Gotham Gal

can non-profits really make a difference?

When I chaired MOUSE in the late 90's, Sarah Holloway was not only one of the founders, she was also the Executive Director.  I loved working with Sarah.  She is smart, insightful, has great instincts and can see through the lines.  Fast forward, Sarah is a professor at Columbia University teaching a core class on non-profit financial management and she more than anyone I know understands how inefficient non-profits are.  Not all of them but most. 

She shared with me a speech she gave on this topic and truth is we have been having the same converstion for years.  The good news is Sarah is speaking on the topic to a group of young people who are interested in making the world a better place as socially responsible entrepreneurs. 

Here is some perspective.  The NYC public school system has an annual budget of $24 billion a year.  That means that one in every 283 Americans are currently enrolled in the NYC public school system.  There are 311 million Americans and 1.1 million kids in the NYC public school system.  You can figure out the math. 

I do not know the number of nonprofits who are either vendors of the Department of Education or are trying to work with individual schools but here is some numbers that might be of help.  The Gates Foundation has an endowment of $33.5 billion.  Most foundations give away about 5% a year so if we go by that statistic that means the Gates Foundation gives away about $1.6 billion a year.  $800 million of that goes to global problems such as health.  $250m goes towards building smaller schools.  That number is probably less than half of what it costs just to build a school in NYC. 

The numbers above makes you wonder why it doesn't make more sense to set up a booth in Union Square and have underserved high school students stand in line and just give them a computer with a number that pays for the services they need for the year.  That would make an impact.

Why do non-profits end up spinning their wheels?  One of the main reasons is that they spend a lot of time trying to remain alive by just raising money each year to retain staff.  The other thing is that non-profits don't evaluate themselves like for profit companies.  Most don't ask themselves "how are we doing and how can we do this better" but spend more time being concerned about the audit committee, insuring next years resources and less focused on being effective. Non-profit boards do not expect much from the organization.  To many, it is a charity not a business. 

I look at an organization like Donors Choose.  Donors Choose is about voluntary contribution so scale is about more people giving money directly to the problem needing to be solved.  No different than setting up a kiosk in Union Square and giving out computers to underserved kids.  Initially Donors Choose had to raise money to kick off their mission but now people who give through the organization are happy to pay for Donors Choose overhead because they are making sure the product is going directly into the hands of the people using the product.  MOUSE, although not a sustainable organization, it is run like a business.  They have two years of their operating budget in a bank account so they do ask themselves every year, what can we do better vs how do we raise money to keep our jobs.  Then there is Hot Bread Kitchen.  A social enterprise.  They are making a product that is being sold to the marketplace bringing back a revenue stream into the business.  At one point, they will be able to be sustainable.  Are they impacting hundreds of women, no but they are impacting a small group of women and their families and to me that is success. 

I want to support Social Enterprises.  Organizations that act like profit businesses and do not rely on charity.  They can find ways to work with partners, they can create solutions to become sustainable by making a difference in the world.  I am going to circle back to the Gates Foundation.  Even if they spent the entire $1.5 billion a year trying to fix a $24 billion a year organization it would be impossible.  What we need is more socially responsible companies who are trying to disrupt the ways of the past which are just feeding money into organizations.  We should all ask the question before just writing a check...is this organization really making a difference?  Some certainly are but the majority of them, unfortunately, are just feeding the staff. 

 

Freshkills Park

Years ago I used to drive to Staten Island to visit the Macys store.  The smell getting out of the car was beyond terrible.  Life has changed out there and Freshkills Park is in the pinnacle of this change.

I took a drive out to Freshkills Park with Eloise Hirsh, the Freshkills Park Adminstrator who happened to be the first Deputy Commissioner of the New Year City Department of Parks and Recreation in the Koch Administration. She has always been passionate about parks and planning.  Eloise and her husband moved to Pittsburgh for almost two decades and when she returned to NYC, she wanted to do something part-time with the parks.  Adrian Benepe, who is the current Commissioner of the NYC Department of Parks and Recreation took Eloise to Freshkills and before you knew it, she was not exactly working part-time as she hoped but instead headed up the Freshkills Park because she became passionate about the park. 

Freshkills is located at the end of Staten Island.  468,000 people live in Staten Island (one of the largest growing counties in the state) and to give you perspective that there are 305,000 people living Pittsburgh (which is shrinking).  The park is 2200 acres which is three times the size of Central Park.  Methane is generated from the landfills at Freshkills which generates enough heat for 22000 homes in State Island.  All impressive statistics.  This is one of the many lines that are collecting the gas. 

The soil out there is cleaner than any other soil in the city, hands down as it is a state of the art landfill conversion generating energy. What is more impressive is how incredibly beautiful the park is.  Currently the park is undergoing development in small chunks that the city has funded to develop 50 acres. 

The birds are beautiful out there.  There is a kayak house that is always filled to capacity.  The biggest question is how do we get more people out to this park as it is like no other park in the boroughs of NYC.  Music festivals, art installations, educational experiences, small farms...we will see.

The vistas, the meadows, the sheer beauty of a park of this size in our own backyard is a park that is in need of lots of TLC to create another destination location that gives us all a break from the concrete jungle we live in everyday. 

 

Brooklyn Navy Yard

Last week I drove out to the Brooklyn Navy Yard to get a tour from Andrew Kimbal.  Andrew is the President/CEO of the Brooklyn Navy Yard Development.  What he has accomplished behind those gates is extraordinary....and the gates are opening up to the rest of the community starting with an incredible interactive museum that tells the story of the Naval yards from past to present. 

Originally the Naval yards built merchant vessels.  Fast forward to 2012 and driving through the yards made me feel like I was entering a secret commerce development that was like having a tour at Universal Studios in Los Angeles.  There is an area for films called Steiner Studios that not only create televisions shows but there are small venues for commercials too.  Still building, still growing. 

There is an area that is to preserve the Maritime industry where they dredged up the harbor so that boats can come in there to be serviced.  Keeping with history.

The museum is part of a visitor and job training center that has helped over a thousand people pivot their careers including helping people who have been incarcerated enter back into society with work skills.

Duggal, one of the last remaining photo labs in the area, has over 30,000 square feet. 

There are buildings devoted to Green Manufacturing.  There is a buildling that is in the process of being built out right now that will be a 80,000 square feet Third Ward with classes, co-working spaces, etc.  The ultimate DIY building.

Buildings are available for future development.  They are hoping for a food incubator and the buildings have easy access for freight trucks and shipping.  Approval for a grocery story has just happened and the community is thrilled. 

I was thinking about a million things that could be done to add to the area that will connect with the community from retail, food and classes at Third Ward.  The most difficult part of the Navy Yard is really just getting there.  The opening at Navy Street is about a 10 minute walk from the N train.  Obviously when the subways were build nobody thought that maybe we'd want to build on our waterways. 

If you have kids, I highly recommend getting out to the museum at the Brooklyn Navy Yard.  It is fantastic.  Andrew has created something that is so well thought out, intelligently curated and such a great addition to Brooklyn.  There are actually companies who want to take large pieces of property with long term leases that had moved out of NY to NJ but want to return.  That is seriously a sign of the times. 

 

 

 

talking about....construction

One of the most stressful things in the world is construction.  I am in the midst of four personal construction projects right now.  Talk about stress.  I would not recommend doing four projects at once but in my case it just happened that way.  As Fred says "but you are so good at it.".  Shoot me.

I was born with an incredible skill...the ability to make decisions quickly and never look back.  That skill is probably the reason I am able to juggle all the moving parts.  It is a serious gift.  I figure that if I make a mistake I can always make another decision.

I just wrapped up on one project, phase 1 and am moving into phase 2.  The reason I am writing this post is to share what I have learned along the way.  Keep in mind that phase 1 finished on time and under budget.  How did that happen?  Most people laugh at you when you tell them you will be done by such and such a date.  I am here to tell you that it is possible to get it done. 

I rarely talk about this particular investment.  I am an investor in the Moon Group.  I am actually the only investor in the Moon Group  That is a story in itself.  They are the key to my success in real estate projects but what I have learned from them can be applied to any project even if you are doing it yourself.

Before I get to what I have learned about construction projects, I want to talk about the Moon Group.  Many years ago, we built our first home in NYC.  As we were attempting to wrap up the project our contractor brought in this guy, Rich Moon, to finish the project.  I called him the sweeper because he was able to bring everyone to the finish line, quickly.  I was impressed and totally hit it off with him.  His mouth and attitude were comparable to mine.  At that point of my life I was trying to figure out what to do next.  I'd come home with a yoga mat under my arm most days while he was getting shit done.  Hmmm, maybe we should go into business together and i'd be a real estate developer.  Ok, that didn't happen. 

Fast forward we sell our place and we build another and I call Rich because there is no way I was going to do a project without him by my side.  Before that he becomes the guy who builds the Gramercy Hotel and then during our project he is hired to build the Standard Hotel.  Not physically build it but be the guy who makes sure shit is getting done.  An owners rep per se, the person you want watching out for you, the number one on the job. 

Keeping on top of the projects is key.  I mean talking to the construction head every single day.  Having a face to face meeting once a week with an agenda.  Buying a lot of the long term lead items yourself because most construction companies float cash so even if you think that they have purchased that hood for your kitchen stove, they haven't.  Things are late not because they are late but because they didn't buy them on time.  Ask your contractor how complete the architects drawings are before shaking hands on the cost.  Guaranteed they aren't 90% done but more like 70% so that 30% ends up not being a fixed cost but a work in progress.  Set goals and dates.  Give a bonus if finished on time that is paid in cash directly to the contractor.  Have a contract that allows you to opt out if goals are not completed.  When things slow down it is probably because subs are not being paid. It is not a exact business each project takes a life on to itself.  I am just getting started. 

This is not an easy business and I am no doubt incredibly lucky to have found Rich who has hired incredible people to run our projects and all of his other clients ( hotels,offices, apartments and homes).  Yet he has proven that you can be on time and on budget.  BTW, on one of our projects the contractor just wasn't hitting the high notes.  What did we do?  Fire them and hire someone else.  On Monday they were fired and on Tuesday the other company jumped in already knowing each sub who was working on the job so we didn't miss a beat.  That is impressive.

Am I looking forward to all these projects being over....for sure.  Is there no doubt that our projects will be on time and on budget....for sure.  Do I hope that what I have learned I can pass on to anyone doing a construction project...absolutely.   What will I come up with to fill the time on these projects....relax??

 

 

real estate in the hamptons

Going out to the Hamptons in January can be a tad depressing.  Super nice to chill and relax but the place is empty.  Restaurants are closed for the season.  You get to see which stores made it through the summer to last another year and the others that have shut their doors.  It happens every year.  Not easy to make money in a seasonal town although there is a blossoming community out here most of them are not shopping at the high end stores on Newtown Lane.

This year, more than most, you can't help but wonder about the real estate market.  So many of the homes out here are second homes.  No doubt that every year there are homes for sale.  That happens everywhere but this year I know for sure that more homes are on the market.  The streets are littered with signs.

Josh, who has been coming out for years never notices the sale signs.  Yesterday as we were driving out and had made our way past East Hampton, he piped up.  "Who is Corcoran and why are there signs in everyone's yard"?  We told him that Corcoran was a company that sells peoples homes.  His next response was, "wow, they must be doing great because they are everywhere.".  Not sure how great they are doing but that gives you an indication of what is happening out east. 

Not a lot of construction just a lot of for sale signs.