Stock IPO Pays Philanthropic Dividends

On August 26, 2020, at 9:30 AM, the Nasdaq opening bell rang out in traditional fashion to announce the start of trading for the day. For FJC donor John Herzog, however, the ringing of the bells indicated something particularly meaningful: a more robust and active phase of his philanthropy with FJC.

On this morning, the ceremonial bell-ringing duties were being performed by Mr. Herzog’s colleague and friend Mr. Ronny Yakov to commemorate the public offering of The OLB Group, Inc., an e-commerce company for which Mr. Yakov acts as Chief Executive Officer. OLB operates in the FinTech space specializing in payment processing solutions. The firm, based in New York City and founded in 1993 initially to provide creative and marketing services to larger companies, has pivoted over time towards e-commerce, and now offers a suite of private-label services that includes business management and crowdfunding platforms, along with their proprietary payment gateway. In addition to being a longtime investor in the company, Mr. Herzog also sits on the firm’s advisory board, and he witnessed first-hand the growth and maturation of The OLB Group in recent years.

Mr. Herzog had generously donated shares in The OLB Group to his account at FJC in 2019, in anticipation of this public offering. He had experienced success working with FJC in the past on similar transactions, and he reached out to see how FJC’s services could be leveraged to help convert this financial opportunity into philanthropy. By first donating the shares to FJC and then selling them, the capital gains taxes that would normally be applicable to an individual selling the stock would be foregone (due to FJC’s tax-exempt status), meaning the money saved in taxes could be utilized for philanthropic purposes. At the time of the donation, The OLB Group’s stock was still traded on the OTC markets, and the thinness of trading volume meant that it would be incumbent upon FJC to hold the stock until such a time when liquidating the shares would be feasible. This customized transaction required approval of FJC’s Investment Committee, which also considered the appropriate pace at which FJC would liquidate the stock.

Mr. Herzog has a long and active history supporting the nonprofit sector with his philanthropy. In 1988 he founded the Museum of American Finance, a 501(c)(3) organization in downtown NYC dedicated to educating the public about the history and impact of finance through exhibits and public events. The Museum, established as a response to the market crash of 1987, houses collections that span from U.S. Treasury bonds issued in the 18th century, to Depression-era scrip, to personal correspondence of influential persons such as Benjamin Graham (author of the seminal The Intelligent Investor). Virtual events featuring expert panelists on finance and financial history have also been added to the programming. Mr. Herzog himself has long been involved in the finance industry, and was formerly CEO of Herzog Heine Geduld, Inc., a leading market maker which was purchased by Merrill Lynch in 2000. By coupling his own charitable instincts with FJC’s expertise, Mr. Herzog will be able to roll a portion of his interest in The OLB Group into material financial support for both the Museum and other non-profit organizations.

“It has been a great experience working with FJC on this stock donation,” says Mr. Herzog. “FJC was patient while we sorted through the IPO process and the subsequent lock up period, and their flexibility is allowing me to be especially charitable from my account now that the stock is liquid.”

Photo courtesy of Brighter Tomorrows

FJC Facilitates Donor Loan to Support Families Facing Domestic Violence

It took the collective efforts of a number of people to get it done: a committed donor, a philanthropic advisor, and the staff at FJC. All parties worked together this spring to close a $100,000 cash flow loan to Brighter Tomorrows, a nonprofit working with victims of domestic violence to provide shelter, counseling and legal advocacy to New York’s Suffolk and Nassau counties as well as New York City and the Tri-State area.

The process began with Sandy Wheeler, a longtime donor to Brighter Tomorrows. Over time, Ms. Wheeler developed a trusted relationship with Dolores Kordon, the organization’s Executive Director, who often lamented the difficulties she faced running an organization that relied heavily on state contracts that were typically slow to pay. “It seemed like the chronic cash flow challenges of Brighter Tomorrow could be creatively addressed with philanthropy,” said Ms. Wheeler.

The Wheelers spoke to their philanthropic advisor at a large financial institution, who made the introduction to FJC. “The Wheelers already had a Donor Advised Fund account, but the sponsor wasn’t really set up to originate loans,” their advisor explained. “We appreciated that FJC had the track record and infrastructure to make this proposed loan happen, and quickly.”

Within a few weeks, staff at FJC worked with the Wheelers to open and fund a new DAF account, review Brighter Tomorrow’s financials, and prepare the legal documents with terms customized according to the Wheelers’ wishes. Among other features, the loan carries no interest.

“Brighter Tomorrows is so grateful for this intervention by FJC and the Wheelers,” says Ms. Kordon. “Particularly during the COVID-19 pandemic, when cash was tight due to many competing programmatic demands, having the Wheeler’s loan to bridge our day-to-day expenses provided us the flexibility to be responsive to the families we were serving, like distributing food cards and helping clients pay rent.”

Photo credit: Ken Teerer, courtesy of SELC

2019 Year in Review: Revolving Funds for Legal Impact

Imaginative FJC donors have created specialized accounts that allow for revolving funds for recoverable expenses, so that nonprofits can recycle grant funds on an ongoing basis.

In 2019 organizations focused on criminal justice reform and impact litigation were particularly active users of these resources, putting nearly $1 million in aggregate to work for their missions. These organizations included: the Government Accountability Project, was able to represent whistleblowers exposing abuses of public trust throughout the federal government as well as corporate employees within the banking, energy, food, and health care industries; the New York Civil Liberties Union, is bringing an important voting rights case to challenge violations of the federal Voting Rights Act; the Southern Environmental Law Center, which has reached a settlement with a private company that will result in the largest coal ash cleanup ever in America; Brooklyn Community Bail Fund secured the freedom of 23 immigrants held in ICE detention and at imminent risk of deportation, and reunited them with their families and communities.

Private Home Transforms Public Library

FJC is home to imaginative donors that seek to go beyond donations of cash or appreciated securities to their Donor Advised Fund accounts. Take for example Georgette Bennett and Leonard Polonsky, whose family fund worked with FJC to transform a residential property in Aspen, Colorado into a portion of their $12 million grant to the New York Public Library. The family donated the Aspen property to FJC, which then sold the real estate, generating the proceeds that covered a portion of the grant. The grant to the Library in 2019 will support the creation of Polonsky Treasures Exhibition, a permanent display of rotating items from its extensive research collections, including an original copy of The Declaration of Independence, Christopher Columbus’ letter to King Ferdinand II advising him of his discovery in the New World, The Gutenberg Bible, and original sheet music from Beethoven and Mozart.

“FJC was completely supportive, cooperative and responsive throughout the complex process,” says Ms. Bennett. “We’re grateful that the team at FJC made it so easy for us.”