Virtue Capital


A 16-year-old school headmaster from rural India

Posted in Uncategorized by paulglader on October 13, 2009
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“As I became older, I became more and more inspired to help rural, underprivileged children.” – Babar Ali

This morning on the BBC, I heard a very interesting story about this boy teaching his neighbor children who cannot attend school. He sounds like a remarkable young man and I wish him all the best.
Here is a link to the story about him:
http://news.bbc.co.uk/2/hi/south_asia/8299780.stm

Here is a link to a video, where school children in the UK are asking questions for Babar to respond to:
http://news.bbc.co.uk/2/hi/in_depth/8302225.stm

Michael Lewis on The End of Wall Street

Posted in Uncategorized by paulglader on November 28, 2008

Virtue Capital readers may be interested in another view of how/why Wall Street failed and hurt the entire economy. Here’s the first paragraph and a link from an excellent article by Michael Lewis in a recent issue of Portfolio magazine. Portfolio has been doing some nice features as a new business magazine on the block. Thanks to Greg Griffin, our friend at The Denver Post, for nominating this piece for inclusion on the blog.  http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom/

To this day, the willingness of a Wall Street investment bank to pay me hundreds of thousands of dollars to dispense investment advice to grownups remains a mystery to me. I was 24 years old, with no experience of, or particular interest in, guessing which stocks and bonds would rise and which would fall. The essential function of Wall Street is to allocate capital—to decide who should get it and who should not. Believe me when I tell you that I hadn’t the first clue.

Paying for college – a novel approach

Posted in Education by paulglader on July 21, 2008
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Nice NYT piece today about a college with a $1 billion endowment that aims to attract all low-income students and to pay for their education. Two thoughts takeaways: a) if the story correctly characterizes Berea, it’s cool to see a college with such a mission. b) many colleges – including the ivies – could learn something here. (link to full article here)
-pg
July 21, 2008

With No Frills or Tuition, a College Draws Notice

 

 

BEREA, Ky. — Berea College, founded 150 years ago to educate freed slaves and “poor white mountaineers,” accepts only applicants from low-income families, and it charges no tuition.

“You can literally come to Berea with nothing but what you can carry, and graduate debt free,” said Joseph P. Bagnoli Jr., the associate provost for enrollment management. “We call it the best education money can’t buy.”

Actually, what buys that education is Berea’s $1.1 billion endowment, which puts the college among the nation’s wealthiest. But unlike most well-endowed colleges, Berea has no football team, coed dorms, hot tubs or climbing walls. Instead, it has a no-frills budget, with food from the college farm, handmade furniture from the college crafts workshops, and 10-hour-a-week campus jobs for every student.

NYT story on a diner approach to juvenile justice

Posted in Crime Reduction,For-Profits - Social Enterprise by paulglader on July 14, 2008

NYT piece today (link here) is a good piece of reporting on an unusual idea in criminal justice reform. I think the holistic element here is a nice idea. Teaching young people how to appreciate old diner cars, how to create value, how to manage a business. It seems like a worthy approach to juvenile reform and a worthy social enterprise idea. -pg

Youthful Offenders Restoring Luster to Diners of Old

CRANSTON, R.I. — Classic American diners are dinosaurs these days. Many of them, anyway.

Now, some defunct diners are getting a new lease on life from an unlikely source: young people in jail.

Behind the razor wire at Rhode Island’s juvenile detention center, teenage offenders are restoring four vintage diners that have been brought there by preservationists for the New Hope Diner Project.

This fall, the first restored diner, Hickey’s, should open in Rhode Island, with some of the teenagers working the griddles and the cash register, and even preparing to manage the restaurant someday.

“The whole poetry behind it is that these are kids who have been pretty much cast away emotionally and criminally, getting a chance to restore beloved eateries that have been cast off from society, too,” said Daniel Zilka, the acting director of the American Diner Museum, who rescues decrepit diners and helps run the project. “If they continue on the path that they’ve been moving upon they would end up in an adult correctional facility. This is probably their last opportunity.”

WXP: New measures for poverty in NYC?

Posted in Poverty Reduction by paulglader on July 14, 2008
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Interesting piece in the Washington Post about thoughts by NY mayor Mike Bloomberg on how to measure poverty. It sounds correct that measuring poverty by amount of income spent on food is not so relevant any more with the advent of fast food (poorer health) and the increased costs of items like rent, transportation and health care. We wish Mr. Bloomberg and the city of NYC Godspeed in coming up with better metrics. We agree the federal measurement system is perhaps outdated. (link to article here) -pg

N.Y. Mayor Offers New Poverty Gauge
Bloomberg Says Federal Measurement System Is Outdated

By Keith B. Richburg
Washington Post Staff Writer
Monday, July 14, 2008; A02

NEW YORK, July 13 — Calling the current federal poverty measure broken and outdated, Mayor Michael R. Bloomberg (I) on Sunday unveiled a new method that he and his aides said gives a more accurate picture of the poor, and that he hopes eventually will become the new national standard.

“If we are serious about fighting poverty, we also have to start getting serious about accurately measuring poverty,” Bloomberg said in remarks prepared for delivery to the convention of the NAACP in Cincinnati. Bad weather prevented his flight to Ohio, and one of Bloomberg’s deputy mayors made the speech in his place.

Bloomberg chose as his audience the nation’s oldest civil rights organization, which is committed to increasing economic empowerment for African Americans, who remain disproportionately poor. His effort comes as the House Ways and Means subcommittee on income security plans a hearing this week on the need for a modern poverty measure for the United States.

The current federal measures show New York City with a poverty rate of 18.9 percent. But the new measure shows that the rate is 23 percent. And the new measure shows wide differences within that spectrum. There are fewer people in extreme poverty, reflecting the impact of anti-poverty assistance programs. But under the new measure, the number of elderly poor nearly doubles, from 18 percent to 32 percent, mostly because of health-care costs.

The current federal poverty measure, in use since 1969, is based primarily on how much of an individual or household’s pretax income is spent on food. The federal poverty measure is used to determine eligibility and amounts of assistance from federal and state programs.

But Bloomberg’s aides said that while food accounted for a third of household spending in the 1960s, food now accounts for only an eighth of spending, with housing and transportation taking a larger slice of income. The new measurement, put together by New York’s Center for Economic Opportunity, takes into account a household’s spending on food, clothing, shelter, transportation, utilities and out-of-pocket medical expenses.

Equally important, the advisers said, the new measurement also takes into account targeted poverty programs that the current measure does not — for instance, whether the individual or household gets food stamps or housing subsidies.

“We don’t have the benefit of an accurate measure of poverty,” said Linda Gibbs, deputy mayor for health and human services, in a conference call with reporters.

The new measure also takes into account regional differences in housing costs to reflect the higher amounts in expensive cities such as New York and San Francisco.

The new measurement is based largely on a method the National Academy of Sciences proposed to Congress in 1995. The center also said it uses census statistics to make adjustments for geographic differences in housing costs.

More on Leona and how her gift to the dogs dings taxpayers

Posted in Uncategorized by paulglader on July 9, 2008

Good opinion piece today in the NYT about how the gift Leona left to the dogs costs taxpayers (Link to full article here).

Dog Eat Your Taxes?

Published: July 9, 2008

“THE latest news from the Palace, that Leona Helmsley left instructions that her charitable bequest of as much as $8 billion be used for the care and welfare of dogs, rubs our noses in the tax deduction for charitable gifts and its common vehicle, the perpetual private foundation. Together these provide a mechanism by which American taxpayers subsidize the whims of the rich and fulfill their fantasies of immortality.”

Leona leaves billions for the dogs

NYT’s Stephanie Strom had a good piece this morning about Leona Helmsley’s trust leaving billions to dog-related organizations (and millions to her little dog “Trouble”). I like dogs as much as the next guy and prefer them over cats. But I do place humans on a higher level of need and innovation photo of leona helmsleyin the world. Personally, I think Helmsley could have done a lot better job at giving her money away (before or after she passed away). I would not list her in the all star list of philanthropic individuals. In fact, I find the legacy she left rather sad. It’s for the dogs, literally. I’m curious what others think about this article and about Leona’s philanthropic behavior. -PG

Are you an efficient or inefficient philanthropist?

Posted in Uncategorized by paulglader on June 25, 2008

photo of Paul Newman as cool hand luke“I’m just standin’ in the rain talkin’ to myself.”

– Paul Newman as Cool Hand Luke

Actor Paul Newman’s philanthropic group suggests only 11% of executives are “very effective” or “extremely effective” at meeting social goals and addressing society’s expectations of their business.

A report this month from the New York-based Committee Encouraging Corporate Philanthropy, or CECP, involved in-house research as well as research by McKinsey & Co. that surveyed more than 700 company executives around the world. They found aspects of self interest by CEOs and board members often were top considerations influencing corporate philanthropy programs. A higher percentage of the efficient philanthropists rated local community needs, high social potential and CEO/Board personal interests as the top three considerations for corporate philanthropy. Among the non-efficient philanthropists, the highest consideration was CEO/Board personal interests followed by employee interest and local community needs.

CECP spokeswoman Lindsay Siegel admits that identifying the 10% more efficient philanthropists CEO’s creates an “aspirational” effect and causes the most innovation executives and companies to become a sort-of lead steer in matters of philanthropy. One issue is for companies to look beyond philanthropy as a means to improve reputation and marketing. Rather, the smart CEOs are treating corporate philanthropy as any other business unit and as an opportunity to make real change for communities where the company operates. The right focus is “Difficult to develop at a large company if it hasn’t been there in the past,” she says. “When a CEO gets it, they can develop more authentic philanthropic offerings rather than using it as a marketing piece.”

The study also demonstrated some bashfulness on the topic by c-level executivies. A few executives were quoted (such as Merrill’s John Thain) and companies named (such as PNC Financial Services Group in Pittsburgh), but many remained anonymous. Many executives still fear the wrath of shareholders, who may think that corporate giving comes at the expense of shareholders and is not the primary role of public companies. Ms. Siegel argues that some shareholder concerns are subsiding. “Philanthropy is important to long-term shareholder growth,” she says.

Many executives wish their corporate philanthropy would help further the company’s reputation or brand (90% of efficient philanthropists and 70% of the others report this goal as the top goal). But only 13% of executives said they have been successful achieving this goal.

CECP says its membership makes up 40% of reported corporate giving in the United States. It was largely founded by actor Paul Newman among others. Mr. Newman did not attend the group’s major conference earlier this month as news came out early in June that the 83-year-old actor is battling cancer.

The actor – nominated for nine Oscars and winner of one for the 1986 film The Color of Money – has made philanthropy a focus in recent decades. He created the Newman’s Own line of organic foods from Organic Balsamic salad dressing to “Farmer’s Garden Salsa”. The company says it donates all profits and royalties after taxes for educational and charitable purposes. Paul Newman and Newman’s Own foundation have given more than $200 million since 1982.

Why the Swedes go for high taxes?

Posted in International Development,Poverty Reduction by paulglader on April 21, 2008
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Why the Swedes go for high taxes?
An American academic in Stockholm

Why do low income Americans hate taxes so much while wealthy Swedes don’t mind paying higher taxes. Both groups are supporting an economic system that seems to violate their own self-interest?
That’s the question Carnegie Mellon researcher Christina Fong explored in a recent project. Americans work from Jan to April to pay taxes. Swedes work from January to August to pay taxes.
“If only income mattered and beliefs about fairness didn’t matter at all, then you should expect to see the world that traditional economists expect you to see, which is that poor people demand redistribution (of tax revenue) and rich people oppose it,” she writes. “The fact that we don’t see that requires some explanation, and a big part of the explanation is that these beliefs about fairness matter a lot. So if you’re poor but you think that the rich people really deserve to be rich, then you’ll accept having less.”
She says Americans believe in the idea of fairness – that you will earn more money if you work hard. They are more concerned with fairness than the actual degree of income equality or inequality.

She said both Swedes and Americans would give up 20% of their annual income to achieve a world that was fair if they perceive it as unfair. Some studies Dr. Fong and others have done illustrate that people will fork over money to ensure fairness. (Click here to read recent studies by Dr. Fong and her collaborators).

Sweden remains a fascinating study in political economy. P.J. Rourke’s book “Eat the Rich” (which now sells for .01 cent on Amazon used) was a good first introduction for me to the Swedish economy when I was an undergrad. He used Sweden as a chapter example of “good socialism” and showed the woes the Swedish economy faced. I’d be curious what readers think of future growth prospects and issues for Sweden’s economy and whether the U.S. should consider aspects of its model or not?

Will we see a Carl Icahn of Socially Responsible Investing?

Veteran retires from the Catholic SRI investing cudgel:
Will we see a Carl Icahn of Socially Responsible Investing?

Call them the socially-conscious corporate agitators.

The director of socially responsible investing at Christian Brothers Investment Services Inc., John K.S. Wilson, is moving over to TIAA-CREF in a corporate governance role. In February, he spoke to a class of MBA candidates at his alma mater, Columbia Business School, and noted some of the challenges related to socially responsible investing. When he discovers concerns in companies his firm has stakes in, he often writes nonbinding shareholder resolutions, meets with company executives and lobbies for change in corporate strategy.

CBIS has $4.3 billion in assets under management for 1,200 clients, who want to follow socially responsible management and investment principles that do not violate the teaching of the Catholic Church. He has had successful dialogues with Coca Cola, Nike, Wal-Mart and other multi-nationals. “Some companies have open cultures. Others are not and are very insular. Those cultures are not amenable to talk to us. Many companies don’t see socially responsible investing as integral to their corporate strategy.”

➢ The Social Investment Forum, a nonprofit group dedicated to promoting responsible investing, reports that socially responsible investing assets in the U.S. surged 18% to $2.71 trillion in 2005 and 2006 and up 324% from the $639 billion in 1995. There were roughly 154 socially screened mutual funds in the U.S., managing $159.2 billion in assets at the end of 2006, compared with 151 funds and $148 billion in assets two years earlier. It claims SRI assets grew at a faster rate -18%- than the broader market of investments, which grew at 3% from 2005 to 2007. It reports that roughly 11% of assets under professional management in the U.S. – nearly $1 of every $9 – are now involved in SRI. New types of funds are allowing for more applications of socially responsible investing. Beyond mutual funds, these include exchange-traded funds, closed-end funds, alternative investments and other pooled products. These funds and shareholders are also forming new types of advocacy efforts. The total number of shareholder resolutions filed by socially responsible investment funds increased from 360 in 2005 to 367 in 2006.

Mr. Wilson believes that SRI and other factors are having an impact on managers and boardrooms of public companies large and small.

“Companies can’t just give a speech, take out an ad, or attempt other public relations tactics to imply corporate social responsibility,” he said. “I think they are starting to realize they need to have real solutions to offer. There is still a lot of PR and talk but things are starting to change.”

Over the years, Mr. Wilson has found himself digging into Pope’s encyclicals and theological works to determine positions he should take up with companies in which Christian Brothers invests. With 2,500 stock holdings, he doesn’t always have time to take up issues of concern with all companies so he shares the workload with other socially responsible investors in the Interfaith Alliance. He said the leverage of ideas and relationships as a shareholder is more valuable than threatening to divest holdings or to publicly embarrass a company.

The relationship approach with companies and proxy filings Mr. Wilson took at Christian Brothers is not as aggressive as activist investors such as James Goldsmith, T. Boone Pickens and Carl Icahn of years past. They are also not as aggressive as the players in private equity’s leveraged buyouts or in modern hedge funds, which sometimes increase shareholdings and then call for specific action by management.

As the socially responsible investing industry evolves, will we ever see a socially responsible corporate raider on the level of Carl Icahn?

“It could happen the stronger the business case becomes (for socially responsible investing),” said Mr. Wilson. “We haven’t yet seen the Carl Icahn or T. Boone Pickens in this space. Ten years from now? You never know.”

- Paul Glader

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