Are Environmental Groups Really Dying?

enmtrd“Environmental Groups Are Drying Up in the `2010s.” “Green Magazines in the Red. “Environmental Movement Struggling as Clout Fades.” The headlines in the nation’s press read like epitaphs.

A Wall Street Journal article observed that, “After years of fighting to save whales and spotted owls, the nation’s big environmental groups are in agony about another dwindling species – their supporters.”

Adding to the perception that the greens have lost their muscle was the dismal lack of legislative victories in the last Congress, when the Democrats controlled both houses and the White House.

But it’s not just the media offering a grim prognosis. “The environmental movement is in massive decline and is going to need a major overhaul if it wants to stage a comeback,” says Eric Mann, director of the Labor/Community Strategy Center in Los Angeles.

A quarter-century past the first Earth Day, is the environmental movement really in its last gasp? Or, in the words of Mark Twain, have reports of its death been greatly exaggerated?

One thing is clear: If the movement is ailing, it’s not due to lack of popular support for the issues. Public opinion polls reflect a strong and consistent commitment to the environment. A Times Mirror survey last June found that 79 percent of respondents describe themselves as active (23 percent) or sympathetic (56 percent) environmentalists. More than half thought environmental laws hadn’t gone far enough, with only 16 percent thinking laws had gone too far. Environmental groups were also given high ratings, with 74 percent feeling highly or moderately favorable toward them. Eighty-nine percent of college students named the environment as the top concern facing the nation in 1992, according to The Student Political Organizing Guide, published by Sierra Club Campus Green Vote and Americans for the Environment.

This support is reflected in the hefty membership rolls and multi-million-dollar budgets of the nation’s largest environmental organizations. Some, like the Nature Conservancy, World Wildlife Fund and Environmental Defense Fund, are experiencing remarkable growth. Others, like the National Audubon Society and Natural Resources Defense Council, lost support when President Clinton was elected, but are now rebounding. Local groups continue to flourish, with the Citizens Clearinghouse on Hazardous Waste (CCHW) in touch with more than 8,000 community organizations.

“Overall, the membership trend was downward,” says Matt MacWilliams, managing partner of MCSSR, a communications consulting firm based in Takoma Park, Maryland, which represents numerous environmental clients. “Not because people were less interested in the environment, but because they thought the problems were being solved when Clinton was elected Since the [congressional] elections, many groups have been picking up membership. Ifs a direct relation to the perceived threat.”

“When Republicans are in office, we seem to get stronger, more united and more powerful,” agrees Luis Sepulveda, president of West Dallas Coalition for Environmental Justice. “Environmental programs get more support.”

While the state of the movement may not be as bad as some have said, most would agree that environmentalists need to regain some of their earlier vigor. Critics from both the right and left point to national groups they say are bloated with bureaucracy, overrun with lawyers and far removed from their grassroots base.

“The most fundamental problem is the collapse of much of the mainstream environmental movement into an explicitly pro-corporate stance,” says Mann.

Not surprisingly, articles in the mainstream press contend that it’s this pro-corporate stance that offers a promising future for environmentalism. For example, an article in the Philadelphia Inquirer argued that EDF’s policy of working with McDonald’s and Prudential Insurance on recycling is just the kind of practical, problem-solving approach that the public wants.

A conservative analysis, “Restructuring Environmental Big Business,” by the Center for the Study of American Business at Washington University in St. Louis, attributes what it calls a public backlash not only to top-heavy bureaucracy but to the movement’s purported exaggeration of environmental dangers and the tendency of most groups to take on such a broad agenda that their mission is lost. “Policy makers and potential donors find it increasingly difficult to tell different organizations apart. Essentially, different environmental groups are offering potential supporters identical products,” according to the report. The report gives high marks to the Nature Conservancy, which has kept its focus on buying land for nature preserves.

All this dissection of the movement has led to some soul-searching. “The national groups, including Greenpeace, did become too large in the 1980s and did grow top-heavy,” says Barbara Dudley, executive director of Greenpeace. “The draw to legislative solutions was too seductive and took the large organizations that evolved from a mass movement too far away from their grassroots.”

“It’s fair to say the environmental movement is confronting extraordinary change, not just in terms of Newt [Gingrich], but far more fundamental and pervasive,” says Lynn Greenwalt, vice president of the National Wildlife Federation (NWF).

Some of the changes are administrative. In an effort to streamline organization, staffs are being cut and publications scaled back. For example, last year, Friends of the Earth pared back the frequency of its newsmagazine from monthly to bimonthly, and NWF is now considering contracting out its mail order business as a way to save money.

But other changes are substantive, with a renewed respect and attention being paid to the grassroots. “A lot of the action is at the state level and we’ll be shifting staff and resources there,” says Greenwalt. “The grassroots is not in Washington. There are plenty of people out there willing to work on their own behalf and for the environment and the human future. That means redeploying resources, money or ideas from here to there.”

The National Audubon Society, based in New York, is in the midst of a major strategic planning process, involving interviews with hundreds of members, staff and board members from around the country, as well as colleagues, political leaders and foundations. “We tried to glean from them some of their best ideas on how we should organize ourselves for the future,” says Tom Martin, Audubon’s chief operating officer.

Like NWF, Audubon plans to shift more attention to the organization’s 500 chapters. “We’re not going to affect Congress through insider lobbying. We have to do it in the home offices [of legislators]. The advocacy will move outside the Beltway,” says Martin.

But the very remedy proposed by many pundits for the environmental movement – to become more pragmatic and single-focused – is not likely to emerge from a grassroots strategy. For example, NWF plans to continue expanding its message beyond wildlife to include public health concerns. “It’s impossible to separate human health issues from those that affect other creatures,” says Greenwalt. “A toxin in the Great Lakes may be devastating to fish and ducks, but it’s also not good for people.”

As activists make clear in the interviews on the future of environmentalism, beginning on page 5, the trend is increasingly toward building coalitions and making connections between environmental and social justice concerns. “In the long run we’ll win the battle because we’re on the side of average Americans,” says environmental consultant Matt MacWilliams. “The other side has been able to marginalize us as elitist and extremist. So the biggest task is to make the environmental message relevant once again to the mainstream. We need to talk to them in terms of what really matters: the health and safety of their families and their communities.”

Whether you call it the mainstream or the grassroots, if national groups follow through on their commitment to communities, the movement could well recapture its former ardor. “Let me reveal a not so obscure secret,” says Greenpeace’s Dudley. “The grassroots environmental groups are a far sight more radical than the national groups.”

Local groups faced with a hazardous facility moving in next door are much less willing to compromise than are the Washington representatives of national groups trying to craft a piece of legislation. In addition, the initial anger and fear about a local site often spreads to other issues as well. “The environmental movement caved in on NAFTA (North American Free Trade Agreement),” says Sue Lynch, executive director of People Against Hazardous Landfill Sites (PAHLS), in Valparaiso, Indiana. “The local groups didn’t. We worked with our local unions and opposed NAFTA. If we cave in, we’re really letting the people down who are counting on us.”

In ways that even the best-intentioned national groups are unable to do, grassroots activism gives a movement its edge. As Lois Gibbs, director of Citizens Clearinghouse for Hazardous Waste, points out, “In most communities, people don’t think they can fight City Hall. We give people back a sense of self-worth and empowerment. We help them build up their self-confidence and say yes, you can.”

Ultimately it will be this self-empowerment that promises not only a healthy future for the environmental movement, but for democracy as well.

Need To Cut Corporate Welfare? Start With Polluters!

ntccwfAfter the slash-and-burn fervor with which Congress passed provisions of the Contract With America, the climate for environmental protection on Capitol Hill has never seemed chillier (see “Activist Alert,” page 30). But the budget-chopping frenzy could actually benefit forests and waterways and even help lead us on a path to more sustainable transportation. By cutting subsidies to big business and resource extraction industries and by reigning in environmentally destructive federal projects, billions of dollars could be trimmed from the federal budget.

In all, taxpayers will spend $51 billion in direct subsidies to corporations and lose another $53.3 billion through tax breaks for corporations this year, according to the Office on Management and Budget. Nearly $6 billion a year goes to nuclear subsidies alone.

Terminating the National Ignition Facility at Livermore Lab, designed to help increase our understanding of nuclear weapons physics, saves $1.8 billion, for example. Halting funding for the Auburn Dam, an exorbitant new facility sited on an earthquake fault near Sacramento, could provide a savings of at least $600 million.

These are just a couple of the 34 items found in “The Green Scissors Report,” which identifies wasteful and environmentally harmful spending that, if cut, would save taxpayers $33 billion. The report was compiled by Friends of the Earth and the National Taxpayers Union Foundation (NTU), with input from 23 other environmental and public interest organizations, including Environmental Action.

“This report is saying, `Washington, you have to end politics as usual. This is a new era’,” says Jill Lancelot of the NTU.

There’s be enormous interest from both Republicans and Democrats on the Hill and a great response all over the country from environmentalists who like being on the offensive for a change,” says Ralph DeGennaro, director the appropriations project for Friends of the Earth.

Some of the proposals are already being considered on the Hill, among them, elimination of the National Ignition Facility, sugar subsidies, the Rural Electrification Administration and the GTMHR gas-cooled nuclear reactor. The gas-cooled reactor would cost $2.6 billion in coming years and has been targeted for elimination by the Administration and some in Congress. The National Science Foundation has found no merit in the project and urges that it be denied funding.

The Army Corps of Engineers Inland Waterway program may fall victim to the House Budget committee ax. Cutting this subsidy for barge owners would save $1.1 billion over five years.

Another corporate subsidy targeted by environmentalists is road building in national forests. “We’ve argued now for years to cut the road budget and shift the burden on to timber companies,” says Cathy Carlson, legislative representative for the National Wildlife Federation. “It’s ridiculous that the taxpayer continues to pay for these mini-freeways in our National Forests.” Few of the roads allow public access for recreation, says Carlson, and $500 million could be saved.

The “Green Scissors Report” recommends doing away with other roads as well. For example, the I-69 Highway Extension in Indiana, dubbed the “Highway to Nowhere,” would destroy 4,000 acres of farmland and forest and cost $800 million. An equal sum could be saved by nixing Corridor H in West Virginia and another $900 million by blocking Route 710 in Los Angeles County. “These highways are perfect examples of misdirected federal funds,” says Nancy Hirsh, senior energy policy analyst for Environmental Action. “They don’t make economic sense, given the alternatives that have been proposed in each local area, and they don’t make environmental sense.”

Grazing and mining subsidies, long opposed by environmentalists, are also targeted, but may be long shots for elimination, according to Lancelot. Of the two, reforming the 1872 Mining Act, to require mining companies to pay royalties on minerals extracted from public lands, is more likely to be passed. “More and more the public is hearing about the rip-off of mining and how absurd it is – the metal for free, the land going for the price of a couple of McDonald’s hamburgers and the waste we’re left with. This is an outrage that’s going to garner a lot of support,” says Lancelot.

The Democratic Party’s Progressive Policy Institute also has a proposal to end corporate welfare and use the money to retrain workers. One popular target is the Agriculture Department’s Market Promotion Program, which will give American companies $100 million this year to advertise abroad. Taxpayers have been subsidizing M&M/Mars, Gallo Wines, Sunkist and Campbell’s Soups, among other corporations, to hawk their wares overseas.

The International Teamsters Union has joined in the fight, protesting federal advertising dollars for Diamond Walnuts. The union declared a boycott of the walnuts four years ago because of the company’s treatment of workers. Diamond uses the pesticide methyl bromide, which can cause nerve and brain damage to workers who are exposed to it.

“Corporate welfare has created a culture of dependence that has encouraged certain industries to live off the taxpayers,” says Peter Montague in Rachel’s Environment & Health Weekly. “And unlike the vast majority of individuals who receive public assistance, most corporate welfare recipients are not particularly needy.”

But the Republican budget cutters so far show far more zeal for going after school lunches and weatherization programs than they do for nuclear power or oil companies. “We’re wondering whether the Republicans are really going to go after corporate pork or not,” says Hirsh.

Even if they do, there’s no assurance the savings would go to taxpayers. One “Green Scissors” recommendation that has already passed is the elimination of $200 million from this year’s Clean Coal Technology Program. But you won’t see the savings reflected on your tax returns in April. The money’s been earmarked for the Pentagon.

Is It Still Possible To “Get Press”?

pressrDURING MY FIVE YEARS AS A BUSINESS WRITER FOR The Miami Herald, I must have sifted through thousands of press releases and fielded hundreds of phone calls from local business owners and their public relations people trying to pitch me stories.

Few of these stories ever make it into the paper, and most of the press releases end up in the trash. The reason: They just aren’t news. On the other hand, a small band of local businesspeople and professionals seem to pop up regularly in the pages of The Herald’s Business Monday tabloid.

What makes the difference? Some people know how to play the game, others don’t have a clue. Art Berkowitz was one of the savvy ones. CPA Berkowitz, 45, a Laguna Niguel, California, sole practitioner who used to work in suburban Miami, wasn’t a partner at a Big Six accounting firm and hadn’t written any best-selling books. But week after week, Berkowitz would manage to get himself mentioned in The Herald’s business section, sometimes offering tax advice, other times holding forth on college financing strategies. Berkowitz’s secret: contacting reporters who covered his areas of expertise and then being available to return their phone calls quickly.

“Some of it was persistence, but a lot of it was luck,” admits Berkowitz, who has not made much headway in getting noticed by his new local paper, The Orange County Register. “You just have to be at the fight place at the fight time.”

As Berkowitz’s experience shows, capturing the attention of the local business press–the business section of the daily newspaper, the weekly journal, or the monthly magazine–is never an exact science. Although companies sometimes get results from a carefully crafted press release and a few strategic phone calls to the appropriate editor or reporter, I’ve seen plenty of businesses get press, or fail to get it, due to the vagaries of publication deadlines. I recall one Miami law firm that kept after me for a year to do a profile, but there was never a news hook to hang the story on. Then, late one Tuesday afternoon, a story that was scheduled to run fell through. My editors scrambled to find a replacement. That Monday, the Miami law firm finally got its profile in The Herald–and was later featured on the front page of The National Law Journal too.

Getting Through to the Press “The more you understand the local media and how they operate, the better you can use them to market yourself and your business,” says Toni Charbonnet, the public relations person who represents the Miami law firm Valdes-Fauli, Cobb, Bischoff & Kriss.

But even though this advice comes from a PR specialist, you need not hire one to get your name in the paper. Even for entrepreneurs on a budget, there are plenty of cost-effective ways to catch the attention of the local press.

1. Tell us why we should ever write about you. Most local business writers work for daily newspapers. That means they’re on deadline, grinding out as many as three or four news stories a day in addition to writing features for the paper’s weekly business section. Pitch your story as succinctly as possible with a quick phone call or a short press release.

“The trick on the phone is to get the pitch out briefly and articulately,” says Sandra Beckwith, 39, a home-based public relations specialist in Fairport, New York, who often writes down a one- or two-sentence pitch and rehearses it before she calls the media.

2. Tell us why we should write about you today. Have you just rolled out a hot new product? Bagged a Fortune 500 client? Landed a government contract? Hired a new executive? Won an award? This is the kind of stuff that the local business press considers news and will probably want to run right away.

“Spend the time to analyze what is unique or different about your business or the product you produce-and what makes it news,” advises Charbonnet.

3. Don’t swing for the fences, just try to get on base. One of the biggest reasons why businesses fail to get written up is that they aim too high. Few newspapers would ever run an entire feature story about a CPA in solo practice, for instance, but somebody like Berkowitz–who’s articulate, informative, and available to the media-can get himself quoted with some regularity in articles that show off his expertise. Beckwith suggests sending out a brief note telling the local business editor or reporter who you are, what you do, and what you’d like to comment on.

4. Read all about it. This may seem obvious, but the best way to find out how to press the local media’s hot buttons is to read the paper and see what kind of stories typically run. While most weekly business tabloids contain a cover story and several full-length features, many also have departments devoted to new hires, awards, and promotions plus locally produced columns on marketing, the professions, retailing, and other topics. Find out where your news item would fit and send an announcement to the reporter or editor in charge.

5. Know your audience. Getting to know the likes, dislikes, interests, and preferences of the business writers who cover your industry or profession is just as vital to selling your story to the local media as market research is to peddling your product or service to potential customers. “A reporter who is also a mother may be interested in safety issues involving toys,” notes Charbonnet.

6. Meet the press. Even if there may be nothing newsworthy to say about your business at the moment, it’s a good idea to get know the local reporter who covers your field so that, when you do have something to announce, you’ll have a listening audience.

7. Make our lives easier. Some local business reporters are too busy to bother with your story, others are just too lazy. Sometimes the quickest way to light a fire under a reporter is to send over some clippings from papers that have covered your story already. When Beckwith decided to launch the Do(o)little Report, a newsletter that takes a humorous look at oddities of male behavior, she sent out press releases to both the national and local media. USA Today, The Wall Street Journal, Eye to Eye With Connie Chung, and National Public Radio all picked up the story–but not her two local Rochester papers, the Democrat & Chronicle and the Times-Union.

“Finally, I ended up sending a few clips to the local business folks with an FYI note [and got] a major feature in the daily newspaper’s Monday business section,” Beckwith recalls.

8. Keep your name current. A deluge of press releases or phone calls will most likely turn off the local business reporter, whereas a mailing every couple of months can be useful to keep the press aware of your existence. To keep her name out there, Beckwith mails a quarterly newsletter about her company to the local media in addition to press releases.

9. Hire a professional if you can’t do it yourself. Even though business reporters–and journalists in general–tend to have a low opinion of public relations people, it may be worth hiring one if you can’t write a grammatical sentence or are too busy running your business to take time to court the media. A good public relations specialist–who might cost you $2,000 a month–can also monitor the local business press to see what’s being covered and by whom.

Even so, says Charbonnet, “If you’re a small firm starting out of your house, I’d do a marketing plan first and direct mail and that sort of stuff. Then I’d analyze whether I’m doing anything different enough to warrant hiring a PR person.”

10. Prepare for the long haul. Building a relationship with the local business press can often take years. Don’t be disappointed if the reporter you spent an hour with on the phone quotes you only once in her story– or doesn’t mention you at all.

Berkowitz, the Miami CPA who recently moved to California, says the introductory letter he sent to the business editor of The Orange County Register so far has failed to produce any phone calls from reporters seeking his expert opinion. But, he says, he hasn’t given up. His next step will be to expand his efforts to other editors, writers, and newspapers.

“The trick is to get quoted once,” Berkowitz says. “Then you stand a chance.”

Don’t Give Your Expertise Away!

expawDAVID LAWRENCE, A.K.A. DOCTOR MAC, CALLS THEM the “hit and runs.” He’ll be sitting at his desk, minding his own Washington, D.C., radio talk-show and computer-consulting business, and the phone will ring.

“Before they even give me their names, or ask about fees, they ask questions,” Lawrence says of this certain breed of caller. “What’s the best word processor under $1007 What’s the command for bold type in Microsoft Word? Why is my screen showing a question mark even though I inserted a disk?”

In the bad old days, Lawrence used to answer every question, politely and completely. Then he noticed a trend. The people whose rapid-fire questions he answered on the phone were not the ones who became his best clients. He found himself spending a lot of time answering queries on the phone for free.

“My time is my inventory,” muses Lawrence. “And if someone takes from inventory, he should pay for it.” Call Lawrence out of the blue today, and he’ll politely interrupt to take your name and address so he can send you a bill. The chat will cost you $1.50 a minute.

This is not to say that Lawrence is unreasonable or totally mercenary. Larger or existing clients get some slack (three minutes or less on the phone for free), and he trades info with professional colleagues on a case-by-case basis. But Lawrence has already learned what many of the rest of us are still struggling with: You can’t make money by giving away what you’re supposed to sell.

Don’t Give Away the Store

The need to donate your services is a problem in many creative fields. Novice writers are often told they must create stories on spec, hoping that the editor will like them. Architects are told their potential clients won’t know if they are right for the job until the clients see the design. Advertising agencies may have it the worst; for them, it is the rule, rather than the exception, that you do the work before you get the work.

Even in noncreative endeavors, the first sign that you’ve really made it to expert status are the number of phone calls and written requests you get for free information. Sometimes, when the information is easy for you to come by and it’s a relationship that you want to nurture, it’s OK for you to give it away. Other times, you have to just say no. Here are a few tips for learning how and where to draw your own lines in the dust.

Establish procedures.

If you always do business in the same way, it’s easier to handle impromptu requests. Paul Treseder is an architect who used to give his time away on occasion. Now he has a firm policy: If he visits you, he bills you $75 an hour for an initial consultation. You can drop by his home office, look at his project photo book (and the great home he designed), and chat for half an hour for free. That’s it, and it works well for him.

Paint word pictures.

Smart Sanders, president of Sanders Consulting Group in Richmond, Virginia, trains advertising agencies in how to get new business. Instead of creating a mock-up of an annual report or brochure, says Sanders, simply tell potential clients what you will create for them. Use descriptive phrases like “a strikingly spare, black-and-gold, glossy cover” or “a soft-focus foldout panel of a country scene.” That way, you’re still offering ideas but nothing firm enough for the clients to execute without you. And your lack of specificity enables the prospects to imagine and embellish the work the way they want it, much as you can imagine a book hero more handsome than the actor who might play him in the movies.

Be rough.

“The world is moving to faster, quicker, sooner,” notes Sanders. Sometimes, Treseder’s architecture clients aren’t sure what they want, so they ask him to do some sketches. He’ll come up with some rough ideas, draw them quickly, and bill at his typical hourly rate. The drawings get more detailed as the clients get more settled in what they want. By the time Treseder is drawing builders’ blueprints, the client has approved–and paid for–all the preliminary work. Sanders suggests that regular rough work and a steady schedule of client approvals protects you from going too far down the road on a project your client just isn’t going to like or pay for.

Protect yourself from theft.

Outright theft is a much more unusual problem than the other examples, but it happens. My brother, Ed Stem, runs his own advertising agency in Columbia, Maryland. He once presented an ad concept to a client who didn’t hire anybody. A short time later, my brother saw his ads in a newspaper. Now he pastes “Property of the Stem Agency” statements on all of his work. Copyright law holds that if you create something and add a similar statement to it, you probably own the copyright.

Strut your stuff.

If a prospect is uncertain about what you produce, show her what you have already done. A booklet of samples, a few references or testimonials from other clients, or even a list of past clients might convince her you know of what you speak. Sanders cautions his clients against showing too many samples: When overwhelmed, potential clients are just as likely to find work they dislike as work they love. Sometimes one or two samples works the best, he suggests.

Set separate rules for colleagues.

Networking is a powerful tool, and you often learn more by swapping knowledge with cohorts than you do from any book, course, or (even) magazine. Figure out what feels comfortable. Lawrence is a Mac consultant who trades information regularly with a fellow PC consultant. Other pros share tips with one another in open, back-and-forth relationships. Still others like to help newcomers get a leg up. Some people will call out of the blue; they even have the chutzpah to admit they’re setting up shop across the street and just want to “pick your brain” (a direct quote from a call I got this morning) about everything you know regarding your business.

Help beginners unfreely.

If you frequently and regularly go over the same ground with neophytes, consider making money on what you know. Charge a consulting fee, offer a course, or write a booklet about how to get into the business. If you know your stuff, you will be offering a worthwhile service. But be very, very cautious about ever giving away the names of your clients and your suppliers.

Get by giving.

Decide when it’s worthwhile to give something away. Stem feels that creativity is his selling point. Since his is a small two-year-old agency, he also feels that he has to do more up-front work to win clients than a more-established agency might. But Stern picks and chooses his opportunities. A potential big-name client with a big budget will get more speculative work out of him than a small company that needs only one brochure or ad. Sanders calls this approach the “four Fs.” Decide which clients have the funds, offer the most fun, possible fame, or footsteps that will lead you to bigger and better things. Do a little more for them than you would for the lower-budget client who doesn’t hold much prospect for exciting work.

Give it away in style.

Maybe you’re just starting out, and you realize you have to build a reputation before you can command high fees. Instead of waiting for someone to ask you for a freebie, pick your pro bono case. Do some speculative work for a prospective client whom you believe in, who will make you look good, and who will spread your name around.

Ask for money.

This is tricky. Sometimes, when they’re in competition for work, businesspeople are asked to provide lengthy and creative proposals or sample projects. In reply, try this request: “I can write that sample chapter for you, but I’ll have to bill you at my hourly rate.” There’s good news and bad news in this approach. The good news, as Treseder has pointed out, is that you’re always up-to-date on being paid for your work. The bad news, notes Sanders, is that the client might pay you a little to create something and then proceed as if he owned that item, without ever moving to the more lucrative contract you thought was at the end of the process. You may be better off keeping control of the preliminary work until the whole project is contracted.

Market aggressively and proactively. Sanders’s colleague, Chuck Meyst, notes that the key to being able to walk away from prospects who ask for too much is never to be desperate. Plan to spend 25 percent of your time marketing, and always have many irons in the fire. If the phone tings and the person on the other end is asking for the moon, June, and spoon, you can always croon a simple “no.”

Managing Money In A Growing Business

mmiagWE ALL WORK TOO HARD FOR OUR MONEY TO LET IT SIT around slothfully without earning its keep. In today’s financial marketplace, your money can either make more money or it can lose money, depending on the banking and saving choices you make and the ways you handle your cash flow.

Practice the following money-management techniques now, while interest rates are low, and they may not seem to make much difference. But then, as rates rise, you’ll be in position to take maximum advantage of the higher yields.

1. Remind yourself of the time value of money. That’s the notion that time devalues money (through inflation) or multiplies it (if it’s invested profitably). Hide $1,000 in your desk drawer, and in five years it will have the buying power of only $837, if inflation remains a minimal 3.5 percent. Invest it at 5 percent instead, and in five years it will have the buying power of $1,077. Money that sits around and fails to keep up with inflation gets lost, just as surely as money that falls out of your pocket or purse.

2. Deposit money as soon as it comes in. Sometimes businesses hold onto checks until orders are processed or until they have the time to enter the deposits in their bookkeeping systems.

“There’s absolutely no excuse for letting badly needed cash sit idle in a drawer,” writes Barry Schimel, a Rockville, Maryland, CPA in his book 100 Ways to Prosper in Today’s Economy (Acropolis Books). “As a general rule,” he says, “deposit your receipts first and worry about the bookkeeping later.” Schimel recommends that you photocopy checks you may need to look at later and then deposit the real thing–no less frequently than daily.

3. Consider a lockbox. If your business receives a lot of money through the mail–say over $100,000 a year–ask your banker to set up a lockbox for you, suggests Lynchburg, Virginia, small-business planner Rick Huff. This is a post office box (also called a drop box) that your bank can access. Once (or even more frequently) a day, the bank will send someone to clear out the box, take out the checks, and deposit them in your interest-bearing account. For their efforts, most banks charge a fee, offer reduced interest on your account, or generally arrange to make some money on your money.

4. Pay off expensive debt. If you bought your last computer on a credit card that charges 16 percent interest, or if you borrowed from a business line at your bank to make your quarterly tax payment, devote all extra cash to paying off those debts first. It doesn’t matter that the interest is tax deductible, since eliminating such interest is the only way to earn such an easy double-digit return.

5. Talk to the hankers. Can you find a bank that will offer you free checking, paired with an interest-earning money-market deposit account? You earn money on every deposit until the bank “sweeps”. funds from that account into your checking account to pay bills. Alternatively, look for a bank that will pay interest on a no-fee business checking account–but these are not so easy to find.

6. Accumulate short-term savings in moneymarket mutual funds. These funds are not insured as bank deposits are but, rather, stake their reputation on stability. They invest in highly rated, very short-term loans to banks, businesses, and governments and do not have the price fluctuations that other mutual funds have. They are considered extremely safe.

Currently yielding around 2.7 percent, these funds won’t make you rich, but they will often pay a bit better than most bank accounts, minus the fees. And since money fund investments are short term, they are positioned to benefit as soon as rates rise. Moneymarket funds offer check writing, although many put a $500 minimum on the amount of the checks.

7. Go a step further–do all of your transactions from a money fund. William E. Donoghue, publisher of Donoghue’$ MoneyLetter in Ashland, Massachusetts, and the nation’s premium money market maven, reserves special words of praise for the United Services Government Securities Savings Fund ([800] 873-8637). This money fund goes out of its way to please small businesses, he notes. It has unlimited free checking ($500 minimum) and pays a competitive rate of interest. Since it invests mostly in treasury bills, the dividends it pays are taxed at the federal level but not at the state or local level.

Donoghue–who, incidentally, also works from his home office across the country in Seattle–uses the United Services fund for all of his business transactions. His comptroller deposits checks into his local checking account and immediately writes a check for that same amount to mail to United Services. By the time the check is received at the fund, the ones he’s deposited at the bank have cleared. And he earns daily dividends on every single penny of balance until the minute the checks he writes clear.

8. Tax free or not to be? Consider your tax rate and decide whether it makes sense to be a tax-free investor. Tax-free money funds invest in municipal securities that are exempt from federal taxes. If you live and work in a high tax state, you can invest in triple tax-free funds that buy only bonds and notes from within your state and therefore pay dividends that are exempt from federal, state, and local taxes. But you pay a price in diversification with a triple taxfree fund. And if the state you live in has very highly rated bonds, you may pay a price in yield, too.

If you are in one of the new top tax brackets, such as the 36 percent federal income tax level for a single individual with a taxable income of $115,000 or more, tax-free investing make sense. You can buy into a tax-free fund that works just like a taxable money-market fund. But if you are in the 28 percent bracket, you’ll have to crunch some numbers to see if it’s worth your while.

Here’s the rule of thumb that can help you decide. Divide the tax-free yield of the money fund you’re thinking of by what’s left after you subtract your tax rate from 1; the answer is the equivalent rate you’d have to earn in taxable interest. For example: Your federal tax rate is 28 percent and you are considering a tax-free fund yielding 2 percent. Subtract 0.28 from 1 and get 0.72. Divide 2 by 0.72 and get 2.78 percent. Can you get a taxable fund yielding more than that? Go for it! If not, invest tax-free.

9. Dip into bonds. For longer-term business savings, take a little more risk and make a little more money. Short-term bond funds earn yields that are about 2.5 percentage points higher than money funds but have average maturities of six months to three years. If interest rates rise, long-term bond funds may slump but these short-term funds will only hiccup, suggests Huff. He tells his clients to shunt extra business cash to Vanguard’s short-term bond funds because they are no load and are known for having among the lowest costs in the mutual fund industry.

10. Invest in your business. With interest rates so low today, a $1,000 promotion has to bring in only about $1,025 of new business (net expenses, of course) to beat the bank’s rate of return over six months. If a new laser printer will reduce your printing bills, or if a new part-time assistant will free you to go after bigger clients and more productive projects, try putting your money to work yourself.