Getting an Edge In Getting Grants

Many small neighborhood and grassroots non-profits need grants to continue their programs. Organizations with goals like improving the arts in a community, neighborhood and community building, and health programs often seem to be competing for the same limited number of dollars. If an organization is too small to hire a full-time grant expert, it can be difficult to wade through the paperwork required to obtain those necessary grants.

But a good idea is not enough to obtain a grant. It takes organization, a strategy, and knowledge of the process to successfully apply for them, says Deborah Aubert Thomas, director of grants at the Princeton Area Community Foundation.

Do your homework. The first step in applying for a grant is to research the organization you are applying to and make sure that it funds your specific program area. For example, one focus of the foundation is programs in low-income neighborhoods. A grant for this type of program would have a good chance of success.

Grant writers should also be aware of the geographic location for a foundation. Some organizations fund grants only for a specific region while other organizations have a national focus. Another tip, Thomas says, is to make sure that the dollar amount you are asking for is within the size of grants the foundation you are applying to funds. For instance, if your project has a $100,000 budget, but the foundation only funds grant up to $50,000 you will have less chance of receiving an award.

Submit only what is requested. You may have applied to other organization for grants, but each foundation has its own forms and wants to see information in a specific format, says Thomas. “Don’t just submit a past proposal. Even if you have all of the material gathered for a different organization, read the information for the next foundation carefully and follow the instructions,” she says. Submitting the wrong information will quickly move your grant application to the bottom of the pile.

Don’t miss a deadline. The Princeton Area Community Foundation has two deadlines per year, in September and April. Other organizations may have one or more deadlines, but check each foundation you plan to apply to, to make sure that your work is submitted on time. There are too many other groups that will have their proposals submitted by the deadline, submitting late will usually mean that your proposal won’t even be considered, says Thomas.

Tight funding at many non-profits means that searching for outside funding sources through grants is necessary to meet the needs of clients and to develop new programs. To be successful, grant writers must keep in mind the need to match the program with the interests of the foundation they are applying to, as well as to make sure that they completely and accurately fill out any of the materials the foundation requests.

Contact PACF at 609-219-1800.

— Karen Hodges Miller

Excerpted from the August 20, 2008, issue of U.S. 1.

Saving Money On Healthcare Plans

Just seven years ago CareGain was a two-person firm in the consumer-driven healthcare market. Now, with 85 workers, it helps banks and insurance companies offer the tax-advantaged healthcare plans that help consumers save money.

With a consumer-driven healthcare plan, employers can encourage employees to make certain decisions that may increase the value of their healthcare benefits. For instance, pre-tax dollars can be used to finance a high-deductible plan at significantly lower cost to the consumer. In one kind of plan, a Health Savings Account (HSA), lets consumers bank pre-tax dollars to pay future doctor bills. Unused dollars can be rolled over, year after year, to be spent or saved at will.

In 2008, according to John Rownd, CareGain’s associate vice president of business development and account management, an individual could bank $2,900 and a family could bank $5,800. This year your family will be able to bank $5,900. And when the doctor bills come rolling in, you have a choice about whether to dip into the health service accounts.

The HSA. HSAs are almost like an IRA, and in fact you could consider your HSA as a second IRA. Eventually that money must be used for medical bills, but you can choose to wait years before tapping the account. “If you save your healthcare dollars for retirement, you are compounding interest and earning interest tax free,” says Rownd.

“Health savings accounts have been criticized incorrectly as being only for the healthy and wealthy,” says Rajiv Mahajan, CEO of CareGain, “but they provide a benefit to any age group or demographic. Those who have gone without insurance, because it has been unaffordable to them, can now afford it.”

More and more large employers are offering HSAs, but individuals can also sign up for an HSA at such major financial institutions as Fidelity or Bank of America. They are also available through banks owned by insurance companies, such as Blue Healthcare Bank and Optum.

The employee owns the HSA. It is portable, so that if you change jobs, you can take it with you. With an HSA you do not have to get your claims substantiated by an insurance firm. “That’s part of the beauty of the HSA,” says Rownd. “The requirement of substantiation requires administrative expense to prove you are using funds properly, that you used the money for qualified medical services. You must submit paperwork from insurance companies or drugstores.”

Though don’t have to submit your receipts, the IRS requires you to keep them.

“It’s a triple threat,” says Rownd. “Contributions go in tax free, they accumulate interest tax free, and they can be invested in money markets, stocks, and mutual funds. If you use them for qualified medical expenses, those funds are again tax free.”

CareGain’s role is to provide technology and servicing solutions for these plans. “Sometimes we integrate with health plans, sometimes with banks. It’s not something that all companies can do. That’s why they need us,” says Rownd.

Health reimbursement arrangements. HRAs are made between you and the employer. Typically they are used with a high-deductible insurance plan. The employer sets aside a certain amount of money. You use money out of the HRA to pay for healthcare bills. “The value to the employer is that, if you use the money, it’s gone. If you don’t, it still belongs to the employer,” says Rownd. The HRA can be used for copays and any qualified medical expenses, including chiropractic care, as designated by the IRS. A variation on the HRA is the “limited purpose” HRA. For instance, an HRA might be set up to pay only for dental bills.

Flex spending accounts. Employers set them up, but they usually do not contribute to them. Employees contribute pre-tax dollars. “You might deduct $50 from your paycheck to use for qualified medical expenses, tax free,” explains Rownd. The employer holds onto the money and keeps the books, with the help of CareGain’s web-based platform. The employee submits receipts and gets reimbursed.

It can be tricky to estimate the out-of-pocket bills that you anticipate spending. And if you don’t use that money by the end of the year, you lose it. “In years past, I’ve bought $125 worth of saline solution for my contacts, just so I wouldn’t lose the money,” says Rownd. To use up the funds people buy extra prescription pills, or “stop smoking” programs, or they schedule surgery before the end of the year. “I’ve heard ads in December for Lasik surgery urging people to use up their FSA dollars.”

FSA variations include the dependent care FSA (for daycare expenses) or the transportation FSA (for parking).

The cost to the employer for setting up an FSA varies by vendor from $100 to $500, says Rownd. One of CareGain’s clients might charge on the low end, another on the high end. “The variables depend on the contract length and the scope of services. The monthly cost to our client might be from $4 to $7 per employee per month.

— Barbara Figge Fox

Excerpted from the June 25, 2008, issue of U.S. 1.

Use Open Source Software and Save

Ben Reytblat, CEO of CEDev (Cost Effective Development) at 87 Saratoga Drive in Princeton Junction, believes that if you aren’t using open source software on both your home and business computers, you are paying too much and getting too little.

But you might be using open source software on your computer right now without realizing that it differs in any way from proprietary software. Ever heard of Linux? Mozilla? How about Firefox?

Free? Not quite. Many people are unclear about open source software, what it is, where it can be purchased, and how it differs from proprietary software. While some applications can be downloaded for free, many other open source programs do have a cost. However, most open source programs do cost less than similar proprietary products.

The difference. In open source products the underlying source code that runs the program is available to the user. This permits the user to work to improve and make changes to the software. “Buying proprietary software is like buying something that advertises it has a secret sauce,” Reytblat says. “No one except the manufacturer knows exactly what is in it.” Open source software, on the other hand, “is like sauce that comes with the recipe. The person who sells it is sharing grandma’s secret recipe with the world.”

Universal appeal. Because there is such a wide variety of applications available with open source software, it can be used by almost any industry. In the past few years CEDev’s clients have included pharmaceutical support and telecom companies as well as engineering, retail, and publishing firms.

Open source software is available for almost any application, says Reytblat, including word processing, spreadsheets, business accounting and inventory programs, and many graphics programs. He claims it is almost always compatible with comparable proprietary programs. Open source programs can also be found for specialized technical applications, and there is also a number of open source programs available for home use, including many excellent children’s learning programs.

Better? That depends. “When I say that open source software is better I don’t mean it in the same sense that people who are marketing something usually do,” says Reytblat. “Most marketers define better as having more features. In software a lot of times that means a spreadsheet program or word processing program that is designed to be used by everyone from a single home office to a multi-national corporation. No one person ever uses more than a few of the features on the software. They don’t understand it and they don’t need it.”

How to get some. Many open source applications can be downloaded from the Internet, “and often with just a couple of clicks of the mouse. It is generally easier to install than proprietary software,” says Reytblat. For someone who wants to explore what is available, he recommends checking reviews on websites such as

“Open source software does a lot of good things. It’s inexpensive, shared, and creates alternatives to monopolistic proprietary software,” says Reytblat. “It’s is not the answer to everything, but it is the answer to a lot.”

— Karen Hodges Miller

Excerpted from the March 19, 2008, issue of U.S. 1.

Getting Real About the Company Assets

Corporations often have extensive real estate holdings — headquarters buildings, distribution centers, manufacturing plants, sales offices, and retail units — that they either own or lease. These real estate transactions appear on financial statements, and their impact on these statements and on other significant corporate performance measures should always be considered in decisions on whether to purchase, sell, or lease.

Companies that are income statement-driven are looking to make a profit in the short term; they are wary of any real estate transactions that will add expenses to the income statement, which will reduce profits.

But revenue is derived mostly from product. “Rarely does real estate affect revenue,” says Todd Anderson, senior managing director in the global corporate services group of CB Richard Ellis. “Where real estate can come into play is on the expense side: if revenue stays the same and you are able to lower expenses, then profits will increase.”

Buy or lease? One important decision businesses face, for example, is between an operating lease and a real estate purchase. “Whether you own or lease real estate is represented very differently on financial statements,” says Anderson, “Depending on what a corporation’s objectives are, can either contribute to the performance measures or detract from them.”

For operating leases, the only part of the transaction represented on the financial statements is a year of rent expense, which may increaseprofits.

If the company is financing the purchase, that financing will show up on the balance sheet as a liability, and interest payments on the financing will appear on the income statement as an interest expense.

Sometimes a business might have a lot of cash, and if it is income statement-driven, it may use that cash to reduce expenses by purchasing real estate with the cash. “If you do that, the only expense that shows up on the income statement is depreciation.”

Mergers and debt. Established companies might become balance sheet-driven, Anderson explains, in the wake of big mergers, which required them to borrow a lot of money. “The purchase could be the best thing in the world, but they take on a lot of debt,” he says. “They may be more focused on that than on profits.”

A company that has acquired debt in the wake of an acquisition will be working hard to pay down that debt. Instead of purchasing and financing an office building, it might want to sell the building, lease the space back from the buyer, and use the money from the sale to pay down debt.

From the inside. Usually real estate decisions are directly related to factors internal to the company and what, from a financial perspective, is important to the business’s success. Therefore, observes Anderson, “a company is usually making real estate decisions not based on the real estate market but based on their business needs; just because it is a great time to buy or sell real estate — that is not usually how businesses make their decisions. They make decisions relative to what is in the best interest of their business. They are not looking at real estate as an investment.”

Do you need it? Choices on whether to buy or lease also depend on the type of real estate facility and how critical it is to the business. A manufacturing plant is often worth owning so that the business has the flexibility to modify the facility whenever it needs to, without concern about restrictions placed by a third-party owner.

If a company is acquiring real estate not core to its business, like a sales office, it may choose to have a short-term lease. This gives the business a different kind of flexibility — the ability to change its location, or to enlarge or contract, depending on market conditions.

— Michele Alperin

Excerpted from the June 4, 2008, issue of U.S. 1.

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