backbone of our communities – our Main Streets! — and are seen by many as the embodiment of the spirit of entrepreneurship.
Entrepreneurs are credited with creating the vast majority of new jobs and employing the majority of the nation’s workers. Granted, big businesses have emerged in fields where new technologies permitted economies of scale in the production and/or distribution of goods. Still, small businesses have remained vital to the nation’s economic development, and even more important as a component of American culture.
Even as our new 21st Century embraced what many Americans could view as superior efficiency and productivity (for both small and big businesses), Americans continued to revere small business owners like Christy for their self-reliance and independence and can-do spirit.
Small businesses have also been the primary way immigrant families coming to America have climbed the economic ladder and achieved the American dream. Many minority populations today — in urban, rural and suburban communities — have seized the small business pathway as a road to economic independence and building personal wealth.
CIN editors have always recognized the vital role played by small businesses, and we devote a large section of the CIN to them. This resource tool provides basic information – including the pros and the cons of small business ownership – basic start up information – government assistance programs on the Federal and State levels – grassroots programs provided by NCRC members – private sector assistance programs – franchising basics – banking connections assistance – available small business resources and the latest small business news and information. Here are some recent excerpts:
Keeping Your Small Business Ahead of the Curve
(Source: Small Business Trends) Ten key ways to keep a small business profitable and ahead of the competition are provided by Small Business Trends.
Small Business Owners Think Controlling Employee Expenses Will Lead To Cost Savings
(Source: Gaebler) A recent Citizens Financial Group/Mastercard study found 55 percent of small business owners believe better management of employee expenses would reduce costs and benefit their business, while 40 percent said more control over employee spending would give them a better peace of mind.
Wells Fargo Lends More Dollars to America’s Small Businesses Than Any Other Lender
(Source: Market Watch) 2011 US Small Business Administration data shows Wells Fargo & Company is the top lender in dollar volume, approving $1.2 billion in SBA loans to America’s small businesses for the 2011 federal fiscal year.
How Small Business Owners Were Hurt by the Fall in Home Prices
(Source: Forbes) Personal borrowing plays a key role in how many small business people finance their companies. When the housing crisis hit, small business owners that relied on home equity to finance their companies’ operations faced a credit squeeze. Thus, small businesses have access to about $25 billion less in credit than they would have had if the trend in home equity loans had continued in the direction it had been going in the first half of the 2000s.
Coffee Fix: Starbucks Pushes Small Business Loans
(Source: Business Week) New York Times columnist Joe Nocera lauds Starbucks for supporting community development financial institutions, the nonprofit lenders serving small businesses and affordable housing in low-income communities. The coffee chain is donating $5 million and encouraging customers to pitch in at the checkout line as well.
Geithner Defends Performance of Small Business Lending Fund
(Source: Business Week) Treasury Secretary Timothy F. Geithner says that the Small Business Lending Fund had been successful even if it was smaller than envisioned. The program closed Sept. 27, having distributed $4 billion of its $30 billion to 332 community banks nationwide.
Related articles
- PR Tips for Small Business (wordsforhirellc.com)
- Small Business Concepts That Work in Today’s Economy (cash-bandit.com)
Starting a Business in a Downturn — Crazy or Genius?
By Catherine Clifford October 5, 2011: 2:06 PM ET
NEW YORK (CNNMoney) — This year was tough for small business and next year doesn’t look much better.
Sound like a crazy time to launch a business? Not necessarily. For bootstrapping entrepreneurs who do their homework, 2012 could spell opportunity.
Indeed. Some of the country’s most successful companies got their start when the economy was flat on its back.
When Thomas Edison opened his lab in 1876 and produced the first light bulb in 1879, it was right smack dab in the middle of a recession. His company eventually became multinational conglomerate General Electric. (GE, Fortune 500)
6 companies born during downturns
“Necessity is the mother of invention — it is absolutely true,” said Ted Zoller, the vice president of entrepreneurship at the Kauffman Foundation. Entrepreneurs often “are looking for resolutions to problems.”
Make no mistake — it’s rough out there: Problems are definitely plentiful. So starting a business is not for the faint of heart.
“We are really in a nadir of consumer confidence,” said Zoller. “People are not taking chances. They are not taking risks.” And they are more tight-fisted with money than ever before.
Zoller, a small business owner, knows this from personal experience. Recently at his bead shop in Chapel Hill, N.C., a customer “was quibbling over a $5 purchase,” he said. “She wanted to bargain it down.” That kind of haggling makes running the business difficult. “We have to survive here,” he said.
Lower chances of survival are exactly why next year is not a good time to launch a business, said William Dunkelberg, the chief economist at the National Federation of Independent Business. Sales are slow for the established companies and just staying open is becoming a problem, he noted.
In 2005, the number of firms that were born outpaced the number of businesses that closed by about 80,000, according to the Department of Commerce‘s Census Bureau.
But by 2009, the number of firms that were being shuttered outpaced the number of companies being born by about 90,000.
“For the most part, there are too many firms, like there are too many houses,” said Dunkelberg. “Like there are too many of a lot of things.”
The hunt for capital: Capital will continue to be scarce.
The credit markets of 2011 are expected to be just as tight next year. And most lending to small businesses will come from community banks, which are already doing the lion’s share, said Ami Kassar, CEO of Philadelphia-based MultiFunding, a loan brokerage for small businesses.
Getting loans will not be a walk in the park. New entrepreneurs will have to be a lot further along with their business plans to get startup capital, experts said.
“They have to prove themselves, prove the revenue stream, get something going,” said Zoller of the Kauffman Foundation. “I think you will see a much higher frequency of ventures being started with little to no capital.”
Regulation nightmares
Those who do get capital will most likely get it from alternative sources, such as friends, family and credit cards, said Ken Yancey, the CEO of SCORE, a nonprofit association, who does not recommend using plastic.
“It is an awesome time to start a business,” said Kassar. “But you really have to bootstrap it, be creative.”
A silver lining: Starting at the bottom does have its advantages. There is only one way to go — up.
“I really don’t think things are going to get a lot worse than they are now. If at all, things are only going to go up,” said Todd McCracken, president and CEO of the National Small Business Association.
If the economy does start to show signs of life, business owners who launch in 2012 “will be in on the ground floor,” he said. “They will look back in 10 years and be glad they started in 2012.”
But it’s important to be prepared, said Yancey of SCORE. Jumping in the deep end and hoping things will work out is not the smartest approach, experts said.
CNNMoney agrees, which is why we are launching the ultimate startup guide, a series of articles to help entrepreneurs weather the challenges of 2012. Check out our first gallery on incubators here. 
Related articles
- Ted Zoller: U.S. Entrepreneurs Need A ‘True Global Mindset’ (huffingtonpost.com)
- Business tips from Recruitment Genius CEO Geoff Newman (simplybusiness.co.uk)
- Do First Things First, EzTimeSheet Employee Attendance Tracker Helps Small Business Be Productive Amid Downturn (prweb.com)
HHS Data: Nonprofit Jobs Picture Mixed, Faster Job Growth than in For-Profit Sector, Small Nonprofits Hit Hard by Recession
October 05, 2011
Rick Cohen
The Non-Profit Quarterly
Based on an analysis of four years of federal government data on tens of thousands of nonprofit, for-profit, and government employers, there are some important and startling findings about employment trends in the nonprofit sector that should interest most nonprofit agency leaders and staff:
- Overall, the nonprofit sector is generating jobs at a faster rate than the private sector. The resilience of the nonprofit sector—and of charitable donors—during a recession is noteworthy, especially as nonprofits perform critical functions in providing a safety net for the poor and disadvantaged during a recession.
- Nonprofit-sector job creation, however, has been largely concentrated in large nonprofit employers with 1,000 employees or more. We would guess that these nonprofits are likely to be hospitals and universities.
- There is a reasonably logical correlation of the growth in nonprofit sector employment with the arrival of federal stimulus dollars starting in 2009 and extending through 2010. We know that a significant portion of the stimulus funds were directed to programs run by nonprofit organizations. It is possible, however, that with the end of stimulus spending, the employment gains of the nonprofit sector in recent years could be reversed.
- Despite the increase in overall nonprofit employment and an increase in the number of establishments associated with large nonprofit employers, there appears to have been a contraction in the number of small nonprofit employers. Perhaps small nonprofits have adjusted to the recession by shifting from paid personnel to volunteer staffing. If the recession ends up double-dipping, more small nonprofits are likely to disappear or be taken over by larger organizations.
Is this data from the Census Bureau? The Bureau of Labor Statistics? The Internal Revenue Service? No, these potential findings are drawn from annual studies conducted by the Agency for Healthcare Research and Quality (AHRQ), a little-known agency associated with the Department of Health and Human Services (HHS).
No one collects undeniably accurate and reliable data on nonprofit employment, no one. Counts of employment by the Bureau of Labor Statistics, for example, are really estimates based on samples, often stratified samples of employers or employees to make sure that information is collected for specific types and classes of employers and for specific geographic regions.
So it is a boon to researchers of the nonprofit sector that a unit of the Department of Health and Human Services also conducts an annual survey of employers—like others, based on a stratified sample—in order to collect health-insurance-related information. Every year since 1996 (with the exception of 2007), AHRQ has surveyed employers to identify and assess the “number and types of private health insurance plans offered, benefits associated with these plans, premiums, contributions by employers and employees, eligibility requirements, and employer characteristics.”
This data series, known as the Medicare Expenditure Panel Study (MEPS), includes an “Insurance/Employer Component” that gathers health expenditure and benefit information from a national sample of tens of thousands of public- and private-sector employers—including nonprofit employers. For researchers interested in the nonprofit sector, there is a side benefit: the data include estimated counts of nonprofit employers and employees by size of employer and by full-time or part-time status of the employees. When examined over a period of years, these data reveal lots of hidden nuggets of insight into changes in nonprofit employment and nonprofit employers.
AHRQ researchers interview a large number of employers via a detailed telephone and written survey, typically sampling some 38,000 to 40,000 private sector establishments drawn from the Census Bureau’s most recent business register. The MEPS response rate for the 2006, 2008, 2009, and 2010 interview periods has typically hovered between 78 and 86 percent. That high response rate is due to several rounds of outreach, including an initial survey mailing, a second mailing if there is no response to the first, and a telephone follow-up if neither mailing secures a response.
Multiple years of data from these carefully constructed national samples reveal often-surprising trends concerning rates of nonprofit job creation, changes in full-time versus part-time employment, and the number and types of nonprofit firms and establishments.
Like many other data sources, the AHRQ surveys suggest that the nonprofit sector is outpacing the private sector in job creation:
Table I: Nonprofit Employment by Firm Size
| YEAR | Total nonprofit employment | Less than 10 employees | 10-24 employees | 25-99 employees | 100-999 employees | 1000 or more employees |
| 2006 | 15,218,123 | 953,578 | 853,258 | 2,256,273 | 4,380,927 | 6,774,086 |
| 2008 | 15,365,566 | 1,015,502 | 890,012 | 2,092,262 | 4,617,822 | 6,749,967 |
| 2009 | 14,429,714 | 968,522 | 782,180 | 1,888,633 | 4,334,549 | 6,455,830 |
| 2010 | 15,703,701 | 931,685 | 810,196 | 2,010,090 | 4,417,686 | 7,534,044 |
The MEPS statistics suggest that nonprofit employment plummeted in 2009 as the national recession ravaged the sector but then increased dramatically in 2010. Why? The obvious answer is the American Recovery and Reinvestment Act of 2009—a.k.a. ARRA or “the stimulus”—which funneled money to nonprofits such as Community Action agencies, Head Start groups, health clinics, and hospitals, allowing them to retain and hire staff. Who knows how many people’s livelihoods during the darkest days of 2009 and 2010 were maintained by ARRA dollars (funding that has more or less come to an end now)?
In 2010, ARRA-funded weatherization employment increased from 10,666 full-time jobs in the first quarter to 15,415 in the fourth as weatherization programs ramped up their activity. ARRA-funded employment in the Health Center Integrated Services Development Initiative increased from 7,068 to 8,267 over the same period, ARRA-funded Community Services Block Grant jobs grew from 7,966 in Q1 to 18,431 in Q3 (the Q4 statistic for this particular program is missing), jobs in the homelessness prevention and rehousing program grew from 3,481 to 4,252, and so on. In addition to these ARRA jobs, accelerated medical reimbursements from Medicaid and Medicare created even more nonprofit employment.
Overall, total nonprofit-sector employment grew by 8.8 percent from 2009 to 2010 according to the MEPS survey. Breaking down the data in terms of nonprofit size reveals a lot of variation, however. Employment among nonprofit employers with 10 to 24 employees was up 3.6 percent. For organizations with 25 to 99 employees it was up 6.4 percent. Between 100 and 999 employees: up 1.9 percent. More than 1,000 employees: up an astounding 16.7 percent. But at nonprofits with fewer than 10 employees employment actually dropped 3.8 percent.
Part-time vs. Full-time
Another revealing way to break down the data is to look at full-time versus part-time jobs. Part-time employment in the nonprofit sector increased 5.3 percent between 2009 and 2010, as compared with a 2.2-percent increase for all private sector employers. Part-time employment in nonprofit organizations with 1,000 or more employees increased a whopping 31.1 percent.
Table II: Part-time Nonprofit Employment by Firm Size
| YEAR | Total (part-time nonprofit) | Less than 10 employees | 10-24 employees | 25-99 employees | 100-999 employees | 1000 or more employees |
| 2006 | 3,820,580 (100%) |
447,854 (11.7%) | 322,816 (8.4%) | 648,327 (17.0%) | 967,568 (25.3%) | 1,434,014 (37.5%) |
| 2008 | 3,886,570 (100%) |
486,015 (12.5%) | 327,332 (8.4%) | 559,350 (14.4%) | 1,185,903 (30.5%) | 1,327,970 (34.2%) |
| 2009 | 3,694,472 (100%) |
467,533 (12.7%) | 298,540 (8.1%) | 512,362 (13.9%) | 1,316,193 (29.8%) | 1,099,844 (35.6%) |
| 2010 | 3,890,001 (100%) |
474,726 (12.2%) | 354,298 (9.1%) | 631,212 (16.2%) | 986,818 (25.4%) | 1,442,947 (37.1%) |
Nearly one out of four nonprofit employees were part-time workers in 2010, compared to slightly more than one out of five private-sector employees overall. (This kind of data is important to the AHRQ because part-time workers are less likely to qualify for employer-provided or employer-subsidized health insurance.)
Nonprofit Firms and Establishments
Although the data is presented by “firm” size, the survey is actually administered among “establishments.” An establishment is defined as “a specific workplace or business location,” while a “firm” is a “business entity consisting of one or more business establishments under common ownership or control.” Consequently, one firm could have several different establishments. Given that the survey sample is specifically constructed to make national estimates, the changes in the number of establishments in the survey do reveal something about the structure of both nonprofit and for-profit business entities in this recession.
Table III: Nonprofit Establishments by Firm Size
| YEAR | Total number of nonprofit establishments | Less than 10 employees | 10-24 employees | 25-99 employees | 100-999 employees | 1000 or more employees |
| 2006 | 488,663 (100%) |
251,174 (51.4%) | 63,429(13.0%) | 61,720 (12.6%) | 85,498 (17.5%) | 26,843 (5.5%) |
| 2008 | 534,554 (100%) |
277,902 (52.0%) | 70,378 (13.2%) | 66,779 (12.5%) | 87,262 (16.3%) | 32,233 (6.0%) |
| 2009 | 510,850 (100%) |
257,460 (50.4%) | 64,592 (12.6%) | 62,590 (12.3%) | 90,200 (17.7%) | 36,007 (7.0%) |
| 2010 | 517,245 (100%) |
255,727 (49.4%) | 64,102 (12.4%) | 69,577 (13.5%) | 89,398 (17.3%) | 38,441 (7.4%) |
Again, it appears that the stimulus was one factor leading to an increase in the number of nonprofit establishments between 2009 and 2010, but the number of nonprofit establishments is still down 3.2 percent as compared with 2008 (a much sharper decline than the 1-percent drop among all private-sector establishments). Particularly noteworthy is the shrinkage in the number of establishments controlled by nonprofit firms of fewer than 10 employees, as compared to the increasingly large share of establishments tied to nonprofit employers with 1,000 employees or more.
The Nonprofit Economic Engine
Everyone can argue methodology and whether the AHRQ’s MEPS studies are a better or worse indicator of changes in the nonprofit sector than other data series. For one thing, the MEPS studies focus on employers, not entities. As a result, among nonprofits—especially nonprofit corporations that are combined with other tax-exempt entities such as religious institutions—the MEPS analysis is missing the larger number of nonprofits that exist without any staff. As a result, a contraction in the number of nonprofit establishments or firms in the MEPS studies does not necessarily mean that there was a corresponding reduction in the overall number of nonprofits for those years.
But the AHRQ’s MEPS studies should help nonprofits and policy-makers recognize the economic importance of the nonprofit sector writ large. It’s more than what the sector absorbs and spends in the form of charitable giving and governmental grants and contracts—which is a significant though not huge portion of the nation’s Gross Domestic Product. It’s also that the nonprofit sector provides employment to millions of people. When debates occur within the Washington beltway over whether employers can afford to provide health insurance or the best methods of generating jobs in the American economy, policy-makers might benefit from looking at the AHRQ data to better appreciate the nonprofit sector as a significant and resilient provider of jobs and incomes.
Related articles
- 2009 Salary Survey of Nonprofits Reveals Promising Results (prweb.com)
- The American Jobs Act and Nonprofits (whitehouse.gov)
- Opportunity Knocks Releases 2009 Most Demanded Nonprofit Positions Listing (prweb.com)
- US economy adds 103,000 new jobs (bbc.co.uk)
- WOW: The Jobs Report Just Smashed Expectations In Canada (businessinsider.com)
- Though U.S. Unemployment Remains at 9.1 Percent, Idealist.org Says Nonprofits are Hiring (altlawyerjobs.com)
- Giving the US nonprofit sector a seat at the federal table (Rep. Betty McCollum) (thehill.com)
- Nonprofits Should Be Represented in Jobs Bill (kynonprofits.wordpress.com)
Enterprising Economy: An Economy Based on Community Connection and Competence
by John McKnight, Peter Block on June 23, 2011
The community is the natural nest for hatching new enterprise — it is the birthplace and home of small business, which provides the largest growth in employment. Friends and family often provide the capital and sweat equity to start a business.
The culture of a local community is a key factor in nurturing entrepreneurial spirit. A community where local people feel they are a center of enterprise creates the vision and support. The culture encourages people to initiate enterprises, members use their buying power to support local enterprises, and they put their savings to work in community credit unions and banks. Their dollars circulate, providing the economic support that parallels and strengthens local social support. Some communities even have a local currency to incentivize support of local economy. A related economic power of a connected community is access to jobs. One quarter of job seekers get information from relatives, friends, and neighbors.
Without strong community connections the economy becomes
co-opted by systems.
Strong community connections spawn new enterprises, sustain them, and provide primary access to employment. Without these functions, the economy becomes a land of large-scale institutions unable to sustain a local workforce (and so large they’re destined to fail to serve any interests but their own).
In the consumer ecology, care is co-opted by systems: businesses, agencies and governments. Insurance agencies send letters to tell us they care about us. Charities ask us to give money to pay for the care of people. Government pays hospitals and medical professionals for their service. In each case, they are providing a paid service — not care. Systems offer services for pay.
Genuine care can’t be paid for — it is given, free of charge. You can pay for services for your mother in a nursing home, but she may lose the care of family, friends, neighbors, faith, and service groups. They become visitors to a service system; she becomes a client.
The place to look for care is in the dense relationships of neighbors and community groups. We have a competent community if we care about each other, and about the neighborhood. Together, our care manifests a vision, culture, and commitment that can uniquely assure our sense of well-being and happiness. This source of satisfaction is complete in and of itself — not dependent on the next purchase.
No business, agency, or government can fulfill basic community functions. If we don’t know our neighbors, aren’t active in local community life, pay others to raise our children and service our elders, and try to buy our way into a good life, we pay a big price. We produce a weak family, a careless community and a nation that tries hopelessly to revive itself from the top down. Reversing this situation is difficult because of the power of systems to make consumers out of citizens.
By seeing the consumer ecology for what it is, we can shift our thinking and become producers of our own future.
By seeing the consumer ecology for what it is, we can become citizens again. We can shift our thinking and decide who we take ourselves to be: producers of our own future, or purchasers of what others have in mind for us. Consumer society begins when what was once the province or function of the family and community migrates to the marketplace. It begins with the decision to purchase what might have been homemade or produced locally. This is how citizens yield their power to the lure of consumption.
Consumption is like an addictive drug. The market promises what it knows won’t be fulfilling. This defines its counterfeit nature — trying to make something appear to be gratifying or satisfying when it is not. The fact that dissatisfaction persists after achieving the good life means the good life is not satisfying. Unfunctional families and incompetent communities signal that we’ve reached the limits of consumer satisfaction.
For example, we talk of the child as a product of the School System, starting early the migration of the child from citizen to consumer, from family and community life into system life. We count on the School System to perform many family functions—to feed them, discipline them, and provide custodial care.
The same dependency goes for other family functions — like health, entertainment, nutrition, employment, mental well-being, elder care, and environmental stewardship — all have been outsourced to professionals. All are organized in systems designed to deliver these functions in efficient, low-cost, consistent ways.
We made the leap from being citizens to being consumers in a culture that sells the idea that a satisfied life is determined first by defining and promoting needs and then figuring out how to fulfill them. We create a larger market by determining that families and communities are filled with needs that are best serviced by systems and professions.
Consumerism offers purchased solutions to being human, providing a substitute for what could come naturally to families and communities.
This is the more profound cost of the consumer promise, the denuding of community capacity. The institutional counterfeit of compassion and support is a two-part package: first, the spin of optimism backed up by a purchase; and, second, the denial when it does not happen.
For example, in advertising we are promised immortality, eternal youth and happiness. This promise is elegant, moving, entertaining. At the end, ways the product could hurt us are described in small print or spoken rapidly — accentuate the positive, eliminate the negative. We call this “spin.” Responses of spin and denial are designed to keep organizations on course. Systems can’t allow sorrow to become personal. When systems lift the veil of denial and spin to apologize or express sorrow, it is either because they’re forced to by law, or it is long after any consequences.
The effort to find a fix for our humanity only forces us into counterfeit promises and unsatisfying results. Often we believe that if we do more of what does not work, it will finally work. This is the dilemma of the consumer economy: it leads to a place where when we reach a limit and still are unsatisfied, we think, if only we had more we would be successful or satisfied — more police, physicians, teachers, services, stuff.
This is not a solution — it’s an addiction. Consumerism is not simply an economic system — it can be considered an ecology. It impacts how we relate to each other; it shapes our relationship with food, work, music, ritual, religion — all elements of culture.
And for this ecological system to work, we have to participate in the effort to purchase what matters and persist at it, despite the lack of results. This consumptive ecological system produces hollowness in our lives, even for those who are winning at the game.
Related articles
- Can Entrepreneurs Rescue the U.S. Economy? (blogs.wsj.com)
- Can We Build Our Own Economy From the Ground Up? (zerohedge.com)
Teens Knock On Doors to Promote Savings
Posted By admin On September 1, 2011 @ 11:48 am In East Los Angeles (Unincorp.),General News |
Braving the hot climate and a large number of barking dogs, a handful of teens from East Los Angeles took to the streets last week to spread the word about creating wealth by saving.
Eighteen-year-old Brandon Rodriguez, an incoming senior at Garfield High School, is a graduate of Pan American Banks’ Youth Financial Literacy Ambassadors program.
Motivated by a desire to help lift up the community, Rodriguez said he was excited and ready to hit the pavement and share the message that there is hope for a better future if you start saving today.
Rocio Ortega, also entering her senior year at Garfield, has already signed up members of her family for Pan American Bank’s free Children’s Savings Accounts.
Pan American Bank’s Financial Literacy Ambassadors hit the streets last week in East LA knocking on doors and spreading the word about the bank’s upcoming youth conference and it’s “Keep on Saving” program. (EGP photo by Gloria Angelina Castillo)“It’s really hard. Yeah, we live in East LA, it’s a low-income community, low-income families, but I think a lot has to do with discipline,” Ortega said. She said many of the wage earners in local families are “making minimum wage, so it’s hard for them to save money when they’re living paycheck-to-paycheck.”
Ortega says understanding “needs” versus “wants” is fundamental to being able to save money and she regularly tells her friends, “You know what, you don’t need that.”
There is a lot of money in East LA, the community just needs to learn how to leverage it for their long-term benefit, Ortega and the other door-knocking volunteers told EGP.
Read this story IN SPANISH: De Puerta a Puertas, Jóvenes Promueven los Ahorros en el Este de LA [1]
On Sept. 10, the Financial Literacy Ambassadors will have another opportunity to spread what they have learned. Pan American Bank will host its 2nd Annual East LA Youth Financial Literacy Conference where the teens, along with the program’s grade school ambassadors, will lead workshops on topics that include: distinguishing needs from wants, how to make and keep to a budget, and how to save money. Targeted at children aged 5-13, attendees will be able to open a Children’s Savings Account immediately after the event. Starting early can lead to a lifetime of good financial habits.
The Youth Financial Literacy program started a couple of years ago after Pan American Bank CEO and President Jesse Torres read a report by the Federal Deposit Insurance Corporation (FDIC) that found nearly 50 percent of Latino families nationwide did not have a bank account, and were instead using check-cashing services and rent-to-own offers that charge high fees and interest rates.
That trend only seems to be growing; check-cashing businesses keep popping up all over East Los Angeles, said volunteers Rodriguez and Mike Gomez, 19.
Torres accompanied the teens on their route last week. “It’s important that we set the tone. That we say we’re serious about doing this, we’re putting the people behind it, we’re educating the kids, we’re hitting the pavement. If we don’t do that the message just won’t take,” he told EGP. “We want the most participation possible because we really believe in it.”
The bank’s goal is to open 14,000 children’s savings accounts. Torres estimates the accounts will cost the bank $12 each a year, including the bank’s initial $5 deposit. The additional cost is from sending out bank statements, maintaining the records on their computer system, etc.
“It’s a $12 investment now, but we know that over the course of the lifetime of these kids we’ll get that money back,” he said.
Like any other bank, Pan American Bank can increase its business by using saving deposits to create loans. Torres says the bank hopes its investment will lead to customer loyalty down the line when his young bank customers grow up and need a car, business, or home loan.
“It’s a definite upfront investment, but we know we’re here for the long-term. We’ve been here 46 years. We count on being here another 46. If we’re going to be here for that time, we have to invest now so down the road, 10-15 years, we have the benefit of an enlightened and economically empowered community,” and we can be a big piece in that, said Torres, who has also turned the bank into a community center of sorts, often hosting community groups and events at its branch in East Los Angeles.
The youth conference on Sept. 10 will be held from 8:30 a.m. to 1 p.m. at the Pan American Bank branch located at 3626 E. 1st St. in East Los Angeles. The bank has another branch in East Los Angeles, and one in Santa Ana. For more information visit http://www.panamericanbank.us or call (323) 264-3310.
Building Community, One Household at a Time 