DATE: December, 2000

Can Donations to a Scholarship Fund Make a Difference?

Dr. Ruth J. Simmons is an interesting example of what can happen with a little help. She remembers her first house; a corrugated tin shack perched on blocks on an East Texas farm where their father, a father of 12, was a tenant farmer.

"The overall impression is one of disbelief that in a lifetime one can travel so far," said Dr. Simmons, who recently was named the President of Brown University.

Dr. Simmons was struck by the irony. Here she was, the great-grandchild of at least one slave on her mother's side, preparing to lead one of the world's most prestigious universities. Dr. Simmons climbed to the pinnacle of the American academy by way of a $1,000 scholarship to Dillard University in New Orleans and a lot of hard work.
Taken from a NY Times article on 11/11/2000

White House Study Points to Rise in Giving

President Clinton has hailed a resurgence in charitable giving, citing a new report from his Council of Economic Advisers that identifies a sharp rise in giving in recent years as a proportion of the nation's total economic activity.

The president, in his weekly radio address to the nation, pointed to recommendations in the report on steps the federal government can take to further cultivate public generosity. In addition, he announced the creation of a $2-million program paid for with private donations that will aim to introduce more young Americans to what he called "the rewards of charitable giving."

The report from the Council of Economic Advisers provides an analysis of philanthropic behavior in the United States, discusses trends in giving over the past several decades, and explains the economic factors that led to the increase in donations. The report also outlines possible future directions for philanthropy and ways giving might be encouraged. Among the report's conclusions:

• Charitable giving has risen as a percentage of gross domestic product in recent years, from 1.7 percent in 1995 to 2.1 percent last year.
• Older Americans are more generous than any other age group.
• Single women are more likely to give than single men.
• Black Americans are more likely to give than whites.

"Last year, Americans gave a record $190-billion to charitable causes: to feed the hungry, immunize children, build homes, tutor immigrants, restore parks, and send disaster relief to hard-hit people all around the world," Mr. Clinton said. "Working with America's extensive network of nonprofit and faith-based organizations, we're making a difference, but we still have more to do."

By Grant Williams, The Chronicle of Philanthropy, Nov. 27, 2000

TOP OF PAGE

Women give more and Volunteering also greater

Big gifts from entrepreneurs are more likely to come from women than men, according to a survey by the National Foundation for Women Business Owners.

Wealthy women are more likely to make large philanthropic donations and volunteer with charitable organizations than their male counterparts. The survey found that half the women surveyed with assets of more than $1 million contributed at least $10,000 a year to charity, compared with 40 percent of men.

The survey, which examined the philanthropic behavior of entrepreneurs, also found that women are more likely to assume volunteer leadership roles in charity organizations. Regardless of gender, business owners are more likely to give to charity than the general public. According to the survey, 9 out of 10 entrepreneurs contribute to philanthropic organizations compared with all U.S. households.
Los Angeles Times, Nov. 15, 2000

TOP OF PAGE

NET USERS TEND TO BE OLDER

One of the conclusions in a survey released late October by the Gartner Group, a market research firm, states that Internet users appear to be a bit older than is suggested by conventional wisdom. The average U.S. Internet user is 41 years old.

The survey of 40,000 American Adults also determined that the average U.S. Internet user:

U.S. Internet users are evenly divided between males and females. Although rounded out to 50/50, there are actually slightly more females online than males.

TOP OF PAGE

BROAD TAX CUTS NOT LIKELY

At a recent forum conducted by the Heritage Foundation, Karlyn Bowman, senior fellow at the American Enterprise Institute stated that the government will not institute a broad, general tax cut in the near future…tax cuts "will more likely happen on the state or local level."

The forum, "Possibilities for Policy Consensus in the New Congress and Administration," was held to discuss the legislative outlook for the 107th Congress.

"The public is sick and tired of mindless partisanship," said Will Marshall, president of the Progressive Policy Institute. The general consensus among the participants was that bipartisanship must play a critical roll in the next Congress.
http://www.ncpg.org/grcnewsdec.html (Government Relations Page of National Committee on Planned Giving)

HIGH YIELD CONCERNS - JUNK BONDS

(an editorial comment on a recent article)

A recent article in the New York Times by Floyd Norris (Junk Bonds Are So Cheap, They Look Good Dec. 15, 2000) opens with these thoughts:

What can explain the carnage in the junk bond market this year? Either investors have panicked or the market is warning of dire problems ahead.

If it is a warning, there are two possible messages. Perhaps a severe recession is coming, one that will send default rates on junk higher than ever before. Already, without a recession, default rates are high and rising.

Or perhaps the quality of companies that borrowed money during the junk bond excesses of the 1990's was simply worse than ever, and when those companies go broke there will be little left for bondholders to recover.

There is something to be said for that theory. In the late 1980's, the bad loans were generally made to finance overpriced leveraged buyouts. "Then, it was good companies with bad balance sheets," said Bruce Monrad, co-manager of Northeast Investors, a junk bond mutual fund. Now, he added, "there may be bad companies out there."

Mr. Norris' concern is well founded. Let me add to this article that when general interest rates (CD's, savings plans, etc.) are low, it becomes easier for commissioned salesmen to find buyers for high-yielding bonds. The high income from junk bonds becomes downright enticing. Please remember - high yield results from high risk. Just because the company name is recognizable or the yield is attractive doesn't mean the bonds are necessarily safe.

High yield also requires high homework (yours) to determine if the risk reward ratio is reasonable. As Mr. Norris says, "...finding a manager who can avoid the disasters may be crucial." If you are thinking about buying individual junk bonds, be careful.

TOP OF PAGE