The State of Telecom

Ethics in Real Estate

Corrections or additions?

These articles by Bart Jackson and Barbara Fox were prepared for

the March 27, 2002 edition of U.S. 1 Newspaper. All rights

reserved.

Non-Profit Disclosure: Rewards for Honesty

Giving makes us feel good, but being suckered makes

us feel angry, mighty angry. Today, both the corporate and individual

donor scrutinizes charities with the eye of a frugal homemaker sorting

through pricey cuts of meat. The non-profit sector must and does

compete

as hard for every dollar as does the market sector. And the real

winners

are those who best display donation-effectiveness.

On Thursday, March 28, at 4:30 p.m. Cliff Landesman speaks on

"The Need for Non-Profit Transparency and Accountability"

in Robertson Hall at Princeton University’s Woodrow Wilson School.

Free. Call 609-258-0157.

Landesman, who began developing nonprofit solutions as a Princeton

doctoral candidate, will explain how current technology can become

an ideal tool for creating donor relationships.

"The real problem is that non-profits inherently lack the

accountability

found in the market sector," says Landesman. He explains that

in the profit-driven market, the buyer and consumer are the same

person.

A man buys and brings home meat, his wife cooks it and they both

consume

it. If it’s poor meat, they shop elsewhere. But when the couple give

$10 to the local soup kitchen, they don’t eat the soup, and have no

way of knowing if it of good quality, or if its ingredients were

wisely

purchased.

Those few fortunate exemptions from this accountability dilemma have

recently become the darlings of corporate giving. Public radio,

libraries,

the arts, and certain regional open space land purchasing charities

all allow the donor to see, hear, or feel the final product. But even

these organizations must convince the giver that his dollar has been

prudently employed.

For the past eight years, Landesman has labored to create a series

of methods that not only streamline non-profit organizations, but

also make their functions more visible to the giving public.

Originally

from St. Louis, Landesman spent most of his childhood in New York

City. After earning a bachelor’s at the University of Michigan and

a master’s degree in philosophy from Oxford, he came to Princeton.

In l993, while writing on volunteering and the public good, he created

a database that allowed the public to view IRS 990-form information

on non-profit organizations. Form 990 is an annual document filed

by approximately one-third of public charities to report information

about their finances and operations to the federal government.

The overwhelming response by both donors and charities to this site

led him to founding Internet Nonprofit Center (INC), a Seattle-based

organization with a website, www.nonprofits.org, full of information

on every aspect of non-profit management. Thought currently the

director

of electronic media for publishing company W.W. Norton, Landesman

continues to keep his hand in the charitable sector, working for

everything

from Vermont Public Radio to the Fund for the City of New York.

"More avenues to a clear, bright vision of non-profits exist than

ever before," says Landesman. "Personalized explanations once

reserved for the $50,000-and-up donor are now available to the general

public." First, and most important for the corporate donor, is

the full, instant, electronic availability of the charity’s 990 IRS

form. The annual report and other brochures can also be provided

individually

and quickly. Thirdly, virtual reality can take the giver to Korea,

where she can observe the rice being distributed, or to Tanzania,

where she can see the bicycle she donated being put to use by a needy

carpenter.

But Internet images not withstanding, nothing beats

bringing the people inside your organization. Landesman says of a

multi-layered volunteer corps still remains the best method of

establishing

donor relationships. People who give time tend to invest funds. You

can borrow especially skilled employees from donor corporations,

providing

the worker a welcome sabbatical, and the donor a substantial tax

credit.

Typically, a non-profit’s best salaried employees are those who began

as enthusiastic volunteers — particularly in the organization’s

lobbying sector.

Despite some notable exceptions, Landesman says that the vast majority

of nonprofit organizations work hard to disclose their operations

to the public. The problem lies in the fact that donors seldom know

what to examine, and the charity doesn’t always know what to show.

A good guide to these questions — and answers — is found at

www.guidestar.org. And Landesman provides his own checklist:

Fund-raising percentage ratio. While among the most

popular

methods of judging a donated-dollar’s effectiveness, Landesman says

that the percent of a non-profit’s gross spent on fund raising is

seldom the litmus test we might think. "Frequently, it is

necessary

to spend half as much in getting a new donor as she will currently

give," he explains. "This is not egregious skimming, it is

a wise investment." Typically the new donor will continue to

donate

several times beyond the initial gift. And since all charities

continually

lose patrons by natural attrition, they must aggressively seek new

members merely to stay even. Better to examine, he says, how those

funds are spent once they enter the charity’s hands.

Who contributes how much? Do you want to be the only

corporate

giver to a charity receiving its primary funding from individuals?

Maybe. In addition to checking out the percentages given by major

categories of government, individuals, and corporate donors, the

potential

donor will want to know whether the current contributors are young

or old, a lot of folks giving a little, or a few giving a lot. Do

these patrons also buy your firm’s product? To be effective fund

raisers,

non-profits should provide break downs of their contributors to make

giving seem worthwhile to a whole array of possible donors.

How old is the charity? Old established non-profits are

cheaper to support via planned giving, such as bequeathed estates.

New charities face high start up costs, frequently with less going

to the actual non-profit work. However, the newer organizations can

often offer greater donor visibility aimed at a more specific target.

The non-profit, warns Landesman, while striving to present itself

as a rewarding recipient, should not be afraid to give staff costs

for office staff as well as for those who work with clients. The

careful

donor will be looking at what changes have occurred in an organization

and why. Answering these questions before they get asked removes any

uneasiness.

How flexible is the charity? Donating your old car was

a brilliant stroke invented by the Salvation Army. It rapidly became

a bandwagon onto which hundreds of non-profits have gleefully piled.

It displayed the ideal of painless giving. Today charities are

competitively

seeking new methods of creative dollar extraction. Most are willing

to work with donors offering funds over extended periods. "There

is a basic conflict here," says Landesman. "Virtually

everybody

wants to earmark his particular funds for direct benefits — buying

rice, medical research, whatever. No charity can exist on that alone.

There’s got to be someone there, working however unglamorously, to

answer the phone." Non-profits see expanded staff and offices

as a direct expansion in benefits. Their donors only want to see the

sacks of food or field doctors. Both entities will have to compromise

on this issue.

Donors are now able swiftly to search not just one, but a whole

array of potential recipients right down to their naked IRS

statements.

Not just the glossy brochure photos, but the inner working of the

charity are open and available. For the clever non-profit — which

knows how to display its operation enticingly — this transparency

can prove a powerfully magnetic tool in its solicitation arsenal.

A little honesty can bring you a lot of friends.

— Bart Jackson

Top Of Page
The State of Telecom

The telecommunications industry was

almost as exciting to be in during the last few years as the dot.com

world," says Gerhard A. Franz. "Similarly to the dot.com

implosion, telecom is in a state of decline today."

Franz predicts that the older companies are the most likely to

survive,

and that American firms will soon consolidate wireless standards for

better service.

Franz will discuss "The State of Telecommunications in the World

Today" on Thursday, March 28, at 6:30 p.m. in Room 131 of

Princeton

University’s Friend Center on Olden Street. The free seminar is

sponsored

by the Princeton/Central Jersey Communications and Consumer

Electronics

Chapter of the Institute of Electrical and Electronics Engineers.

Call 609-584-8424.

Another free telecommunications seminar, this one pitched to a less

technically oriented audience, will be at the Princeton Public Library

in the Princeton Shopping Center on Tuesday, April 2, at 7 p.m.

George

Faigen, co-author of "Wireless Data for the Enterprise,"

will speak on "Wireless Data: Manifest Destiny or Technology

Chasm?"

Until last month, Faigen was the chief marketing and strategy officer

for Broadbeam Corporation on College Road (U.S. 1, January 23). Call

609-924-9529.

The holder of two patents, Gerhard Franz grew up in Vienna, where

his parents were pharmacists. He has a PhD in Electrical Engineering

(semiconductors) from the Technical University of Vienna, Austria

and an executive MBA from Rutgers University, Newark. He came to the

United States in 1985, at age 28, to do electrical engineering

research

for General Electric in Schenectady and then moved to Lockheed Martin.

His most recent job at Lockheed was as director of marketing and sales

for Europe and central Asia for the space and telecommunications

divisions.

Europe, especially Eastern Europe, is a good market for wireless

services,

Franz says. Wireless is growing at a more rapid rate there than in

the United States, "because in Eastern Europe a lot of basic

infrastructure

is still not there. People are jumping a generation and going directly

to mobile services. You don’t have to have as big an investment."

When Lockheed divested this business at the end of last year, Franz

opened a consulting business, A.G. Franz Associates LLC at 5 Stanton

Court in Plainsboro (609-936-1919, www.agfranz.com). He also chairs

the Princeton section of the IEEE. He makes these predictions:

The roll-out of third-generation mobile systems will

enable

much higher data rates, which will enable web access on cell phones,

maybe even video. "With the third generation will come a

consolidation

of standards in the United States," says Franz. In contrast to

Europe, where unified standards were set up early in the wireless

game, Americans must contend with a half-dozen incompatible systems:

Cingular, AT&T Wireless, Nextel, Verizon, VoiceStream, and Sprint.

Switching coverage means getting equipment.

Franz says that Verizon and Sprint are combining to adapt Code

Division

Multiple Access (CDMA 2000) standards, and they will roll out

third-generation

equipment that adheres to these new standards this year. Meanwhile

AT&T Wireless will move toward joining VoiceStream/Deutsche Telekom

in the third-generation evolution of the Global System for Mobile

Communication (GSM) standard (which is also the European standard).

The name for this will be wideband CDMA.

A proliferation of fixed wireless services will allow

laptop users to "hook up wirelessly" in homes, offices, and

airports — just about any place other than moving vehicles.

"This

will change the way we are connected, when, with your laptop, you

can connect in familiar places," says Franz.

Further consolidation of telecommunications businesses

will give the advantage to existing companies, such as Verizon.

"Global

Crossings, Tyco, and other companies that sprang up — they built

networks rapidly, and those networks are not profitable. When faced

with a lot of bandwidth and a downturn, they went under," he says.

"The existing companies will benefit, because they have the cash

business in their local service to sustain them."

These local phone companies will always do fine, says Franz.

"Because

people will always talk."

— Barbara Fox

Ethics in Real Estate

Anyone who has ever closed on a piece of property or

a building knows that no matter how niggling the real estate laws

may be, they never quite seem to apply to your case. Vague clouds

of "discretion" invariably swirl around the sharper points

of ethics. If you think that lawyers groping their way through these

misty gray areas never concern themselves with ethics, think again.

The Mercer County Bar Association, in an attempt to help ferret out

where right lies in those far fields beyond the law, offers a

roundtable

discussion "Everyday Ethics in Real Estate Closings: The Issues

Nobody Talks About," on Thursday, April 4, at 12:30 p.m. at the

Palmer Inn. Cost: $37. Call 609-585-6200. Attendees will break up

into groups and considering a series of real estate situations. Each

table’s solution to each question are brought forth and discussed

before the group.

The questions will be proposed by Lee A. Gronikowski, a the

bar’s Department of Ethics Council, and by Grace Dennigan, an

attorney in private practice at 5 Independence Way who is a member

of the bar’s Real Estate Section. The moderators tailor the program

to cover situations involving bankers, real estate agents, surveyors,

and title insurance professionals, as well as attorneys.

"Real estate trends fluctuate," says Dennigan. "The

attorney,

banker, and most of the professionals involved, however, are held

to very inflexible standards. Situations forever arise testing just

how far from our rules we ethically may stray." She proffers a

few examples of topics that will be covered, with much greater

specificity,

in the roundtable:

How full is full disclosure? Two months after purchase,

the basement of a building leaks, flooding the brand new building

just purchased. It was, after all, the biggest rainfall in three

years.

Inventory now lies soaked in soggy boxes. Can you seek redress from

the seller for failure to disclose a pre-existing problem? Was it

his legal or ethical duty to inform you that this rare deluge might

cause problems? Can you prove that he was aware of the condition?

All of these questions fall generally under the ever-tightening rules

of full disclosure. What used to be a sales brochure for a building

now need to be a confession. Dennigan insists you can no longer just

close the deal and walk away. But the question remains, exactly how

far down the road does the law reach? If you live on a street that

swells with traffic every rush hour, do you have to inform those

touring

your house Saturday morning of this probability? Maybe. Dennigan says

the trend now tilts increasingly toward disclosing the ridiculously

obvious.

Who bounced the check? Irving is selling his old house

and plans to move into his newly purchased one across town all within

a single Friday. He closes on the old house in the morning and hands

the check to his attorney, Ghengis, who plans to deposit it in escrow

in his bank, The Farmer’s Megatentacle. The money will go toward the

purchase of Irv’s new house that afternoon. At the afternoon closing,

Irv writes a new check for the new house, which the seller, Swifty

Greyhound, runs and deposits in his own bank, The Seaman’s Harpoon.

Attorney Ghengis, alas, did not make it to Megatentacle before

Friday’s

closing and simply deposited the closing check first thing on Monday.

But it is too late. Seaman’s has already rushed Greyhound’s check

to Megatentacle. Megatentacle has stamped the check "Insufficient

funds," and Seaman’s refuses to simply reissue the check. Irving

and Swifty were last seen at in front of the new house threatening

to "settle this like men," while their wives warned them to

remember their hernia and prostate conditions respectively. Now, who

ethically and who legally is responsible, and more important what

is the simplest way of settling this situation (without a double

hernia)?

Sellers’ need to know. An attorney is retained to advise

on and handle the sale of a major piece of property by multiple

sellers.

Since three of them live out of town, the attorney deals strictly

with the one local client. Throughout all negotiations and the final

closing, the lawyer dutifully sends copies of all papers to each

seller.

The deal closes, but scarcely before the ink is dry, the three silent

sellers come to town complaining about several aspects of the deal,

and seeking redress against the lawyer.

The other owners of the property were sent papers for review, but

not specifically phoned and polled for agreement on the several issues

of sale. Where do all the sellers, the attorney, and the final deal

stand? Such a situation becomes particularly sticky when spouses are

forced to divide and sell property in a divorce settlement.

Several additional smaller, yet equally tricky, ethical

quandaries

will be brought to light. If a New Jersey lawyer negotiates a sale

with an attorney from Pennsylvania who is not a member of the New

Jersey Bar, is the Garden State attorney duty bound to report him?

If the closing depends on a short list of small repair items for which

a simply-negotiated repair credit could offer a smooth solution, how

closely do sellers and buyers have to stick to the H.U.D. regulations?

Truly the world of real estate and its regulations is filled with

a host of tangled questions. Says Dennigan: "Want the answers?

Come to the roundtable."

— Bart Jackson


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