Monthly Archives: November 2020

Financier & Norfolk State University Alumnus Ralph Newsome Publishes Children’s Financial Literacy Book

Posted on November 23, 2020 by hbcumoney | Leave a comment

What was the inspiration behind writing this book? I’m a financial book worm and I was trying to find a good introduction book on finances for my daughter and all the books that I came across were either to basic or flat out incorrect. So, I felt the need to address the problem.

Your book is definitely targeted at the youth, which we know is a great time to teach about finances. Why did you decide to tackle this age group? This age group is essential to really move the needle for the next leaders of the world to be totally financially independent. Let’s be honest most kids will receive little to no financial education while in school and at home. Most kids will have to play catch up the rest of their lives. Repeating the same statements or questions: “If only I would have known this” or “why didn’t someone tell me about that”. I call that the generational trap or curse; most kids do not have the rich uncle to rescue them from a life of financial mishaps so this book will be their rich uncle, mentor, parent if you will.

You live, eat, and breathe finance and investments, was there anything particularly new or challenging you experienced while writing the book? Yes! Where do I draw the line? There was so much I wanted to add to the book because I believe people are only given the bare minimum of information and then they are left to make critical decisions with very little data. I wanted to break the cycle of a lack of information with a powerful packed book. I would rather have people complain that the book is overkill than to complain about it being like every other basic book on the market.

Is there something you would like to see HBCUs and HBCU Alumni Associations do to help further financial literacy and aptitude in our community? Absolutely; it starts with a conversation on finances. I believe people either are too prideful to admit that they need help with finances or they are afraid of being ridicule for not knowing something. A lot of times, in the Black community, money talk is taboo. Either because family members or friends get offended if someone well off brings up money or it’s perceived as though the well-off person is bragging. Lastly, the well-off person may not want to bring up money because they may feel as though people will beg for money or the “you too good now” or “money really changed you” statements may come. I know that was a little off topic but we have to address these issues. More specifically HBCUs need to be open to using Alumni that have proven to be thought leaders on the subject. Also, HBCUs (like Frats and Soros) need to collaborate on pulling resources to for investments in real estate, gold, small businesses, etc. No disrespect but “fish fry” plates will not get it done. If the community could see HBCUs investing, building, and teaching on finances, there will be a 100fold return.

And last but not least, how can teachers, parents, mentors, etc. go about keeping children engaged in financial learning as they grow up? The teaching must begin early and never stop. Kids will be interested in whatever the adult figure in their life is interested in. If the adult is playing video games daily, the kid will play daily; if the adult is stuffing their face binge watching their favorite Netflix show the kid will follow suit. If the adult is on social media daily, smoking, drinking, cursing, etc….the apple doesn’t fall too far from the tree. Every day is a teachable moment for kids so find little things each day to tie to finances. Train up the child the way they should go.

Ralph Newsome is Managing Director of Acquisition– a proud graduate of Norfolk State University with a BS in Accounting. He has been buying assets and returning profits to investors for about a decade. He was invited to attend Warren Buffett’s Berkshire Hathaway Investors Conference in 2016. What Ralph likes to do the most is help educate others in the complicated world of wealth building. Whether its advising portfolio management, educating on the use of leverage, or distress asset purchasing, Ultimately, he enjoys helping others. Visit his firm at New Level Realty Group.

The Double-Edged Sword Of White Philanthropy Into HBCUs

Posted on November 17, 2020 by hbcumoney | 2 comments

“When the white man came, we had the land and they had the Bibles. Now they have the land and we have the Bibles.” – Chief Dan George

Let us be clear, we need the money. Over 95 percent of HBCUs have endowments that are less than $100 million. In 2015, Sweet Briar College, a women’s college in Virginia, abruptly decided to cease operations. It sent shock waves through the higher education world and for many HBCU advocates it was an indirect message to our institutions that the fire alarm for survival for colleges on the financial fringes was not just a drill, but smoke could be seen in the very near distance. Sweet Briar College had an endowment of $75 million, which would put it firmly ahead of over 90 percent of HBCUs currently – and it closed.

It is no secret that the racial wealth gap makes it extremely difficult for African Americans to compete in philanthropic terms with our counterparts. The Federal Reserve in September 2020 reported, “White families have the highest level of both median and mean family wealth: $188,200 and $983,400, respectively. Black families’ median and mean wealth is less than 15 percent that of White families, at $24,100 and $142,500, respectively.” Given these numbers and given how much consistent financial philanthropic efforts are largely correlated with disposable income and wealth, then this certainly can give some understanding to the story of why HBCUs and African American nonprofit organizations (NPOs) in general have struggled. The Black Church (Are African American Churches Derailing African America’s Economic Progress?) being the lone exception to this rule, which has created a domino effect of instability for secular NPO development and infrastructure in our community’s institutions. Simply put, with what little money we do have to give it almost all has for the past three to four decades gone into the black hole coffers of the Black Church and done little to build proper financial infrastructure for other community supporting organizations. Enter white hope and savior.

2020 has seen unprecedented gifts to HBCUs from white philanthropists starting with Mackenzie Scott, one of the cofounders of Amazon, who at the time of this writing is worth almost $60 billion. She made waves with her unprecedented and seemingly unsolicited gifts to six HBCUs and HBCU supporting organizations that totaled more than $160 million. This was followed up shortly after by Michael Bloomberg, founder of Bloomberg L.P. and worth almost $55 billion himself, with donating $100 million as well to the nation’s four HBCU medical schools. These two donations alone are equivalent to approximately 10 percent of all 100 plus HBCUs combined endowments over their 100 plus year history. Finally in some HBCU circles it was exalted, mainstream America also known as European/White America was “seeing” us and giving us our just due. Paying what was owed to us for so long being mistreated and underfunded. However, that same tune was not being sung or so kind when the Koch brothers donated $50 million between the United Negro College Fund and Thurgood Marshall Fund in 2014 and 2017, respectively. There were some who even called for the money to be returned in both cases so there is an inherent complexity in our organizations being in dire need of funds, but also wanting to be particular about who the donor is. The conversation about HBCUs and European American donors seems to be one that is little discussed and complex in its acknowledgment. But the elephant is there.

In fact, unless something astonishing happens in the rest of 2020 and since HBCU Money has been reporting on the Million Dollar Donations To HBCUs beginning in 2013, three of the seven years of largest donations to HBCUs have come from European/White Americans. There is certainly some historical reasoning behind schools like Hampton, Howard, Morehouse, Spelman, and Tuskegee receiving attention from European American benefactors. These schools have a long storied history and ties with them since their founding. Morehouse and Spelman receiving their names as a result of their generous funding from one John D. Rockefeller, Sr in the late nineteenth century. It is no coincidence that their early proximity to whiteness has allowed them to fair far better financially today than their HBCU counterparts founded by African American interest. But what does it mean when European Americans are the dominant donors of HBCUs and not African Americans?

The long complex history of European American philanthropy as a social, economic, and political tool of influence seems often remiss in our community. African Americans have a naïve tendency to believe culturally that philanthropy is altruism. This despite us all having a familial experience where one family member lent money to another family member and even if the money is paid back, the lender never seems to let it not be told at Thanksgiving how they saved said family member. Think about European American philanthropy as a tool – missionaries in Africa, seemingly endless aid to Africa through the IMF and World Bank that has been used to create dependency states versus developed (see competitive) economies and you start to realize that philanthropy can have a strategic purpose. It paints a picture that Africans are incapable of empowering themselves and that without European and European American benevolence they simply could not survive. The same picture can be painted for HBCUs and African American NPOs.

It is hard to speak out against European and European American injustice towards the African Diaspora if you are HBCUs and African American NPOs (AANPOs) when that is the hand that feeds you. How can you convince African Americans that African American institutions are the mechanism by which we can empower ourselves as a community if they themselves are unable to find a solution? There have been a number of HBCUs who have come under pressure from wanting to have someone like Minister Louis Farrakhan of the Nation of Islam speak. Whether you agree with his ideology or not, the African American community understands the perch from which he speaks even if they do not agree with it. It should be us who decides who can and can not speak, but that is not how money works. Money garners influence in ways that can make you sit up in your bed uncomfortable at night because you heard something rumbling in the closet, but you live alone.

Let us be clear, it is not that accepting money from European Americans is bad or unacceptable. There is a fine line between cutting off one’s nose to spite your own face. However, who has the leverage in the donation is vital. Is it money you have to have to keep the doors open or money that just provides icing on the cake? In the former it is the donor who wields immense power and in the latter it is in the institution. HBCU alumni must at least be willing to have the conversation about where our institutions money is coming from and more importantly how can we can ensure non-HBCU donors do not garner influence that moves us off our purpose to serve African American social, economic, and political interest and empowerment.

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Posted in Philanthropy

Tagged amazon, bloomberg, HBCUs, jeff bezos, koch brothers, mackenzie scott, philanthropy, thurgood marshall fund, UNCF

African America’s October 2020 Jobs Report – 10.8%

Posted on November 14, 2020 by hbcumoney | Leave a comment

OVERALL UNEMPLOYMENT: 6.9% (7.9%)

AFRICAN AMERICAN: 10.8% (12.1%)

LATINO AMERICAN: 8.8% (10.3%)

EUROPEAN AMERICAN: 6.0% (7.0%)

ASIAN AMERICAN: 7.6% (8.9%)

Previous month in parentheses.

Analysis: All groups saw drops in their unemployment rates, led by Latino America’s 150 basis point decrease. African Americans had second smallest decrease, with unemployment dropping 160 basis points.

AFRICAN AMERICAN UNEMPLOYMENT RATE BY GENDER & AGE

AFRICAN AMERICAN MEN: 11.5% (12.6%)

AFRICAN AMERICAN WOMEN: 9.2% (11.1%)

AFRICAN AMERICAN TEENAGE: 23.6% (20.7%)

AFRICAN AMERICAN PARTICIPATION BY GENDER & AGE

AFRICAN AMERICAN MEN: 65.4% (64.7%)

AFRICAN AMERICAN WOMEN: 60.1% (59.8%)

AFRICAN AMERICAN TEENAGE: 30.3% (30.0%)

Analysis: African American Men and Women saw declines in their unemployment rate, rates while African American Teenagers saw an substantive uptick in their unemployment rate by 290 basis points. Participation rates for Men and Women improved marginally. African American Teenagers saw a modest improvement of 30 basis points in October.

African American Men-Women Job Gap: African American women currently have 1,075,000 more jobs than African American men in October. This is a increase from 1,030,000 in September.

CONCLUSION: The overall economy added 638,000 million jobs in October. African America added 433,000 jobs in October or 67.9 percent of the overall jobs. From Yahoo Finance, “U.S. employers have brought back fewer jobs on net in every month since June, when payrolls rose by a record 4.78 million as stay-in-place orders and lockdowns lifted and allowed many businesses to restart operations. That trend continued in October, as the economy only slowly brought back payrolls that had been lost at the start of the pandemic. The October jobs report also continued to reflect a worrying trend seen in the past several months’ worth of data: Many individuals’ temporary furloughs or layoffs have become permanent.”

12 Things Your HBCU Alumni Association/Chapter Needs To Do To Be Financially Successful

Posted on November 6, 2020 by hbcumoney | 2 comments

“Planning is bringing the future into the present so that you can do something about it now.” – Alan Lakein

Far too many HBCU Alumni Associations and Chapters have been asleep at the wheel for far too long financially. They have conducted themselves like a child who says they want to start a lemonade stand, but refuses to take the time to make a plan of acquiring lemons, sugar, water, and certainly not building a lemonade stand. There is more time spent playing with their friends and then seemingly complaining that their friends do not support their lemonade stand – that does not exist. It is enough to drive one mad. We have laid out twelve steps that HBCU alumni associations and chapters need to do to make themselves financially integral and sustainable for the future to meet the financial needs of both African America and the HBCUs they serve.

Move banking accounts to African American owned banks and/or credit unions. It is utterly baffling that HBCUs and HBCU Alumni Associations/Chapters at this point still have not done this very elementary point of economic development given the acute presence of the #BankBlack movement over the past few years. Public HBCUs have more red tape by being state institutions and there are significant political dynamics at play there, but private HBCUs and HBCU alumni associations/chapters at private or public HBCUs at this point simply have no excuse.
Invest in technology, especially financial technology. If HBCU Alumni Associations/Chapters want younger alumni involvement as they claim then they have to come into the 21st century – do you realize we are two decades into the 21st century and some HBCU foundations, alumni associations/chapters do not have a functioning web presence. This is where typically you would insert a mind blown emoji or gif. It is unfathomable and inexcusable at this point. HBCU Alumni Associations/Chapters need a web and social media presence independent of the mother institution for a myriad of reasons that should be readily apparent without great explanation. Alumni associations/chapters can work out an agreement with their schools to create work study that involves social media work and web development for those students who are interested and have the necessary skillset. Otherwise, spend the money and pay for a real web designer and social media manager – it is worth it. Financial technology – accepting payment by Venmo, CashApp, etc. should not be groundbreaking it should be standard. There are a plethora of financial technology available for nonprofit organizations. This should be the job of the treasurer at both the national and chapter levels to find technology that can improve the financial efficiency.
Collect information on your members. Know your association/chapters strengths and weaknesses. If you plan on doing education outreach with your alumni association/chapter, it may help knowing who in the organization that has a background and connections in education. Need to put on an event? It may help to know the alumnus who worked in event planning or knows someone who does. Other information should be household income, level of education, home ownership, etc. The more information the better (we will explain the value of this in another point). But not knowing what assets you have is a dearth of proper planning and strategy.
Write a business plan. If you do not know where you are going, any road will get you there. This opaque behavior is stressfully true with HBCU Alumni Associations/Chapters. We have an alumni association/chapter, now what? Having a written plan of what you want to accomplish, why, and how is paramount to any organization. HBCU Alumni Associations/Chapters are no different. The business plan should be reviewed and updated every 3-4 years to ensure that goals are on track . A review committee made up of internal and external members would be advised.
Create a revenue and investment committee. These can be one committee or two committees, but it needs to exist. Beyond dues, how does the association/chapter plan to make money? Thinking of ways that revenue can be generated and those ideas presented to the association and chapter would be vital. Seriously, because have we not killed the annual golf tournament? Someone on this committee needs to have an investment background and if there is no one in the chapter with it, then invite a local financial adviser to sit on the committee in a volunteer role to help.
Raise dues. There was just a collective gasp from everyone just now. However, creativity. Right now, most associations/chapters charge annual dues of $25-35 annually. Going to a monthly model of $5-10 can skyrocket annual dues revenue to $60-120 which is an increase of over 100 percent in dues revenue and it is an amount that few will miss. Implementing financial technology can allow this to be automated around alumni pay periods.
Produce a newsletter and sale local advertising. Remember the roster of your membership and the data we talked about collecting. This is extremely valuable in putting together a media kit that you can use to sell local advertising in. Most alumni associations/chapters send out newsletters anyway. The ability to monetize that in the most optimal way requires being able to tell potential advertisers who they are reaching. Imagine being able to simply sell ten advertisements a year with twelve month commitments that each pay $50 per month. This is $6,000 in new annual revenue for the chapter from local businesses and relationship building.
Hire a financial adviser. It can be the aforementioned one or a different one, but this also needs to be done. Associations/Chapters should be generating far more income than they do with the collective financial ability at their disposal. As an entity, your association/chapter can have a brokerage account that invest in stocks and bonds – not just sitting in a checking and savings account losing purchasing power. Ensure that the financial adviser is credible. There are even African American brokerage firms that can provide accounts and advising all under one roof. Again, we are not going to fundraise our way to institutional wealth. Our organizations’ money needs to be making money while it “sleeps” because money never sleeps.
Purchase real estate. Now that you have a financial adviser, your chapter should also retain a real estate adviser to help build a rental property portfolio. Remember, we just created $6,000 in new annual revenue via the newsletter. You also raised dues from $25 to $60 and with the $35 surplus on a chapter of just twenty alumni that provides and extra $700 annually. In line with your investment income from your brokerage is also rental income. The association/chapter can focus on purchasing everything from single-family to commercial properties. If chapters purchased near their HBCU, it could help stem off any potential gentrification as many HBCUs are seeing, but in little position to do anything about. They could also purchase real estate locally where their chapter is located. This would provide the association/chapter another stream of revenue and diversified real estate holdings.
Invest in African American small businesses. This could be done in conjunction with African American owned banks/credit unions. If a small business could not qualify for a SBA loan, then the chapter could work out a deal with the bank that would allow them to review the investment on the bank’s recommendation. The chapter would then either invest in the business with equity or provide a loan and act as a shadow lender. We know this is something desperately needed for many African American small businesses who are trying to grow and for some reason or another lack access to traditional financial products. Imagine a local African American kid comes to the bank with the next great social media company, but he needs $38,000 to get it going and does not qualify, but the bank says they have a program that may work to help him. The chapter invest the $38,000 for a 50 percent stake and acts as a passive investor while the kid builds his dream. Why $38,000? This is the amount Mark Zuckerberg and classmate Eduardo Saverin invested to get Facebook off the ground in 2004. A company now worth $840 billion and a 50 percent stake would be worth $420 billion – from a $38,000 investment. Not to mention the potential to secure jobs and internships for your HBCU’s students and alumni as the company grew.
Endow internships at local organizations. HBCU alumni constantly complain about our students not having access to opportunity. Well, now with your new found financial wealth you can buy them access just like everyone else does for their community. The Museum of Natural Science in New York, Miami, Houston, etc. sure do appreciate that $100,000 donation your association/chapter gave them to hire a paid summer internship. The condition? That intern needs to come from your HBCU. Now, a student from your HBCU gets a paid summer internship, work experience in a field of their interest, and most importantly builds their professional network.
Be transparent. Associations and chapters need to ensure that members feel like they know and understand what is going on. Part of this is improving the membership’s financial aptitude through financial literacy so that they understand the decisions being made on some level. Have a quarterly review of the financial portfolio and an annual audit. Trust is vital and for African American organizations that trust is built through transparency.

HBCU Alumni Associations & Chapters should be the symbol of group economics for African America. Instead, the actions have been more hat in hand with the rest of African American organizations who could, but do not leverage their capability. The infrastructure is there for HBCU Alumni Associations & Chapters to be financial forces if the proper financial strategy and plan is implemented. It is time to stop playing and start planning, there is a lemonade stand to build.