Monthly Archives: February 2015

Not the Sharpest Tool in the Shed


So I find out that everyone else in my Zone class of DGE’s has already scheduled their club visits for next year, and I realize that I really don’t have a great idea where all of the clubs are in my District.  Geography was never my thing.  So I think to myself, why not buy a map and lay out all the clubs in the District using pins so that I can use good time and territory management while I schedule my visits?

The first thing I find out is that AAA does not have a free map of Maryland.  Instead they offer a map that includes the state of Delaware, assuring that the scale of my project would need a magnifying glass to see. But since I’m way too cheap to actually purchase a map of Maryland, the Delaware/Md. map would be the way to go.  The next thing I realize is that I have morning, lunch, and evening clubs, so I need different color pins for each time of day.  No problem here.  It turns out you can buy pins in a variety of colors.

The next problem to be overcome was that there are meetings five days a week and I need to differentiate Tuesday meetings from Wednesday meetings.  So again, with the Type A spirit driving me onwards, I cut out little rectangular colored papers where each color represents a day of the week, and then write the club name on the slip of paper.  This is all done meticulously in microscopic size handwriting that is pretty much illegible.

With these issues surmounted, I next mount my AAA map on a piece of cardboard that I find jammed into a trash pile in the garage and begin putting pins in the map for every club in the District.  The result is spectacular.  The map has separate smaller maps for DC, Baltimore, Frederick, and Annapolis, so all is good.  Of course, dealing with the stupid pins and papers is a pain, but hey…this is all in the service of Rotary.


The end result?  A beautifully laid out map full of pins and papers with club names showing where every club is in the District, the day of the week they meet, and the time of day they meet.  Next step?  Trying to figure out what order to visit clubs to maximize my time.  So, after two days of getting maps, pins, and paper, writing down club names in tiny handwriting, and struggling with putting pins in maps, I am ready to get to work.


That’s when a thought occurred to me.  Didn’t our District Directory have some helpful information in this regard?  Why yes, it turns out it did.  Turning to page 6 I find a section called, Clubs Sorted By Area and Day.  And lo and behold, here is all the information I needed.  And so, dear RFA readers, I have proven, once again, that I am not the sharpest tool in the shed.  But I do have some really cool pictures of pins in a map of Maryland and Delaware that give a great view of our Rotary clubs in District 7620.

By the way, that unbelievably large mass of pins in the middle of the map represent the mighty Howard County Eight Rotary clubs.  Yup eight…you can count the pins.

This weekend I’m off to Chesapeake PETS where I get to hang out with my club presidents, make speeches, introduce our RI Director, and generally cause all kinds of havoc.  What fun!  I will be reporting it all here at Ready, Fire, Aim!



Speaking at the Rotary Youth Leadership Awards (RYLA)


The good news was I had the opportunity to speak at the RYLA 2015 Conference last evening at the National 4-H Center in Washington, DC.  The bad news was I got caught in the freakish snow storm that blew in right when I was leaving and it took two and half hours to get home.  For those who don’t know, RYLA is a leadership program designed by Rotarians for high school students in grades 10 through 12.  Special thanks to RYLA committee members Rochelle Brown, Mary Dudley, Ed Kumian, Navin Valliappan, and Judy Cappuccilli, for another amazing job done.  Oh heck, I might as well let Judy explain what RYLA is all about:


As always, the energy and enthusiasm of the students who attend is impossible to resist.  I thought I would share my comments to the group last evening.  If you have an Interact club associated with your club, perhaps they would benefit from some of these thoughts about Rotary, Youth, Leadership, and Awards.

Saturday Evening Comment for RYLA 2015

 As I was thinking about this talk, I was struck that the name RYLA, Rotary Youth Leadership Awards, is one of those great names that tells us much of what we need to know about your efforts here over the next few days.

Let’s start with Rotary. I sometimes wonder if our High School Students, Interactors and Rotaractors realize the size of this amazing organization called, Rotary. Imagine if you will, 1.2 million Rotarians organized into 34,000 Rotary clubs, in more than 500 Rotary Districts, and 34 Zones of Rotary Districts, in more than 200 countries around the world. I just came from my own District Governor training in San Diego, called the International Assembly, where every Rotary District Governor in the world is required to attend. I mention this because there were more countries represented at the International Assembly than there are at the United Nations. Amazing isn’t it?

What about Interact clubs? You might be interested to know that Interact has a membership of over 250,000 youth in more than 11,000 clubs worldwide. It’s one of Rotary’s fastest growing programs with clubs in over 120 countries and geographical areas.

Here in our District 7620, we have 63 Rotary clubs from as far north as Aberdeen, as far south as Lexington Park on the Chesapeake Bay peninsula, as far west as Frederick, and east to Annapolis. We have about 2,300 Rotarians in our District alone, all following Rotary’s 4-Way Test: 1) Is it the truth, 2) Is it fair to all concerned, 3) Will it build goodwill and better friendships, and 4) Is it be beneficial to all concerned. Rotarians hold their service projects to the standard of “Will it Do Good in the World.” All 1.2 million members are dedicated to the goal of world peace through humanitarian service, where we define the six areas of focus of our Rotary Foundation as peace and conflict resolution, disease prevention, maternal and child health care, clean water and sanitation, literacy, and economic development.

Last year the Rotary Foundation funded over $35 million of humanitarian projects. Our number one priority is the eradication of Polio, a disease that causes you to be paralyzed and has a terrible effect on children under the age of five. Rotary has been fighting this disease since the mid-1980’s and we’ve reduced the number of cases from more than a thousand  per day to just about 300 cases per year in only three remaining countries. Our partners in this effort are the Bill and Melinda Gates Foundation, the World Health Organization, the Center for Disease Control, and UNICEF. As we like to say, we are “this close” to our goal of eradicating this disease forever.

But that’s not to say that Rotary doesn’t have its challenges. And one of them is that our organization is aging. Here is a recent statistic: 70% of Rotarians are age 50 years or older. So if Rotary is to remain relevant. If what we do is to remain important, we need all of you to join an Interact Club and then graduate to a Rotaract club either in your community or at the college you attend, and then eventually join Rotary at some point in your career of doing service for others.


The next letter in RYLA is “Y” which stands for “Youth.” The Rotary “Youth” Leadership Awards. I would make the following comment about youth. When it comes to service, those you serve, for the most part, could care less about your age. It turns out that young people are amazingly creative when it comes to “hands on” service projects. Why? Because you ain’t got no money! You are not yet at that point in your life where your role is to provide the financing for service projects. This is when you DO service projects. In the eyes of the lonely, the hungry, the sick, the elderly, and the others who need your help, I promise you that they don’t see your age at all. All they see is what you are doing on their behalf…and as many of you already know, they are extremely grateful.

Here’s our secret though. Helping someone that you get to meet, someone who looks you in the eye and says “thank you,” someone who is going to immediately benefit from your time and attention, is an experience that gives us enormous personal satisfaction. I hope you get to experience this feeling.

The next letter in RYLA is, of course, Leadership. I’ve taught leadership to Rotary club presidents for more than a decade, and it occurs to me that one of the most important benefits of joining a service club, at any age, is the opportunity for personal development AND the opportunity for you to grow as leaders.

Here at RYLA, I encourage you to step out of your comfort zone and try to assess what leadership skills you do best and what you need to improve. Public speaking, persuasion, listening, evaluating, project planning, motivating, team building, critical thinking, and leading by example, are all attributes of effective leaders. You will be able to translate these skills to every area of your life, including, of course, high school, college, family, and career.

When you eventually do matriculate from High School or Interact, to Rotaract, and then to Rotary club membership you will take these skills to a new level, and you will be able to practice and network with the Rotary leaders in your community who have years of experience and know how to get things done. That’s pretty good stuff…don’t you think?


Finally, the last letter is “A” in RYLA which stands for Awards. It may sound cliché, but I can assure you that by virtue of the fact that you are here for this RYLA conference that you are all award winners already. But here’s the thing. In the real world you usually don’t get awards for doing the things that you do every day as a leader. The awards come from watching your team succeed, or from helping others to achieve their goals. As a true leader, you will get the most satisfaction when the people you are working with on your team win the awards. Here’s another cliché for you: Being a great leader is its own reward.

Lastly, I would share with you that at your stage in leadership development, I would give you an award that no one else is likely to give you, which is the “I tried to do something outside of my comfort zone and I failed” award. I would be thrilled to give you an award for failing because this is the time for you to explore new ideas, take risks,  and develop new skills. This is your chance to push yourself to try things that make you uncomfortable, and then fall on your butt, dust yourself off, learn something from the experience, and give it another try. I hereby challenge all of you to earn the “no one knows that I was terrified to try this” award over the next couple of days. Just remember, courage, in my opinion, is one of the most important attributes of great leaders, of ANY age.

So…mercifully for all of us I’ve run out of letters. I sincerely hope that your RYLA journey is a life-changing one for all of you. We ask all of you to eventually bring the leadership skills that you are developing here to a Rotary club in your community, wherever your life journey takes you.  We desperately need your knowledge, energy, enthusiasm, and creativity. As you head off to college, if you don’t have a Rotaract club in your community, or at your school, then please consider starting one. Make service an integral part of your life.

I will be encouraging club presidents all over the District in 2015-2016 to be open to doing joint ventures with our Interact clubs and Rotaract clubs, and to help you implement your projects.

Oh…I forgot one last letter than isn’t in RYLA, but should be. That letter is “F” which stands for FUN. I know you are all going to have an amazingly fun time over the next few days.

Good luck to all of you, and thanks for coming.

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It’s Easy to Become an Arch Klumph Society Member, an Open Letter to Rotary One Percenters



Dear Rotary One Percenter,

If you are a Rotary one percenter, I thought I would write to you today about joining the Arch Klumph Society. That’s because to join the Arch Klumph Society you have to give a total of $250,000 to the Rotary Foundation, and that, my friend, is no small chunk of change. However, you may find it interesting to know that your Rotary friends in the top 1% of income and net worth in the U.S. and around the world have many interesting choices to consider if they want to join.  My other, non-one percent readers, might be interested, or horrified, to know that you need to earn $389,000 of household income to be in the top 1% of wage earners in the U.S., and have an estimated $8-9 million of assets to be in the top 1% of net worth. (This one percent thing is a little complicated, so just trust me on the numbers.)

If you happen to be a Rotary one percenter reading this article, you will probably be aware of the fact that we live in a disinflationary world characterized by a crash in worldwide interest rates. If you live in the U.S. and want to earn some interest on your money, you can lend the U.S. government money for ten years in the form of a U.S. Treasury Bond and they will pay you the whopping annual interest rate of 1.95%. Or, if you want to lend Uncle Sam money for thirty years you get paid 2.51% per year. YIKES. If you don’t want to climb out on the yield curve and you want to keep your money in cash you get paid nothing. Nadda. And in many parts of the world you actually have to pay the bank to stash some cash in their accounts. That’s right. Major banks in Europe are currently offering negative interest rates.

If you don’t want to invest in bonds in order to drive an income stream from your portfolio, you might consider investing in stocks and selling them as needed to pay your bills. The problem here is that 1) stocks are now, by many traditional measures, very overvalued and are due for a major correction, and 2) it seems that the tax on capital gains keep increasing. There is now a surcharge for the Affordable Care Act of 3.8% and when added to the top capital gains tax rate it will cost you 23.8% in taxes to sell some shares to pay the bills. Ouch. (At this point non-one percenter Rotarians may be saying something like, “Cry me a river, pal.” But this letter isn’t for you so pipe down.)

Not to mention the fact that stock prices are up and yields are down. Lets say you got rich owning a diversified portfolio of stocks that matches the yield of the S&P 500 stock Index. You are currently getting paid a yield of 1.9%. REALLY? Only 1.9%! What if you are a Rotarian named Forest Gump and you own a huge portfolio of Apple Stock? (APPL) You are getting paid a dividend of 1.76%. It’s hard to pay the household staff on that kind of dividend, isn’t it?

So…to review. You’re a rich Rotarian and nobody but me cares about your troubles. You can’t earn any money on your money in the current market environment without taking a preposterous amount of risk. You can’t earn anything in the bond market. The stock market is expensive and doesn’t pay much in the way of dividends, and capital gains taxes are through the roof…and are probably headed higher. What to do?

I’ll tell you exactly what to do. (NOTE: Don’t consider this unless you want to quadruple your income, get a huge current tax deduction, avoid a huge capital gain on the sale of your appreciated securities, and become a certified warrior for world peace with a plaque on the wall of One Rotary Center with your name on it as a brand new Arch Klumph Society member.)

First, call your Major Gifts Officer at the Rotary Foundation and tell him or her that you are about to make their day. You might also mention that Ken Solow sent you.

Next, establish what is called a Charitable Remainder Unit Trust (CRUT) at the Rotary Foundation. (ANOTHER NOTE: Everything you are about to read sounds too good to be true. Sometimes rich people can get a break and this is one of them. If you are about to stroke a check for $250,000 to benefit my favorite charity, then I will lead the standing ovation for you. As they once said at McDonald’s, “You deserve a break today.”)

First, select $250,000 of cash that is absolutely dead money, or $250,000 of bonds that is nearly dead money, and gift it to the Rotary Foundation. Regardless of all the financial benefits that will accrue to you, the Rotary Foundation will give you full credit for this gift and you will get full recognition as an Arch Klumph Society Member.    Guess who else will be impressed?  The IRS will cheer when you cut this check for cash and if you and your spouse are ages 60 and 57 respectively, they will allow you a charitable deduction of $64,065. (ANOTHER NOTE: If you are a tax attorney or in the business of giving financial advice, you know that all of these numbers depend on specific personal financial issues. Please get a grip. I will tell everyone not to do anything without checking with his or her tax advisor later. I’m trying to close a deal here for cryin out loud.) If you are in a high tax state and paying the highest marginal tax rates then the deduction is worth about 50% or $32,000. That’s right. You get paid $32,000 to be an Arch Klumph Society Member. Just sayin.

You made a gift of cash so it cost you absolutely nothing in terms of lost earnings. But wait, it gets better.

The Rotary Foundation will invest your money in a professionally diversified portfolio. You give them the $250,000 and choose what Rotary program you want to support after the death of you and your spouse. But get this…you get to keep the income for your life AND the life of your spouse. And now for the $250,000 question… What rate of income gets paid to you from your Rotary Trust? NO LESS THEN 5%! “What? you say. How can they do that? I wasn’t getting paid anything from my cash and almost nothing from my bonds.’  They can do it because they are paying from the earnings generated by the total return of your account, not just the interest rate on your account. As long as the TRF portfolio earns a total return of 5% you get paid 5%. So instead of earning nothing on your cash, less than 2% on your bonds, or less than 2% on your stocks, you now get paid a cash income of 5%!

But…it gets even better. No really. It gets even better. Let’s say your money is invested by TRF and it earns more than 5%. Then in subsequent years you still get paid out 5% of your principal, but the principal IS REVALUED EVERY YEAR. So if you initially give $250,000 to TRF and your money earns 7% and you choose a 5% withdrawal rate, in subsequent years your income stream is going to grow by 2%. You see? Your $250,000 grew by 7%. You withdrew 5%, and the remainder sits in the trust where next year you will withdraw 5% of the new balance of $255,000. So instead of getting $250,000 x 5% of income, or $12,500, you get 5% of $255,000, or $12,750. If the investments at TRF average more than 5% every year then your income grows every year. Does that sound better than a Treasury bond paying a flat 1.95% income taxable every year? You betcha.

Yes, it’s true. If your money earns less than 5% then you take a 5% withdrawal from a smaller principal balance that year. But who cares? Your rich for Pete’s sake.

But, you say, I have my Forest-Gump like stash of Apple stock with very low basis that is going to cost me 23% of capital gains to sell? Just give the shares to TRF and Uncle Sam will still give you a charitable tax deduction, (it’s less than a deduction for giving cash, but hey…don’t be greedy), AND TRF will sell the shares for you while you avoid paying $59,500 of capital gains taxes. So, Uncle Sam pays you to make the charitable gift in the form of a tax deduction. You avoid a $59,000+ capital gain. And you turn a dividend yield of 1.76% into a 5% yield that is likely to grow over time. As we like to say in the finance business, “ain’t that better than a stick in the eye?”

And so, Rotary one percenter, you are now asking, “what’s the catch?” The catch, my friend, is that almost none of this makes financial sense UNLESS you are interested in supporting the Rotary Foundation and all of its great programs and good works. The net cost to you to be an Arch Klumph Society Member, the most revered level of giving in Rotary, is probably less then you thought. But there is still a cost and you need to consult with your tax experts, and the experts at Major Gifts at the Rotary Foundation, before you embark on a sophisticated strategy like funding a CRUT for you and your family. However, make sure you read this article a few times before you put yourself in the hands of the geeks and let them confuse you. I just gave you the straight scoop on how it works. I know…it’s so good it’s hard to believe.

2015-2016 RI President Ravi Ravindran’s Rotary theme is “Be a Gift to the World.” If you happen to have an extra $250,000 lying around, earning little to nothing, or locked up with a low cost basis, please consider “Making a Gift to the World.”

Uh…one last thing.  You don’t need to write a check for the whole $250,000 at one time to get started funding your CRUT.  But…what the heck.  It will make you feel better then remodeling the kitchen….again.