Mid-Year Update on F4DC’s Finances

Like the rest of the world, F4DC has been affected by the global recession—we just don’t have as much cash coming through as we used to, and we’re not able to predict very well what our cash flow is going to be like from this year to next.

“Why’s that?” you may ask. It’s because our financial resources come from the estate of my father (who died in January 2007), and the recession is making it very hard for the estate to “settle.” As I said in an earlier blog post:

It’s because of the kinds of investments that my Dad made, which were mostly not in the stock market or other publicly traded instruments. He mostly invested in privately arranged loans to commercial real estate developers, start-ups of companies making medical devices, that kind of thing. We can’t get the money in these kinds of investments “on command.” We have to wait till the loan agreements become “liquid,” or pay off in the form of cash. And then we have to wait a little while longer while the estate settles this aspect of its business and pays off its various beneficiaries, of which F4DC is one.

One effect of the global recession is to slow that whole liquidation process down even more. So, we’re getting by on smaller and somewhat unpredictable distributions from the estate.

With the downturn and uncertainty—in fact because of the downturn and uncertainty—we’ve made efforts to cut way back on our overhead so that we can put more of our available resources into the community, through grants (see the news about our new Matching Grants Program) and special projects. (See Ed’s blog posts about the Southern Grassroots Economy Project, which has the potential to build a healthier, sustainable economy over the long run.)

You can see how some of these changes are playing out in two financial documents you can download: Our June 30, 2010 Balance Sheet (pdf) and January – June 2010 Income and Expense report (pdf). The balance sheet shows that we have about $375,000 in the bank: not quite where we thought we’d be three years out from the founding of F4DC, but enough to make a difference in reaching our mission.

In the Income and Expense report, you can see that we’ve had about $145,000 in income in 2010. We’ve been advised that this is basically it for the year, unless one or more of the private equity investments makes a surprise move toward liquidity.

Our biggest expense category so far this year is personnel, but this isn’t going to be ongoing. This big number was incurred at the start of the year and reflects the severance payouts we made to our staff as we bid them farewell.

Now, I’m pleased to say that our biggest ongoing expense category is grants and awards—and it’s about to take off substantially with the new Matching Grants Program. And the work we’re doing to contribute to the development of the Solidarity Economy in the Southeast is going to be showing up in our travel and meeting expenses. Keep following Ed’s blog posts to see how this evolves: we’ll be meeting, convening, and spreading the learning of folks who are actively building productive, collaborative, democratic, community-based enterprises.

F4DC’s 2009 990-PF form

For an organization that talks a lot about transparency, it’s been a while since we’ve updated the financial information on our website. F4DC’s been through a big transition in the last year. We’ve moved from being a staffed organization with an office to an all-volunteer organization working out of our homes and coffee shops. It’s taken some time, but we are officially caught up!

You can now download our 2009 990-PF form for review. The 990-PF is kind of like a foundation’s tax return. It’s the official report we make to the US Treasury every year, in which we talk about how much money we have and what we did with it. All non-profits file a 990, and foundations (a special kind of non-profit) file the 990-PF. If you ever want to check out a non-profit’s funding sources and expenditures, ask to see their most recent 990’s (or 990-PF’s).

Fall 2008 Update on F4DC’s Money

These days, it seems rare to get timely information, especially about money matters, from agencies and organizations. Yet, at F4DC, we think that transparency – the practice of proactively sharing detailed and accurate information with the public – is a key hallmark of authentic democracy. If the community doesn’t have ready access to solid, understandable information, we can’t be sure whether our institutions are living up to their billing, can’t hold them to account in any real way. Nor can the public engage in informed debate and decision-making about the value of those institutions to the community or the direction we’d like them to go in.

In an effort to practice what we preach, this webpage is the place where we talk turkey about money. Here’s the latest scoop on F4DC’s money – how much we have, where it came from, and where it’s being spent.

You can see on our Balance Sheet and our Statement of Financial Income and Expense that as of October 31st. we had received only a small portion of the money that will ultimately come from the estate of W.H. Thompson (my Dad). This year, we received $354,000 from Dad’s estate, out of a total that we expect will amount to roughly $5 million (though this figure is hard to pin down, given the state of the economy these days!).

“Why is it taking so long?” you might ask. It’s because of the kinds of investments that my Dad made, which were mostly not in the stock market or other publicly traded instruments. He mostly invested in privately arranged loans to commercial real estate developers, start-ups of companies making medical devices, that kind of thing. We can’t get the money in these kinds of investments “on command.” We have to wait till the loan agreements become “liquid,” or pay off in the form of cash. And then we have to wait a little while longer while the estate settles this aspect of its business and pays off its various beneficiaries, of which F4DC is one.

It’s going to take a number of years for the estate to be made liquid and settle, and it’s going to happen in stages. With the economy in the condition it is in, it’s hard to know how long this will take, but we estimate about 5-7 years, with a good portion of it coming in the next 1-3 years.

Of the $354,000 we have received so far from the estate, we spent about $135,000 this year, making grants and just running our basic operations. You can see where we spent it on the Statement of Financial Income and Expense. The biggest expenses are for paying our four staff members, the next is grants, and the next is operating expenses (supplies, printing, etc.).

What isn’t on these statements (but will appear on the one we put up at the end of the year) is $30,000 more in grants made in November the list of new grantees!

You can also see on the Balance Sheet that we have purchased almost $25,000 in computer equipment, software, furniture, and other equipment. This stuff constitutes our so-called “fixed assets,” and we’ll be using it to get our work done for many years.

The money we haven’t spent yet (about $240,000 as of October 31st) is currently sitting in a money market account, earning a little bit of interest. We need to have relatively easy access to this money to cover our expenses and grants in the coming months, which is why it is not being given away or invested in longer-term kinds of things.

As F4DC gains access to more of the money in my Dad’s estate, we – F4DC’s Finance Committee and Board – will be struggling with whether and what kinds of investments to make. Here’s a key question:

Is it possible to earn a little income on the money, while also feeling like the money is being used to improve the quality of life on this planet?

We’ll keep you posted about the thinking of the Finance Committee and Board as we struggle through this hard question.

In the meantime, what do you think about the way we are spending and investing our money so far? Let us know at info@f4dc.org!

Marnie Thompson
November 13, 2008