Tag Archives: investing

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

“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.

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. 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.
  11. 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.
  12. 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.

The Greatest Financial Literacy Video Ever (According To Our Editor)

“A wise person should have money in their head, but not in their heart.” – Jonathan Swift

By William A. Foster, IV

Anyone who knows me and has talked to me about money has been sent this video. As a financier who has been asked for personal finance help by family and friends along with once upon a time being a former adjunct professor whose primary job was to teach a prism of subjects for incoming freshmen at a local community college throughout the course, one of those being financial literacy, finding this video was like stumbling upon treasure.

Dan Griffin, CPA, in one hour could honestly change your financial life if you listen, take notes, and put into action everything he discusses. I have watched more financial literacy videos than I can count and this is hands down the best. It is not smoke and mirrors, nor him trying to sign you up for anything, or any of the quite frankly pompousness that I tend to come across with this new era of financial literacy experts that have cropped up as a niche industry. Are there credible people out there trying to teach financial literacy? Absolutely. Is it getting harder and harder to figure who is genuine and who is a pimp turned pastor turned financial advisor? Definitely. Dan Griffin’s video is the most basic financial “meal” imaginable, meat and potatoes. His voice throughout is never too high or low, but simply steady. Moving from one subject on the financial menu to the next and explaining them in depth while giving you additional information to look up on your own. Quite frankly, I have yet to see anyone come remotely close to this one hour.

If the wealth gap for African Americans is to be closed both individual and institutionally, then it starts with improving our basic financial literacy and that is what this video does. As a bonus, we have also added how you can legally get to a point where you are paying no federal taxes.

HBCU Money™ Business Book Feature – What Every Real Estate Investor Needs to Know About Cash Flow

The Classic Guide to Real Estate Investing―Updated for a Re-energized Industry!

Real estate is once again a great investment, and this bestselling guide provides everything you need to know to get in now and make your fortune.

What Every Real Estate Investor Needs to Know About Cash Flow removes the guesswork from investing in real estate by teaching you how to crunch numbers like a pro, so you can confidently judge a property’s value and ensure it provides long-term returns.

Real estate expert, Frank Gallinelli has added new, detailed investment case studies, while maintaining the essentials that have made his book a staple among serious investors. Learn how to measure critical aspects of real estate investments, including:

  • Discounted Cash Flow
  • Net Present Value
  • Capitalization Rate
  • Cash-on-Cash Return
  • Net Operating Income
  • Internal Rate of Return
  • Profitability Index
  • Return on Equity

Whether you’re just beginning in real estate investing or you’re a seasoned professional, What Every Real Estate Investor Needs to Know About Cash Flow has what you need to make sure you take the smartest approach for your next investment using proven calculations.

HBCU Money™ Business Book Feature – Building Wealth One House at a Time

Make your first million and earn a steady income with this updated, essential guide to real estate investing

The collapse in real estate prices from 2007 through 2012 was the most significant event in the real estate industry since the Great Depression. But today, with the real estate market rebounding, a new generation of investors is entering the field, eager to make their fortune.

Building Wealth One House at a Time, 2nd Edition provides you with a practical way to create wealth through an ethical approach of buying, financing, and managing property. Renowned real estate expert John W. Schaub takes you through his 9-step program and explains how to accumulate one million dollars’ worth of houses debt free in any market, while earning a steady cash flow.

This invaluable guide presents fresh strategies for buying and financing property, reflected in six new chapters on topics such as real estate cycles, financing real estate purchases, negotiation techniques, and retirement investing.

You’ll learn how to:

• Finance real estate purchases without going to a bank
• Recognize and capitalize on real estate cycles
• Improve your negotiation skills in any situation
• Avoid common and costly mistakes
• Create cash flow that lasts forever, and much more

Building Wealth One House at a Time, 2nd Edition reveals how virtually anyone can accumulate houses debt free and earn an income for life.

Personal Finance Tips From Warren Buffett

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The HBCU Money™ staff also adds some commentary to the subjects of Mr. Buffett’s quotes to provide more depth and better understand the points.

  • EARNINGS: There are three different types of income. Earned, passive, and investment income. Guess which is taxed the highest? The one you go to work for. Passive income (e.g. rental property, limited partnerships, intellectual property) if properly managed can be taxed at near zero income. Investment income (e.g. dividends from stock ownership) falls under 0, 15, or 20 percent based on taxable income. More importantly, these incomes are not based on you leaving the house or your boss liking you.
  • SPENDING: It is not how much you make, but what you do with what you make. There is nothing wrong with having nice things, however, in an era where people do things to project a social media lifestyle, keeping up with the Joneses, Smiths, and everyone else has become even more problematic. Use personal finance tools like Mint.com or others to help you track your spending and give yourself a grade on a month by month basis.
  • SAVINGS: Why is it so hard? Wages have been flat for a long time that is for sure, but we must play the hand we are dealt. The question is does pride get in the way of many people saving.  Most people’s biggest expense is housing, yet how many are willing to take on a roommate or two for a year or two to save? Saving must become a habit that can start small and snowball with time with discipline. Find a friend and compete with them if that helps, but find the thing that pushes your button to do it.
  • RISKS: Are you 50/50 about a coming raise and decide to buy that car you always wanted or put that foreign vacation on the credit card? Then you just failed at risk management. Risk is always about understanding the pros and cons of any financial decision and finding ways to mitigate that risk. You bought the car? Okay, so you Uber and add extra income until you get the raise. If you do not, then keep Ubering. Again, risk management is vital to one’s long-term financial planning.
  • INVESTMENT: When do you need a financial advisor? When you are rich you say? Think again. The moment you have a job you need a financial advisor and probably not just one. Checks and balances (risk management). Is your only investment account your retirement account? There are multiple financial investments to consider from owning stocks, owning a stake in a small business, to even owning land. All of these make up the ingredients that is your financial pie. How one distributes them is up to your own risk tolerance, but you have never eaten an apple pie using only apples. No one thing is going to make you wealthy or preserve it.
  • EXPECTATION: This is something that we must reflect on within ourselves and from those around us. We expect to be wealthy, but is our behavior matching it? Are we surrounding ourselves with likeminded people in our pursuits? We can not expect to be financially sound and surrounded by those who want to go to the mall every weekend. Are we patient with our investments? Or do we chase “get rich quickly” schemes because we have not educated ourselves properly to have the proper expectation of savings, budgeting, investing, and the TIME it takes to accomplish those goals.

Need in depth help on all of the above?

Watch this staff recommended Youtube video by Dan Griffin, CPA entitled “Saving & Investing Basics: A Guide for Young Adults” here.

Be sure to also read HBCU Money’s “Recommending Reading for African American Financial Starters” here.