Huffington Post…
After getting off to a rocky start at the beginning of President Obama’s term, the stock market has grown steadily. Consider the Dow Jones, which went up 128 points on Wednesday alone. Even if you don’t have a stock portfolio overflowing with GOOG and AAPL, and especially if you’re involved with a nonprofit or charity, here’s another reason to be thankful for the Obama administration’s success in turning the stock markets around: Commonfund, the 40-year-old Connecticut-based financial advisor to educational and nonprofit endowments, has just released two companion studies of 175 foundations, including 135 private/public foundations and 40 community foundations and operating charities, with a combined total of $108.2 billion in assets. The Commonfund studies found that investment returns of the foundations were in the range of 12 percent in FY2010. This is critical, as it’s the interest or returns on investments that is disbursed by most foundations and charities. Commonfund notes that while the 12 percent returns in FY 2010 were well below the 21 percent range posted in the Obama recovery year of FY2009, these two consecutive years of double-digit returns served as a welcome offset to the 26 percent portfolio decline experienced by these organizations in FY2008, during the final year of the Bush administration. In fact, the average investment returns in 2010 were the fourth highest in the nine years that the foundation study has been conducted and the third highest in the seven years of the operating charities study. According to Commonfund’s executive director John Griswold, foundation funds are still tight, but the situation appears to be less than the crisis that has been feared in the non-profit sector: “Two consecutive years of good performance is a great relief for foundations and operating charities participating in the two Studies after the serious erosion in asset values experienced in FY2008. While three-year returns are just about flat, five- and 10-year returns are edging back into the range of 5 percent, which is an encouraging sign although it still falls short of covering these nonprofit organizations’ spending, inflation and costs.” The same is true with regard to the levels of giving: Among operating charities, giving was stronger in FY2010, but far from robust. Among responding institutions, 17 percent reported decreased giving in FY2010, a marked improvement over the 38 percent that reported decreased giving in FY2009. Finally, the study found that levels of giving by foundations are inching up, with the largest foundations, not surprisingly, leading the way, with community foundations, perhaps hedging their bets about the recovery, giving away the least to nonprofits and charities. Given the “pipeline” effect, resulting from the time delay for foundations and charities to pass along the available funds resulting from their investment returns, nonprofits over the past year or two may have been feeling the lingering results of the poor stock market under the final year of the Bush administration, whereas the revenue from the past year or two may just, in many cases, be starting to flow. If so, that is certainly welcome news to nonprofits. At the same time, this all represents another example of the inextricable ties between “too big to fail” Wall Street and the rest of the nation.
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Bill Lichtenstein: Obama’s Wall Street Turnaround Good for Nonprofits
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Huffington Post…
NEW YORK/LOS ANGELES (Phil Wahba and Lisa Baertlein) – McDonald’s Corp said higher costs for beef, bread and other items cut into its quarterly margins and that inflation for the year would be worse than expected. The inflation comments on Thursday sent shares of the world’s largest restaurant company down 2 percent, even though strong sales helped McDonald’s post a first-quarter profit that beat expectations. March sales at established restaurants also rose more than expected. “The key question now will be how they are going to raise prices to try to offset some of these food costs,” Edward Jones analyst Jack Russo said. McDonald’s said it now expects food costs to rise between 4 percent and 4.5 percent in the United States and Europe this year. In January, McDonald’s said it expected its food costs to be 2 percent to 2.5 percent higher this year in the United States and up between 3.5 percent and 4.5 percent in Europe. McDonald’s has been outperforming most other U.S. restaurant chains and taking market share from smaller rivals amid a slow U.S. economic recovery. After struggling during the recession, McDonald’s has outperformed its fast-food peers by updating its menu. The company pointed to its McCafe menu as a source of sales gains. “The bottom line is they’re still doing a great job of growing revenue,” said Peter Jankovskis, co-chief investment officer at Oakbrook Investments in Lisle, Illinois. The firm owns McDonald’s shares. Analysts remain concerned about high gas prices that could prompt fast-food restaurant patrons to cut back. But Jankovskis said McDonald’s was better equipped than others to cope with those prices. The company has more locations than its rivals, so customers do not have to travel far to get to one. “The big test will come in the summer months with gasoline remaining in the neighborhood of $4.00 (a gallon) — that’s when the strength of McDonald’s will come through,” he said. McDonald’s results come a day after rival Yum Brands Inc reported better-than-expected sales due to strength in China. Chipotle Mexican Grill, which has nearly all of its 1,100 restaurants in the United States, saw higher food costs eat into margins. Total revenue at the Golden Arches during the first quarter that ended March 31, rose 9 percent to $6.1 billion, with sales in Europe leading the way. March sales at restaurants open at least 13 months were up 3 percent in the United States, up 4.9 percent in Europe and gained 0.5 percent in McDonald’s Asia/Pacific, Middle East and Africa unit. Globally they rose 3.6 percent. Analysts, on average, were looking for same-restaurant sales to rise almost 2 percent in the United States, more than 3 percent in Europe and 2 percent in APMEA. Sales in Asia may have been pinched by the disasters in Japan. The United States contributes just over one-third of McDonald’s overall revenue, compared with 40 percent for Europe — its largest market for sales and one where it has more middle-class appeal. First-quarter net income rose 10.9 percent to $1.21 billion, or $1.15 per share, from $1.09 billion, or $1 per share, a year earlier. That beat Wall Street expectations of a profit of $1.14 per share, according to Thomson Reuters I/B/E/S. But operating margin fell to 17.7 percent from 18.2 percent as costs for food and paper rose. Food and paper costs were 33.6 percent of sales in the quarter, compared with 32.9 percent a year earlier. McDonald’s shares fell 1.9 percent, or $1.56, TO $76.84 in morning New York Stock Exchange trading. (Reporting by Phil Wahba and Lisa Baertlein; Editing by Maureen Bavdek) Copyright 2011 Thomson Reuters. Click for Restrictions .
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McDonald’s Expects Significant Increases In Food Prices
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