Investing in Children

Are you an investor? You may be without knowing it. It doesn’t take a portfolio of stocks or mutual funds riding the ebb and flow of the market to make you one. If you occasionally put a few coins in a donation box or turn in your old clunker to the YSI Thrift and Gift, you are making an investment—an investment that may help change the community you live in.

The modern-day business world operates on a bottom line mentality. Back a few hundred years ago, when modern business practice was evolving, the notion of public corporations to provide services for the general good of the community developed. Then, corporations were seen primarily as providing a public service rather than as a means of making investors rich. Most employees were loyal; many companies were benevolent; those that weren’t became the targets of labor unions. The focus was more on the consumer than on the investor. Times have changed.

Recently a new type of corporation has evolved to fill a need once filled by churches and benevolent businesses. Not-for-profit corporations have blossomed over the past few years to provide enhanced education, health and human services, to support the arts and the environment—all things we value, things that make life worth living for many of us.

As with other businesses, not-for-profits need investors too. But the return on the investment may be a little harder to measure than simply counting stacks of coins. How can you, as an investor in a not-for-profit, tell if you’re getting your money’s worth?

First, if it’s local, you might want to visit and see how things are going. Often your gut level reaction is your best guide. Next, as with any company you invest in, you need to read the information you receive. See if it provides you with details of substance. See if it portrays a service that you can truly feel good about supporting. If it’s appropriate, use the services, or talk to people who have. Finally check the financial health of the organization. Is it run efficiently? Is it paying for a quality staff? Neither too much nor so little that its employees have to rely on other not-for-profits in order to live. Is it using its money for the services you think you are supporting?

Although not-for-profits do not pay taxes, they do file a tax return each year with the IRS. Called a 990, it makes a 1040 look like child’s play. The 990 is a public document that is available by request from all not-for-profits, who may charge a small fee for copying and mailing it. (You don’t want your investment dollar used to send 990s to other investors.) It shows in great detail the financial picture of the organization including the amounts spent for programs, administration, and fund raising.

Remember, it is your money, and you need to get a return on it even if the gain is simply a better world to live in—one that provides for its children, that takes care of its poor, its sick, its needy, that enriches its citizens lives. Diversify if you like, or pick what is significant to you. When it comes to investing not all bottom lines are created equal.

The Youth Science Institute’s most recent Annual Report may be seen at www.ysi-ca.org. Its 990 may be requested at (408) 356-4945 ext. 10.

Leave a Reply

Your email address will not be published.