Not For Profits Need Bitcoin to Survive - Cenacle Capital Management LLC

Not For Profits Need Bitcoin to Survive: Moving Not for Profits and Foundations into the 21^st Century

Having served on several boards and committees over the years, I’m still inspired by the commitment and loyalty of board members and investment committees who move the mission along often through sheer will power.

Almost every not-for-profit (“NFP”) I have been a part of lives month-to-month, occasionally with a last-minute savior coming to the rescue with a short-term influx of cash or donation.

Despite board meetings moving along like a 70’s parent teacher conference, not treating charitable organizations as a “for-profit” business with benchmarks for efficiency and streamlining processes is a waste of precious resources. Currently, I see five ways NFPs can improve their financial outlook:

Portfolio Expenses: With interest rates still hovering around zero, NFPs should be looking to swap expensive mutual funds for their lower cost counterpart called Exchange Traded Funds (ETFs). Due to their regulatory and legal structure, ETFs, in some cases, can be 80% less expensive than their mutual fund peers. This can save 0.25% to 1.00% or more annually in fees. Every dollar of waste uncovered in an investment portfolio, is a dollar you don’t have to raise.
Advisor Fees: Much of the recent Department of Labor (DOL) conversation regarding the fiduciary rule deals with ERISA and 401(k) “rollovers”. Full-time and part-time investment committee members may have other more demanding duties, but they still have a fiduciary obligation to donors to monitor fees and performance. ⁽¹⁾ Ask “How much is our trust department / bank / advisor charging us annually?”
Prudent Use of Derivatives: Derivatives is not a dirty word as everyone thinks.
Using listed, standardized options to increase portfolio income can reduce some market volatility, which might be a prudent strategy in some cases. The temptation to stretch for yield in riskier products can potentially be avoided by using conservative cash secured put writing or covered call writing strategies.⁽²⁾ ⁽³⁾ Speak with a tax professional before generating excessive investment income from options.
Social Media: Don’t be afraid of creating exciting content to engage. Use Facebook, Instagram and Twitter to attract followers and discover your authentic voice and vision. Don’t hide the skeletons in your closet. Authenticity is key.
Embrace Bitcoin: As local merchants discontinue the use of high-fee credit card and bank processing fees for transactions, NFPs should be able to improve cash flow immediately by accepting Apple Pay, Bitcoin, Ethereum, Ripple, PayPal and other forms of “digital payment” for fast donations. Most millennials don’t have a checkbook; they intensely despise banks and would prefer to send a quick payment from their smartphone using a QR code to your digital wallet. Make it easier for millennials to contribute to your NFP.

In a few years, charitable organizations will likely be software apps, matching donors with those in need of funds by immediately processing payments. Governance Boards will be bits of code submitted by crypto-boardrooms using “smart contracts” written on the Ethereum blockchain. ⁽⁴⁾

Footnotes:

Disclaimer: Bill Ulivieri is an independent, “fee only”, state registered investment advisor and accredited investment fiduciary. He personally owns Bitcoin, Ethereum, and is a Zcash miner. The content of this article is for informational and educational use only. This content has not been reviewed for compliance with Rule 206(4)-1 under the Investment Advisers Act or similar state regulations. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed.