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Donor Governance and Financial Management in Prominent U.S. Art Museums

June 29, 2015 Comments off

Donor Governance and Financial Management in Prominent U.S. Art Museums
Source: Social Science Research Service

I study “donor governance,” which occurs when contributors to non-profit firms place restrictions on their gifts to limit the discretion of managers. In a study of U.S. art museums, I find that this practice has grown significantly in recent years, and it represents the largest source of permanent capital in the industry. When donor restrictions are strong, museums shift their cost structures away from administration and toward program services, and they exhibit very high savings rates, retaining in their endowments 45 cents of each incremental dollar donated. Retention rates are near zero for cash generated from other activities. Restricted donations appear to stabilize non-profits and significantly influence their activities, but they reduce management flexibility and may contribute to lower profit margins. Rising donor governance in U.S. art museums may represent a reaction by contributors to the industry’s high rates of financial distress, weak boards of trustees, and large private benefits of control enjoyed by managers.

U.S. Financial Services Credit Ratings Are Resilient To Cyber Security–For Now

June 17, 2015 Comments off

U.S. Financial Services Credit Ratings Are Resilient To Cyber Security–For Now
Source: Standard & Poor’s

It seems not a week goes by without a high-profile cyber-attack against a major U.S. corporation or government agency. A sampling of past corporate targets includes giant retailers (Home Depot, Target, Sony), banks (JPMorgan Chase, Citibank), and health insurers (Anthem, Premera Blue Cross). Clearly, no entity is safe from a cyber-attack. But what are the credit implications of this onslaught of data breaches? Although the many successful cyber-attacks have not yet resulted in any changes in Standard & Poor’s Ratings Services’ ratings on financial services companies, we view cyber-security as an emerging risk that we believe has the potential to pose a higher credit risk to financial services firms in the future, although we cannot predict the timing. It’s not difficult to envision scenarios in which criminal or state-sponsored cyber-attacks (for credit implications, we don’t differentiate the sources of intrusion) would result in significant economic effects, business interruption, theft, or reputational risk. One key point is that cyber-attacks may not be discovered immediately: It can take weeks or months before an intrusion is discovered.

Cyber-attacks appear random but could be highly correlated thanks to contagion caused by global interconnectivity. Data interconnectivity exists among banks, merchants, data owners (health care providers, telecom companies, etc.), and other sources (vendors, distributors, suppliers). So, hackers have many paths to breaching company data and disrupting business operations. Published reports note that data breaches have been going on long enough for cyber-criminals to have collected substantial data on a large number of individuals.

Overview

  • So far, we have not downgraded any companies because of the damage resulting from a cyber-attack.
  • Although company disclosures about cyber-risks remain limited, we’re starting to explore the issue in the context of management governance and enterprise risk management.
  • Although still too small to draw robust statistical conclusions, our analysis provides insights into how and when cyber-attacks can affect creditworthiness.
  • Our credit opinion takes into account a balanced view including other risk factors concerning the effects of a cyber-attack.

Corruption — still a major problem in several Western Balkan countries

June 16, 2015 Comments off

Corruption — still a major problem in several Western Balkan countries
Source: European Parliamentary Think Tank

The United Nations’ 2003 Convention against Corruption (UNCAC) starts by noting that corruption ‘undermines democracy and the rule of law, leads to violations of human rights, distorts markets, erodes the quality of life and allows organized crime, terrorism and other threats to human security to flourish’. To a varying extent, all countries are susceptible to the phenomenon of corruption (EU Member States not excluded). Factors such as social and economic development, political background and culture, among others, define how deep rooted it is in a given state. The Western Balkans (WB) is a region with a history of corrupt practices, one usually perceived as vulnerable to corruption. With the exception of Kosovo,* all countries from the Western Balkans – Albania, Bosnia and Herzegovina (BiH), the former Yugoslav Republic of Macedonia, Montenegro and Serbia – are parties to UNCAC. Without exception, they are faced with widespread corruption – one of the key challenges as regards their aspirations for European integration. They have each made different progress towards EU membership, but share similar difficulties in the fight against corruption. Notwithstanding the assistance from the EU in the framework of the enlargement process, the results they have achieved so far have similarly been assessed as limited. * This designation is without prejudice to positions on status, and is in line with UNSCR 1244 and the ICJ Opinion on the Kosovo Declaration of Independence.

NIH approves strategic vision to transform National Library of Medicine

June 12, 2015 Comments off

NIH approves strategic vision to transform National Library of Medicine
Source: National Institutes of Health

National Institutes of Health Director Francis S. Collins, M.D., Ph.D., today approved a federal report that lays out the long-term scientific vision for the NIH’s National Library of Medicine (NLM), the world’s largest biomedical library.

In summary, the ACD envisioned NLM to be a modernized conceptualization of a library and formulated a series of recommendations to guide its future:

  • Continually evolve to remain a leader in assimilating and disseminating accessible and authoritative biomedical research findings and trusted health information to the public, healthcare professionals, and researchers worldwide.
  • Lead efforts to support and catalyze open science, data sharing, and research reproducibility, striving to promote the concept that biomedical information and its transparent analysis are public goods.
  • Be the intellectual and programmatic epicenter for data science at NIH, including becoming the center of intellectual and programmatic activities in biomedical data science, and stimulate its advancement throughout biomedical research and application.
  • Strengthen its role in fostering the future generation of professionals in biomedical informatics, data science, library sciences, and related disciplines through sustained and focused training efforts.
  • Maintain, preserve, and make accessible the nation’s historical efforts in advancing biomedical research and medicine, thereby ensuring that this legacy is both safe and accessible for long-term use.
  • Have new NLM leadership evaluate what talent, resources, and organizational structures are required to ensure NLM can fully achieve its mission and best allocate its resources.

USDoC OIG — Investigation into Alleged Contracting Misconduct and Exertion of Improper Influence Involving a Senior National Weather Service Official

June 12, 2015 Comments off

Investigation into Alleged Contracting Misconduct and Exertion of Improper Influence Involving a Senior National Weather Service Official (PDF)
Source: U.S. Department of Commerce, Office of Inspector General

Based on the evidence obtained over the course of our investigation, the OIG identified numerous problems related to the retention of Senior Official as a consultant for NWS that indicate a lack of understanding on the part of multiple NOAA officials regarding key government contracting and ethics regulations.

As for the actions of Senior Official himself, the OIG concluded that he was personally and substantially involved in the procurement of his own post-retirement consulting services for NWS. This involvement implicated numerous federal laws and regulations, including the criminal conflict-of-interest statute found in 18 U.S.C. § 208. Specifically, the evidence obtained over the course of our investigation establishes that Senior Official engaged in the following while still holding his position as a federal employee:

+ Drafted and edited the applicable statement of work for his post-retirement consulting position;
+ Participated with NWS officials in setting what labor category and rates would be used to pay for his consulting services; and
+ Signed the task management plan that created the consulting position he would take upon his retirement on behalf of the contractor that would be employing him.

In addition, the evidence indicates that Senior Official took inappropriate steps to arrange for the payment by NOAA of approximately $50,000 worth of his post-retirement housing expenses. In particular, while still holding his government position, Senior Official instructed his direct subordinate to facilitate his post-retirement use of a NOAA housing contract intended to accommodate senior executives on temporary assignments to NOAA headquarters in Silver Spring, Maryland, even though Senior Official was not eligible for housing under this contract once he became a consultant.

Agencies Issue Final Standards for Assessing Diversity Policies and Practices of Regulated Entities

June 10, 2015 Comments off

Agencies Issue Final Standards for Assessing Diversity Policies and Practices of Regulated Entities
Source: Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, National Credit Union Administration, Office of the Comptroller of the Currency, Securities and Exchange Commission

Federal agencies today issued a final interagency policy statement establishing joint standards for assessing the diversity policies and practices of the entities they regulate.

Section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 required the Federal Reserve Board, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission to establish an Office of Minority and Women Inclusion (OMWI) at each agency to be responsible for all matters relating to diversity in management, employment, and business activities. The Dodd-Frank Act also instructed each OMWI director to develop standards for assessing the diversity policies and practices of the agencies’ regulated entities.

The final standards, which are generally similar to the proposed standards, provide a framework for regulated entities to create and strengthen their diversity policies and practices—including their organizational commitment to diversity, workforce and employment practices, procurement and business practices, and practices to promote transparency of organizational diversity and inclusion within the entities’ U.S. operations.

Fact Sheet: Protecting Students from Abusive Career Colleges

June 10, 2015 Comments off

Fact Sheet: Protecting Students from Abusive Career Colleges
Source: U.S. Department of Education

Over the past six years, the Education Department has taken unprecedented steps to hold career colleges accountable for giving students what they deserve: a high-quality, affordable education that prepares them for their careers. The Department established tougher regulations targeting misleading claims by colleges and incentives that drove sales people to enroll students through dubious promises. The Department has cracked down on bad actors through investigations and enforcement actions. The Department also issued “gainful employment” regulations, which will help ensure that students at career colleges don’t end up with debt they cannot repay. The Department will continue to hold institutions accountable in order to improve the value of their programs, protect students from abusive colleges, and safeguard the interests of taxpayers.

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