Making Charity Pay

February 20, 2009

The Sallie Mae corporate family funnels charitable contributions to the Sallie Mae Fund, the donor-advised fund managed by the non-profit Community Foundation for the National Capital Region in Washington, D.C.

The Community Foundation, in turn, is paid a management fee, which it says it uses to serve the “compelling charitable needs of Metropolitan Washington.” Forty percent of all its grants are made outside greater Washington.

The Sallie Mae donor advised fund was set up with a $2 million contribution in 1992.  Fund vice president Erin Korsvall would not disclose how much has been contributed since or how it was spent.

Donor-advised funds allow donors to “recommend” which charities will receive donations and how much money they will be given.  While the donor’s advice can be overridden, rejecting a recommendation is “frowned upon” by donors, according to the Journal of Accountancy.

Spending recommendations by the Sallie Mae corporate family were followed without exception, Korsvall said. Later, she said she couldn’t say every recommendation since 1992 was followed.

Public filings by the Community Foundation don’t list how much money was received by or donated from any of the donor-advised funds it manages. One 574-page tax return lists hundreds of contributions to charities, but doesn’t disclose the contributor.

“Because we know so little about these Donor Advised Funds and there are such minimal requirements,”  said Niki Jagpal, the research director of the National Committee for Responsive Philanthropy said, “you have no way of telling whether there’s insider dealing or a conflict of interest of whether the donor receives a benefit.”

“It all comes down to accountability and transparency,” she added. “What is the public purpose.”

On average, the donor-advised fund contributed $2.6 million each year from 2002 through 2007 to its charitable partner, the Sallie Mae Fund, Inc. The non-profit Sallie Mae Fund Inc. receives no money directly from the Sallie Mae corporate family.

Public records don’t disclose how the remainder of the charitable contributions were used. The Sallie Mae Fund trumpets some of its giving in more than 150 pages of press releases, good deeds that it says total more than $125 million since 2001. There’s no detailed accounting from the non-profit.

Here’s a breakdown of how the money was spent from public tax filings through 2007:

  • 20 percent on salaries, or $2.8 million
  • 6.4 percent on expenses, or $891,963.
  • 24 percent on the high-tech bus tour, or $3.4 million.
  • 31 percent on paying for college workshops, or $2.9 million.
  • 12 percent on education materials, or $1.6 million

The 2008 tax filing is not yet available.

Korsvall said the Fund now is staffed by employees from the SLM corporate family and has no employees.

Scholarship applications are directed to either the Community Foundation or individual charities that are sponsored by The Sallie Mae Fund, she said.

Four of the largest scholarship funds are handled this way:

  • The American Dream Scholarships are awarded by the United Negro College Fund. It also employed the United Negro College Fund as a consultant.

Front Row Seat to The Recovery

February 20, 2009

Speaking today to the US Conference of Mayors, President Obama outlined some of the details of The American Recovery and Reinvestment Act. Full details will be posted on a new website with an introduction video by The President:

“In the face of an economic crisis we haven’t seen since the great depression, The American Recovery and Reinvestment Plan represents a strategic and significant investment in our country’s future. The size and scale of this plan demand unprecedented efforts to root out waste, inefficiency, and unneccesary spending. Recovery.gov will be the portal for these efforts. Publishing information about how the funding secured by the legislation will be spent in a timely targeted and transparent manner. Instead of politicians doling out money behind closed doors, the important decisions about where taxpayer dollars are invested will be yours to scrutinize. Right now recovery.gov provides projections based on the planning that went into the legislation. And once the money starts to go out to build new roads, modernize schools and create new jobs, you’ll be able to see how, when and where it is spent. So take a look now, but come back often. Recovery.gov will be changing and growing a lot in the weeks and months ahead and we’re counting on your participation. Thank you.”

Homeowners say “Produce the Note” to Stop Foreclosures!

February 19, 2009

ABC Action News in Tampa interviews the Consumer Warning Network’s Chris Hoyer about “Produce the Note” and talks with homeowner Kathy Lovelace who used document templates provided by CWN for free to file her motion with the court to “Produce the Note.”

Produce-The-Note Gaining Momentum

February 18, 2009

With all the talk of Helping Homeowners, much attention is being paid to the plight of those currently in foreclosure or those headed into foreclosure. President Obama says that a fix is on the way but what can you do right now?

Several months ago we posted a story detailing how you can use the Produce-The-Note strategy to buy yourself extra time in the process. We’ve assembled some free template documents that you can use right now.

Using the Produce-The-Note strategy is something all homeowners facing foreclosure can do. If you believe you’ve been treated unfairly, fight back. We have created templates for a legal request, a letter to your lender and a motion to compel to help you through the process.

About Face(book)

February 18, 2009

By Jonathan Cohen:

Imagine seeing an online advertisement for Facebook featuring a family photo you posted five years ago.  Under the new terms of use recently unveiled by Facebook, this hypothetical situation could have been a reality for its users.

On February 4, Facebook revised its terms of use to state that the site would retain user-posted content after users terminate their accounts, and can use that content for practically any purpose imaginable.  Understandably, this revision caused concern amongst users on a massive scale (a Google blog search for “Facebook terms of use” returned over 10 million results).

In direct response to public rallying against the policy change, and perhaps out of fear that users would jump ship and take up residence on competing social networking sites, Facebook swiftly reinstated its old terms of use on February 18.

According to a blog post by Facebook CEO Mark Zuckerberg, the reversion to the old terms of use is only temporary while Facebook works to “resolve the issues that people have raised.”  Zuckerberg also confirmed that the next round of revisions will be “significant” and that users will have some say regarding the new terms.  If you would like to participate in the development of the new terms of use, Facebook is now accepting user comments, questions, and suggestions here.

The Consumer Warning Network will provide updates as further information about changes to Facebook’s terms of use becomes available.

Homeowners’ Rallying Cry: Produce the Note

February 17, 2009

by MITCH STACY Associated Press Correspondent

ZEPHYRHILLS, Fla. (AP) — Kathy Lovelace lost her job and was about to lose her house, too. But then she made a seemingly simple request of the bank: Show me the original mortgage paperwork.

And just like that, the foreclosure proceedings came to a standstill.

Lovelace and other homeowners around the country are managing to stave off foreclosure by employing a strategy that goes to the heart of the whole nationwide mess.

(AP Photo/Chris O’Meara)

Read more

The 2009 Stimulus Bill and Its Impact on Deficits and Unemployment – Who Can We Trust?

February 17, 2009

“The only function of economic forecasting is to make astrology look respectable.” John Kenneth Galbraith

The Stimulus Bill passed by both the House and the Senate (with very little little “bipartisan support”) looks to pump $787 billion into the economy, with the purpose of combating rising unemployment and decreased consumer spending. Will it work? The Democrats may say yes, but not the GOP, which continue to believe that only tax cuts can help a sick economy. Who can we trust to give us the straight scoop on whether any of this monumental spending will have any of the anticipated benefits it touts?

Enter the Congressional Budget Office (CBO).The CBO has concluded that the bill will indeed increase the federal deficit by $787 billion between now and 2011, and during the same span will increase employment by between 5 and 7 million jobs. But the CBO also says that in terms of a percentage of our gross domestic product (GDP) the Stimulus Bill will have no negative effect on our debt ratio.

Trust a congressional agency, you ask? Republicans and Democrats can’t even agree on whether pickup or delivery is best for pizza. How could you trust a congressional office dominated by Republicans a few years ago to warn about the dangers of deregulation, or a current Congress dominated by Democrats to warn about too much spending?

So who is the CBO? It is a congressional agency created in 1974 to provide Congress with “objective, nonpartisan and timely analysis” on pending and enacted legislation. The CBO responds to written inquiries of politicians from both sides of the aisle, utilizing a staff of 235 people. Its website carries a copy of all such inquiries.

How non-partisan? History does tend to show that the CBO gives straight answers to questions, rather than simply telling the party in power what it wants to hear. For example, despite the claims of proponents that the 2009 Stimulus package will carry an immediate “jolt” to the economy, the CBO reported to Republican Senate Minority Leader Mitch McConnell that Republican criticisms of the short-term ineffectiveness of the proposals were well taken.

When the CBO was first created, it received a lot of criticism as to its partisanship. In its early years, Democrats controlled Congress, and Republicans accused the CBO of liberal bias. After Republicans took power, however, they warmed up to the CBO. Over subsequent years, the CBO has generally been perceived as objective and non-partisan. By serving both the House and the Senate, and by responding to both Republican and Democratic inquiries, it has managed to avoid controversy.

But how competent is the CBO? Is it like those talk show pundits who are always very good at saying, after a crisis has occurred, “I saw it coming,” but who seem no better than a crystal ball at predicting what hasn’t happened yet?

A look at some of its past pronouncements are a mixed bag. Back in August 2006 the CBO projected that there was no recession in the country’s near term economic future, and that unemployment would stay at a 5% level. Wrong. The CBO also warned, however, that housing values would continue to plummet, losing 12% of their values by 2009.

In short, the CBO may continue to earn its reputation of non-partisanship, but at predicting our economic future it’s no better than the “Madame Zora” fortunetelling booth at the State Fair.

Bank CEO Compensation – How Much Is Too Much?

February 16, 2009

CEOBy Angie Moreschi:

It’s good to be the CEO. Big Bank Executives have made a mint over the past several years, overseeing the greatest financial disaster in generations.  Definitely worthy of every penny.  With compensation in the millions, these CEO’s took while the gettin’ was good.  And now, they’re taking again, but this time from the taxpayers.  As the government prepares to dole out the cash for TARP-2, we thought you might like to see just how much these folks were paid.

From $72.5 million for Goldman Sachs President Gary Cohn to JP Morgan Chase CEO James Dimon’s $27.8 million to Bank of America CEO Ken Lewis’ $24.8 million.  Must be nice.  Read the numbers from CNN Money for the total compensation of top executives in 2007 for the 9 banks that got money from the first batch of federal TARP dollars.

And we’ll do the math for you.  If you add up the dollar amounts listed for those top executives in 2007… the grand total is… $945 million.   Yes, just under a billion dollars for these corporate leaders who’ve proven they sure know how to make money– at least for themselves.

Another Day Another $1 Trillion – TALF

February 10, 2009

By Nicole Mayer:

$1 Trillion More to go to Financial Institutions and Investors

There has been a lot of news about the American Recovery and Reinvestment Act discussed by President Obama last night and passed by the Senate today. Today, we also heard from Treasury Secretary, Timothy Geithner, about a new Financial Stability Plan, consisting of three parts. One of the three being the Term Asset Backed Lending Facility (TALF) introduced last November.

TALF was first presented as a $200 billion package on November 25, 2008, meant to stimulate growth in the areas of student lending, automotive lending, credit card lending and small business lending. Throughout 2008 and the beginning of 2009, the amount marked for the TALF program remained at $200 billion, that is, until today. Today, the Federal Reserve Board announced that the TALF program could expand to $1 trillion and may include “commercial-backed securities, private label residential mortgage-backed securities and other asset-backed securities.” Geithner’s description of the Financial Stability Plan today confirmed that TALF has increased five-fold overnight. As a result of this increase, the Treasury will have to use $100 billion, instead of the planned $20 billion, to leverage up to $1 trillion of lending from the Federal Reserve.

The date the TALF will begin will be announced later in the month; however, there was no mention today of the terms of the TALF program. With no mention of terms, one wonders whether the previous terms and conditions set forth for the TALF will still apply. Those terms and conditions contain a key restriction that renders an asset-backed security ineligible for TALF if it was “backed by loans originated by the borrower or an affiliate of the borrower.” This provision seeks to ensure that those companies that made the risky loans in the first place are not bailed out by the TALF program. However, with the introduction of the Financial Stability Plan it is unclear whether new terms and conditions will be put in place.

Additionally, President Obama recently announced a limitation on top executive compensation of $500,000 for companies that received a substantial amount of federal funds. There has been no mention on whether the same condition, or any other supervision of executive compensation, will apply to the institutions participating in the TALF program.

Success Fighting Foreclosure with Produce the Note

February 9, 2009

Rhode Island Attorney George Babcock is finding success using the “Produce the Note” strategy to fight foreclosure for his clients.  Mr. Babcock has used the bank’s failure to properly produce documents to get a temporary restraining order to stop the foreclosure process.  When it came time for a hearing before the judge, the banks decided to walk away.  The Consumer Warning Network’s Angie Moreschi interviews Mr. Babcock in this radio podcast to learn more about his successful efforts to fight foreclosure.

If you are currently facing foreclosure here are some steps you can follow along with some templates for a legal request, a letter to your lender, and a motion to compel.

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