See You In Court
Emotions run hot when a charity gets sued
By Tom Pope and Mark Hrywna

Cars for Kids-Southern Style had organized car shows for nearly 20 years, raising money for children’s hospitals and other charities and organizations dealing with children. This past June, at its car show in Selmer, Tenn., part of a festival that draws tens of thousands of spectators, a dragster spun out of control during a burnout and careened into a crowd of people, killing six and injuring 23 others.

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Life Insurance Settlements
Proceed With Caution
By Michael Patterson

The headlines on the promotional literature are tantalizing:

• "Iowa Charitable Organization Chooses a Life Settlement to Optomize Policy's Value"
• "Ohio Charity Salvages Donated Policy: Receives a $48,000 Cash Settlement"
• University Foundation Receives $600,000 Form Life Settlement"

Hardly a day passes without someone approaching a charitable organization with the insurance industry's latest fundraising concept. In this case, it's life settlements.

"This is just another tool in your toolbox," said Reginald Jackson, a Redlands, Calif., financial advisor, asset manager and certified financial planner.

A life settlement entails the sale of a life insurance policy to an institutional buyer for an amount greater than its cash surrender value, but less than the death benefit. This process ordinarily involves a life settlement broker, who puts the policy up for bid before potential buyers. The purchaser either resells the policy or holds it until maturity to collect the death benefits.

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Step By Step
Deciding if you need help with investments
By John Zietlow, D.B.A., CTP

No doubt you have read or heard stories of nonprofits either taken in by various investment scams or investing in inappropriate investment vehicles. And, the recent Donors Forum survey finding that fewer than half of Chicago-area nonprofits had an investment policy suggests that many could benefit from an investment consultant's services.

Deciding if you need one and then selecting wisely can be a full-time job. Broadening roles of financial managers requires time spent in other duties, and many of these managers are trained in accounting, but not in finance, particularly investments.

• Proper investment management requires:
  Hands-on experience in the securities marketplace;
• The time, expertise, and software to properly evaluate investment risk/reward tradeoffs, construct, evaluate, and re-balance portfolios, and to maintain investment records that account for portfolio transactions and provide necessary alerts and reports;
• The ability to stay on top of developments and trends in the securities markets; and,
• The diligence to continually adhere to the boundaries prescribed by the organization's investing policy statement (IPS) and the overall context of an investing strategy.

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Bizarro Campaigns
The cost of money in an inverse economy
By Paul Clolery

The stock market is at or near an all-time high, yet interest rates are climbing when they should be diving. Gasoline prices are topping $3 a gallon, but more people than ever drove for vacation during the Memorial Day holiday, according to the agencies that track those things.

And while the prime rate is stable now, it has more than doubled from its 10-year low of 4 percent on July 1, 2003 to 8.25 percent now.

Market and economic trends are not following their usual patterns, and that could have an impact on the large gifts nonprofits need to fund capital campaigns. And for nonprofits planning to build -- either brick and mortar or endowments -- the cost of money is getting more expensive and sensitive to the mood swings of the Dow Jones.

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