Small Business Journal March

SMALL BUSINESS
JOURNAL
MARCH 2015
BUSINESS KNOWLEDGE. BUSINESS OPPORTUNITY. BUSINESS ACCESS.
Jonathan Blau
Fusion Family Wealth
SUCCESSFULINVESTING GENERALLY
REQUIRES ONE SIMPLE
PRINCIPLE:
BEHAVE
THE RECENT AND FAR-REACHING
NEW YORK STATE
NOT-FOR-PROFIT
REVITALIZATION
ACT (“NPRA”)
Ethan Kahn, CPA
and Partner
FEATURE
LEVERAGED FUNDS OF FUNDS:A STRATEGY TO ADDRESS TODAY’S MARKET CHALLENGES
ABRAHAM BIDERMAN AND HOWARD HOROWITZ

S M A L L B U S I N E S S J O U R N A L2

M A R C H 2 0 1 5 3
INSIDE
Buy vs. Lease: An Evolving Issue for a Successful Small
Business and Opportunities for Financing Under the
SBA 504 Loan Program . . . . . . . . . . . . . . . . . 6
LEONARD GRUNSTEIN
Successful Investing Generally Requires
One Simple Principle: Behave . . . . . . . . . . . . . . 12
JONATHAN R. BLAU,
Leveraged Funds of Funds: A Strategy To Address Today’s
Market Challenges . . . . . . . . . . . . . . . . . . . . 18
ABRAHAM BIDERMAN & HOWARD HOROWITZ
The “Uncertain” Terrain of Estate and Tax Planning . . 22
ADAM KATZ
Rate Way Vs. Right Way - Tips to obtaining mortgage
financing . . . . . . . . . . . . . . . . . . . . . . . . . 27
NICK LEIMAN & ISAAC GLUCK
Analyzing a Campaign that Generated $100 Million . .32
YITZCHOK SAFTLAS,
The Buy . . . . . . . . . . . . . . . . . . . . . . . . . . 36
JACOB AKERMAN,
The recent and far-reaching New York State Not-for-Profit
Revitalization Act (“NPRA”) . . . . . . . . . . . . . . . 38
ETHAN KAHN
FEATURE
LEVERAGED FUNDS OF
FUNDS: A STRATEGY
TO ADDRESS TODAY’S
MARKET CHALLENGES
ABRAHAM BIDERMAN &
HOWARD HOROWITZ
PAGE 18
E
quity markets are teetering at record
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Leveraged funds of hedge funds offer an
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returns, have fallen from their once lofty
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M A R C H 2 0 1 5 5
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646.402.5799 / www.WMexactlyright.com
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T
he ability to rent space is a decided
advantage for most entrepreneurs
opening a new small business.
After all, why invest limited capital in
order to create or own space, for the
business to occupy, when the space can
be rented. Moreover, the funds are usually
better deployed in furthering sales and
bolstering the income side of the equation.
This is especially so during the early stages
of a business, when getting product or services to market,
growing sales and obtaining market share are a priority.
As time goes on and the business matures, the question
of buy vs. lease space becomes more poignant. This can
occur for a variety of reasons. For example, when the initial
term of a lease expires, the prevailing market rent may be
significantly higher than the rent at the inception of the
lease. There may be other intervening circumstances, such
as a landlord’s desire to reposition the space. As a result,
the existing space my not be available to re-lease.
The shock of a material change in the rent can disrupt
the profitability of an otherwise successful small business.
Many businesses can’t take the stress. This includes small
retail, professional and other service firms. Moreover,
relocation within the immediate vicinity may not be an
option. There may not be any other available space that
is satisfactory. In any event, rents may also have increased
throughout the area. All too often, otherwise successful
BY:
Leonard
Grunstein
Financial
Executive
Buy vs. Lease:
An Evolving Issue
for a Successful
Small Business
and Opportunities
for Financing
Under the SBA 504
Loan Program

M A R C H 2 0 1 5 7
local businesses are forced to close because of these stresses.
Growing up in a family that owned a retail grocery
business, I felt the stresses at lease renewal time. Sitting
next to my dad, negotiating the terms of a lease renewal
for the store, I was acutely aware of the pressure he
was under. Moving the business to another locale was
not a genuine option. It was make or break time. We
had to negotiate a rent acceptable to the landlord, but
which allowed the business to survive. It was no mean
achievement. The pressure was redoubled when it came
time to sell the business. Not only was landlord’s consent
required for an assignment of the lease; the new buyer
reasonably desired a lease extension. There were only a few
years remaining to the existing lease term. I negotiated the
deal on behalf of my dad. It required an immediate rent
increase and fortunately the buyer
was willing to accept it without an
adjustment to the purchase price
of the business. I later learned that
when the extended lease came
up for renewal, the landlord was
unwilling to renew. Instead, the
store space, as well as, the other
retail spaces in the complex were
vacated and repositioned for more
upscale occupancy. Needless to say,
forced out of its space, the grocery
store business no longer exists. The
ability to buy the space might have
saved this small local business.
Real estate can also be a
wonderful outlet for diversification
of investment by a successful
entrepreneur. In the early stages
of a business, there is often little
or no choice but to reinvest the
net income in order to grow the
business. However, as time goes on
and a successful business matures, the needs of the
business itself may not be as compelling. Finding
investment opportunities for surplus monies is not an
easy task. Entrepreneurs, who have successfully overcome
all manner of challenges on their own, in establishing
their small businesses, sometimes find it difficult passively
to park their hard earned cash with a stranger. Often, the
amount available for investment is just not sufficient to
attract the attention of a major investment firm. It’s easy
to make a mistake and there are genuine concerns about
who to invest with and in what investments.
The prospect of making an investment in the real estate
the business occupies can be interesting from a number
of perspectives. A successful retail businessman knows a
great deal about the trends in his particular neighborhood.
From a real estate point of view, the outlook for local retail
rentals is often derivative of prospects for the surrounding
residential community. A community in flux usually has
a corresponding effect on the local retail economy. Thus
as a neighborhood undergoes gentrification and becomes
more upscale, so, usually, does the retail. Higher retail
rents are generally associated with these positive changes.
On the other hand, urban blight originating in the
residential sector also has a negative effect on the local
retail in the area.
Industrial uses in urban settings have also experienced
encroachments by so-called higher and better uses, such
as office and residential. The growth of cities and the lack
of land make for a heady combination when it comes
to adaptively reusing existing structures and raising the
rents. The result is to squeeze out small
industrial tenants.
A savvy small businessman often
has a keen appreciation of these local
trends and is well positioned to take
advantage of opportunities to acquire
real estate in the emerging area where
his or her business is located. I have
often heard tales of “if only”. Imagine
“if only I had bought the building in
Soho [or Tribeca], where the factory
was located, what wealth would have
been generated? Now the building
is a luxury condo.” Well those trends
originated thirty
or more years ago.
But there are newer
opportunitiesthathave
appeared. Consider
old industrial areas like
Williamsburg North
that are in the midst
of being redeveloped
into high-end housing.
This began approximately a
decade ago. What is the next burgeoning area?
A local small businessman often has knowledge and
information that could be translated into a realistic
investment plan. Nevertheless, owning and operating
real estate is a business; not just a passive investment
opportunity. It takes more than a good idea, strong heart,
gut instinct, hard work and dogged determination. But,
those are extremely important ingredients. An individual
armed with these attributes can make it in the real estate
business, too. The other major elements are money and
luck.
Sourcing capital seems to be a perennial problem for
most small businesses. The perception of risk in funding
" “...if only I
had bought the
building in Soho
[or Tribeca],
where the factory
was located,
what wealth
would have been
generated?” "

a small vs. a large business is magnified. This is so during
the startup phase and even after the business reaches
sustained profitability. A loan to a small business is viewed
as inherently more risky than a similar loan, meeting the
same objective underwriting criteria, to a large one. There
is also the matter of banks not being genuinely interested
in making small loans. The time spent underwriting
and closing a small loan with a small business borrower
is at least the same as that required for a large loan and
often significantly more. Smaller businesses don’t have
the accounting and legal personnel needed to expedite
the processing of a loan. They may have to bring on
outside help just to meet the documentary and other
typical demands of a bank lender. This can range from
basic legal documentation for the entity to full audited
statements for the current and
a number of prior years of
operation. A small business may
not be able to accommodate these
requirements at a reasonable cost
commensurate with the financing
requested or within a reasonable
time frame. It’s not the way
small business functions in the
usual course. There is often an
apparent clash of cultures. Is it
any wonder that banks shy away
from making small loans to small
businesses, when they can spend
the same or less time, with less
effort, pursuing large loans to
large businesses? When it comes
to bonus time, at the bank, it’s
about the dollar volume of loans
that close and pay interest. It’s
not about the absolute number
of individual loans closed. It is
also not about the amount of time
spent working on applications
for loans that don’t end up
closing.
I remember well facing these very issues in my first
bank approximately 20 years ago. The bank specialized
in making small multi-family and commercial mortgage
loans. This included mortgage loan to small businessmen
to purchase the buildings in which their businesses were
located. We found that there was a healthy demand for this
financial product and very little supply. We underwrote the
smaller loans just like the larger ones. Thus, we analyzed
the real estate that was to be the security for the loan on
its own. The fact that the borrower was to be the primary
tenant was not deemed a plus from a credit perspective.
However, it was perceived that the borrower was less
likely to default in paying the loan so as not to lose both
the property and the business. Nevertheless, the tenant
was not what would be considered a credit tenant. Our
primary concern from an underwriting perspective was the
marketability of the property, the prevailing market rents
in the area and demand for the space. It was critical that
the rent needed to service the mortgage debt not exceed
the market rent. Of course, the borrower had to be able
to afford the rent. However, like all well underwritten real
estate mortgage loans, it was not just about the particular
tenant. If the tenant was no longer there and had to be
replaced, then the property still had to be able to carry
the mortgage. Thus, the prevailing market rents needed
to be sufficient to support payment of debt service under
the mortgage loan. There also had to be a determination
made that there was adequate demand by tenants for the
space, in the ordinary course. The
bank did well financially because
it charged a little more, when
compared to large mortgage
loans at the major banks. The
borrowers were willing to pay a
little more because there were few,
if any, bank lenders interested in
making these loans and the next
tier of non-bank lender charged
exceedingly higher rates.
Small mortgage loans made
by my bank included one to the
owner of a retail business for the
purpose of acquiring the building
in which the business was
located. The business occupied
the main floor and there were
a few residential apartments
above. I look back at that loan
and can’t help but smile at the
prescience of the borrower. The
area has benefited from gentrification
and the property is worth many times
the original purchase price. Rents have
climbed dramatically in the area and are likely
unaffordable for many of the local users of almost two
decades ago. The borrower had a gut instinct that proved
to be correct. While we at the bank shared that view and
admired the borrower’s entrepreneurial spirit, nevertheless,
our underwriting was based on then existing market
conditions. Interestingly, at the time, the loan could not be
sourced as a SBA guaranteed loan, because real estate loans
were not permitted under the program. But this changed
with the enactment of the SBA 504 Loan Program, which
was designed to facilitate the making of these kinds of real
estate mortgage loans to small businesses. Last year, the
SBA adopted regulations to improve access to the 504
Loan Program, as summarized below.
There is also the matter
of banks not being
genuinely interested in
making small loans.
un

M A R C H 2 0 1 5 9
Under the program, a qualifying small business can, in
connection with obtaining space for its business, finance
the acquisition of land and building. This can include
the cost of construction of the building, machinery and
equipment, as well as, certain closing and other costs.
There are three components to the financing model. It
begins with a bank loan, generally, for 50% of the total
qualifying project cost. That loan is secured by a first
mortgage against the property. A second mortgage loan is
obtained through a Certified Development Corporation
(a not for profit quasi governmental entity that is approved
by the SBA under the program
to perform this function). The
amount of this loan is, generally,
for up to 40% of the total
qualifying project cost. This loan
is subordinated to the lien of
the Bank’s first mortgage against
the real estate. It is sourced by
way of issuance of debentures
that are guaranteed through the
SBA. The loans, however, are
further limited to a total not
exceeding 90% of the appraised
value of the property financed,
upon completion of the project.
For these purposes, the value of
the business itself is excluded.
The balance of 10% or more is
equity provided by the borrower.
The CDC loan amount might be
lower than 40% and the equity
requirement higher than 10%,
under certain circumstances, as
noted above and described below.
Since the purpose of this
SBA program is job creation or
retention, the maximum amount
of the CDC second loan is,
generally, $65,000 per job created
or retained. This limit is raised to
$100,000 per job, in the case of
small manufacturing businesses.
The maximum amount of this component of the overall
financing is $5 million, generally. Small manufacturers
can obtain up to $5.5 million. The per job limitation
on the SBA loan amount can be waived, if the borrower
satisfies certain public policy criteria. These include being
a part of a qualifying business district revitalization or
the expansion of a qualified minority; women or veteran
controlled or owned small business. Other examples of
public policy goals include expansion of exports, aiding
rural development, re-tooling , installing robotics and/or
otherwise modernizing so as to better be able to compete
with imports, restructuring because of federally mandated
standards or policies and changes necessitated by federal
budget cutbacks. Another possibility is obtaining LEED
certification, which involves providing a third party expert
report that documents the commitment to meet the
green public policy goals of reducing the small business
borrower’s energy consumption by 10% or generate at
least 10% renewable energy on site.
The rentable area of an existing building to be financed
must be at least 51% occupied by the small business
owner. In a new construction project, the small business
owner must occupy at least 60%
of the rentable area. There are
other restrictions on leasing in a
new construction project, as well.
A small business is defined
as a for profit business that has
tangible net worth that is no
greater than $15 million and
average net income after taxes
of below $5 million per year,
for the preceding two years of
operation. The small business
borrower may be organized as a
sole proprietorship, corporation,
partnership or limited liability
company. New small businesses
are defined as those in business
for less than two years. The equity
component required is raised to
15% in the case of a new business
borrower or the purchase of an
existing business. The equity
requirement is also raised an
additional 5%, in the case of the
purchase of a special purposes
property as defined by the SBA.
These include, for example,
amusement parks, bowling alleys,
car washes, gas stations and service
centers, nursing homes, surgery
centers and wineries. Thus, a new
small business borrower seeking
to finance the purchase of a special use property would be
required to provide a 20% equity contribution.
Eligibility under the program is premised on the
borrower and its principals not having sufficient financial
strength to accomplish the financing without the aid of
the SBA. At the same time, the borrower must show that
it is able to pay back the loan in accordance with its terms.
However, projected income can be used for this purpose.
The borrowers and reporting principals (owning 20%
or more of the borrower) are required to submit financial
Under the program,
a qualifying small
business can, in
connection with
obtaining space for its
business, finance the
acquisition of land and
building.

statements and tax returns. The profit and loss statements
for the business must be current to within 90 days of the
application and include the preceding 3 fiscal years of
operating history. An overview and history of the business,
as well as a business plan is required to be submitted. The
borrower must show why the SBA loan is needed and how
it will help the business. Projections are required, which
show how the loan can be repaid. In this regard, it should
be noted that projected earnings might be sufficient
to support the loan, even if the historical earnings are
insufficient. The reporting principals are also required to
complete and submit the SBA form Statements of Personal
History. Disclosures must be made of the ownership and
any affiliates of the small business borrower.
In general, no collateral beyond the real estate and
machinery and equipment financed is required. However,
if this is insufficient, then additional collateral may
be required to be posted to secure the loan or the loan
amount may be reduced and additional equity required.
This can also occur if the loan is viewed as riskier, the
business is a start-up or the underwritten cash flow is
insufficient to support the debt. Personal guarantees of the
reporting principals are required. In addition, if the bank
requires other guarantors in support of the bank mortgage
loan, then they must similarly guaranty the CDC loan.
Besides the loan documents and mortgage liens against
the property, the underwriting requirements include a
qualified third party appraisal, environmental report and
title insurance, satisfactory to the lenders. Typically, key
man life insurance is also required. This requirement may
be waived if there is a formal succession plan in place and
theborrowercanprovetherewouldbeaseamlesstransition.
However, it is likely that the individuals designated to take
over the business would also have to guarantee the loan.
This requirement may make this alternative impractical.
As to the land and building, the CDC loan component
is typically provided on a term loan basis. CDC loans are
typically written for a term of 10 or 20 years. The term
of the bank loan portion of the financing is a matter for
negotiation with the bank. It is typically from 7-10 years.
Machinery and equipment having at least a useful life of
10 years can be financed as a part of the overall financing;
but this component of the financed amount can only be
financed over a maximum of 10 years. The SBA and CDC
fees total approximately 3% of the loan amount. There is
also an annual fee that is included as a part of the monthly
debt service. The CDC loan provides for prepayment
penalties. The bank loan closing fees and any prepayment
penalties are a part of the terms and conditions negotiated
between the parties.
The proceeds of a 504 loan can only be used for
prescribed purposes as noted above. They cannot be used
for working capital or inventory. Consolidating, repaying
or refinancing debt, generally, is also not a permitted use
of proceeds. There is a limited exception for refinancing
existing mortgage debt against the real estate occupied
by the business, in connection with an expansion of the
business. However, the qualified total project cost to be
financed under the 504 Loan Program must be at least
twice the amount of the mortgage debt to be refinanced.
It should be noted that the proceeds of a 504 financing
may not be used for speculation or investment in rental
real estate, generally. The property to be financed must be
occupied by the small business borrower, as summarized
above.
The SBA 504 Loan Program addresses an important
need in the market place. It helps provide commercial
real estate mortgage financing to small businesses at
competitive rates. There are a number of banks that have
participated in the SBA program. The names are available
online. Reference can be made to the SBA website at
SBA.gov to find a CDC servicing a particular locale.
Contacting a local CDC is a traditional way of initiating
the loan process. Pre-approval is a possibility. This can be a
very helpful, in terms of tying up a real estate opportunity.
It also provides the comfort of knowing that a 504 loan is a
real possibility. Remember, though, there are a number of
closing conditions and it’s not closed until title passes and
the loan is funded. Having the right team of experienced
experts on board can help facilitate the process.
Leonard Grunstein has successfully represented a number of promi-
nent clients over the years, including, a number of banks and other
institutional lenders. He also founded a federal savings bank and
then national bank, where he served as Chairman for a number
of years. He was also the Chairman of Israel Discount Bank of
New York.
Mr. Grunstein has published articles on various topics in real estate
and finance, including in The Banking Law Journal, The Real
Estate Finance Journal, the New York Law Journal and other fine
publications.

M A R C H 2 0 1 5 11
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T
he principles of Behavioral
Finance are critical for each
investor to understand and
incorporate into their investment
planning construct in order to
maximizetheprobabilityofachieving
their financial goals and to avoid
taking actions that create permanent
capital loss.
Two of the most successful
investors who have ever lived understood and, in
Warren Buffet’s case, still understand that the ability to
keep emotions from influencing investment decisions is
the single most important factor. According to Buffet,
“To invest successfully over a lifetime does not require
a stratospheric IQ, unusual business insights, or inside
information. What’s needed is a sound intellectual
framework for making decisions and the ability to keep
emotions from corroding that framework.”
Warren Buffet’s mentor, Benjamin Graham said “The
investor’s chief problem and even his worst enemy is
likely to be himself.”
Sadly, led by the large wire houses (Morgan Stanley,
UBS, Merrill Lynch, etc…) and firms like Morningstar,
Wall Street’s Marketing Machine creates a culture designed
to exploit -- rather than to address to the investor’s benefit
-- the innate psychologically-driven tendencies that
cause investors to maintain a short-term focus, chase
performance, and abandon long-term planning efforts
by attributing far too much meaning to the most recent
performance trends and current events.
As we crave order and certainty, our minds are
wired to constantly look for patterns. Few things are
more elusive in the global financial marketplace than
predictable patterns! As a result, one of the most pervasive
and dangerous cognitive decision drivers is recency
bias. Those with recency bias prominently recall and/or
emphasize recent events and then extrapolate a future
predictable long-term pattern where none exists.
Please see the chart below highlighting a Hong Kong
elementary school first grade entrance examination.
Please take no more than 20 seconds to try and determine
which spot number the car is in.
Successful Investing Generally Requires
One Simple Principle:
BEHAVE
BY
Jonathan R.
Blau,
President & CEO,
Fusion
Family Wealth

M A R C H 2 0 1 5 13
The majority of people will automatically look for
a pattern, which prevents us from exploring a more
effective approach. It is almost impossible to resist our
brain’s automatic pattern-seeking programming. Please
turn the chart upside down and you’ll see that the brain’s
default method for problem solving -- seeking a pattern
– prevented us from exploring an alternative and simpler
approach to finding the answer.
HOW MUCH DO PSYCHOLOGICAL
DECISION-DRIVERS COST INVESTORS?
One widely followed study, updated every year
since 1984, actually quantifies how much psychological
decision-drivers cost investors, and the numbers are
staggering.
The Dalbar study 1
illustrates (see Exhibit I)that over
the 20 year period illustrated, psychologically decision-
driven market timing behaviors cost the average equity
investor close to $4 million for every $1 million invested.
Investors should resist the siren call of brokerage
firms touting their large equity research capabilities,
along with fund companies touting their mutual funds
that “outperformed” the S & P 500 index for the past
3 and 5 year periods and those that are rated 5 stars by
Morningstar.
All of these messages are often nothing more than
results-oriented marketing campaigns designed to take
advantage of what the industry knows well – that we
1) Dalbar’s 20th Annual Quantitative Analysis of Investor
Behavior 2014 Advisor Edition.
humans are programmed to seek patterns to identify
potential dangers and potential opportunities, and that
we tend to focus more on recent patterns (“recency effect”)
than on longer term patterns. As it relates to investing,
the recency effect induces us to believe that, based on
recent performance results, we can extrapolate a future
predictable pattern of returns where none exists. This is
why so many investors engage in the “buy high, sell low,
repeat until broke” investment pattern. They are forever
chasing the elusive dream of persistent out-performance.
Morningstar’s rating system specifically enables
fund companies to take advantage of recency bias to the
detriment of investors. A fund receives 5 stars as a result
of having recently outperformed a majority of funds in
its category. In other words, the higher star rankings
indicate, in most cases, that those particular funds have
gotten relatively expensive. The lower star-rated funds
now likely represent better relative investment values.
Logically, investors should peel some money from the
more expensive funds and rebalance into what has become
more undervalued. The problem is, most investors do not
appreciate the backward looking nature of the star system
and they have been led to believe that 5 star funds are
“good” and that 1-star funds should be avoided.
A study conducted by Vanguard shows that on
average, the opposite is true. Vanguard’s study revealed
that for the three years following the year a fund received
a 5-star ranking, 39% of such funds outperformed their
respective style benchmark. During the same period,
close to 50% of funds with the lowest 1-star ranking
outperformed! Further the study looked at 36 month
excess returns (versus the relevant style benchmarks)
"Psychologically decision-driven market timing behaviors cost the
average equity investor close to $4 million for every $1 million
invested."
Exhibit I: 20 Year Anualized Returns
10
7.5
2.5
5
0
Equity Funds Fixed Income Funds Inflation S & P 500
S&P 500 & Barclays Aggregate Bond Index
Inflation
Equity & Fixed Income Funds
Ba
5.05
0.71
2.37
9.92
Exhibit I: 20 Year Anualized Returns
10
7.5
2.5
5
0
Equity Funds Fixed Income Funds Inflation S & P 500
S&P 500 & Barclays Aggregate Bond Index
Inflation
Equity & Fixed Income Funds
Barclays Aggregate
Bond Index
5.05
0.71
2.37
9.92
5.74

Exhibit II: Determinants of Portfolio Performance
100%
75%
25%
50%
Asset Allocation Market Timing
Asset Allocation
Market Timing
Stock Selection
Other
Stock Selection Other
91%
5% 2%2%
0%
Exhibit II: Determinants of Portfolio Performance
100%
75%
25%
50%
Asset Allocation
Market Timing
Stock Selection
Other
Stock Selection Other
91%
5% 2%2%
0%
25%
50%
Asset Allocation
Market Timing
Stock Selection
Other
Stock Selection Othe
91%
5% 2%2%
0%
and found that, over time, the top rated mutual funds
generated the lowest excess returns while the lowest rated
funds generated the highest excess returns.2
WHAT IS AN INVESTOR’S BEST DEFENSE?
Investors need to avoid focusing most of their energy
on trying to find stocks or funds that have the best past
performance records in hopes of achieving a more “certain”
future investment result. The fact is that studies have
determined that the asset allocation decision accounts
for over 90% of a portfolio’s total value movement, while
stock/fund selection accounts for 5% (see Exhibit II).
Similarly, since most actively managed funds do not
outperform index funds, investors would be wiser, and
likely far better off financially, if they focused most of their
energy on developing an asset allocation strategy to reflect
their long-term goals, while seeking out an adviser adept
at identifying their individual decision-drivers and helping
to mitigate the impact of such drivers in order to ensure
the highest probability of plan adherence.
Investors should avoid choosing random benchmarks
like the S & P 500 or their neighbor’s broker’s performance
to measure their success. Using such arbitrary benchmarks
tends to lead to unrealistic expectations that are not based
on the risk tolerance and objectives of the individual
investor. This type of arbitrary benchmarking often leads
to inappropriate asset allocation moves and long-term
plan abandonment, usually at the worst times.
2) Christopher B. Phillips, CFA & Francis M. Kinniry Jr., CFA
– Mutual Fund Ratings and Future Performance – (Vanguard June
2010) http://www.vanguard.com/pdf/icrwmf.pdf.
Helpful benchmarks are generally goal-based and
customized.Forexample,aninvestorwhodefinesanannual
retirement spending need of $300,000 and an anticipated
retirement time horizon of 20 years can periodically track
whether the recommended plan's likelihood of achieving
the goal by measuring periodically how close they are to
the balance needed at retirement.
SOME SPECIFIC RULES TO LIVE BY
• Avoid frequent portfolio monitoring - Investors
should be most concerned with maximizing the
overall level of their wealth over time. Instead, they
tend to be preoccupied with monitoring short-term
changes in the level of their wealth. This behavior
drives them to make decisions that reduce the
probability of maximizing long-term wealth.
Frequent monitoring causes us to adjust our portfolio
in reaction to what we see, and can have extremely
negative implications for the ultimate level of our
wealth. This behavior is a result of what is known
as myopic loss aversion – when investors focus too
heavily on short-term declines and forget how
important it is to remain invested for the long-term
to grow their wealth. As there are many more daily
declines than monthly or annual declines, investors
who view their portfolio less frequently will see fewer
losing periods and are far more likely to stick to
their plan and discipline, increasing the odds of their
achieving financial goals.
• Recognize the contradiction in viewing all past
market crashes as opportunities, while viewing
all future market crashes as risks. As a general rule,

M A R C H 2 0 1 5 15
when we buy investments at lower prices, we should
expect a higher future return. Warren Buffet tells
investors to be greedy when others are fearful and to
be fearful when others are greedy (buy low and sell
high). He is a credible source of investment advice.
• Avoid short-term thinking – The market rewards
patience and discipline more than any other skill.
Those who can focus on the next 5 years, rather than
on the next 5 days, are more likely to avoid behaviors
that impede their ability to reach financial goals.
• Don’t follow “expert forecasts” – Expert forecasters
have been shown to be accurate only 48% of the
time, about the same accuracy as a random coin toss.
The more confident the expert was in their opinion,
the less accurate
their forecast
was. The trouble
is that the more
confident experts
are listened to
or followed the
most.
• Avoid outcome
bias – Judging
whether or not
your portfolio
has been well
diversified or
whether you
have been
advised properly
based only on
the investment
outcome is
dangerous. This
bias led many
investors to hire
advisors in the
late 90’s who
i m p r u d e n t l y
chased technology stocks to be able to generate
performance statistics in line with the popular
indices. The prudency of their “advice” was poor and
outcome bias led investors to make costly choices in
terms of the advisors they chose to rely upon. Seek
out prudent advice and well thought out processes,
rules and disciplines.
• Select advisors held to a Fiduciary standard of care
-Unfortunately, the large wire house firms – UBS,
Morgan Stanley, Merrill Lynch, Wells Fargo, etc…
-- are held to a far lower “suitability” standard of
care. Conflicted models can tend to take advantage
of investor behavior biases – rather than try to help
investors identify and mitigate the impact of biases
-- to sell high commission-generating products like
annuities. A fee-only Registered Investment Adviser
is held to a legal fiduciary standard of care and is
required by law to place client interests ahead of their
own. Investors likely increase their odds of success
by shunning those held only to the lesser suitability
standard of care.
Most people wouldn’t hire a doctor who refuses to sign
the Hippocratic Oath. Similarly, if an advisor won’t put in
writing that he or she will act as a fiduciary, then you may
want to think twice about hiring them.
Jonathan is the President and CEO of Fusion Family Wealth,
a financial
advisory firm
he founded in
November 2013.
B e h a v i o r a l
finance is an
important aspect
of his business
and he brings a
fresh perspective
and clarity on
his work with
clients. For more
than two decades
Jonathan has
acted as a
“trusted advi-
sor to trusted
advisors” with
deep experience
working with
accounting and
law firms on a
wide array of
financial services
capabilities.
Jonathan holds an MBA in Accounting and an MS in taxation.
He honed his extensive planning and technical skills during his
tenure in the tax and Family Wealth Planning division of a "big
6" accounting firm from 1992 to 1996.
He has held a series of wealth management positions in the finan-
cial services industry. In recent years, he worked as a senior advisor
at Sanford C. Bernstein & Co., Inc., Morgan Stanley and UBS.
Jonathan has been a lecturer for the Foundation for Accounting
Education (FAE) and the New York State Society of CPAs on the
topic of “Taxation of Financial Instruments.”
Mr. Blau is also an active board member of the Gurwin Jewish
Nursing & Rehabilitation Center.
"Expert forecasters have been shown to
be accurate only 48% of the time."

WEALTH MANAGEMENT
Investment Management
Trust and Estates
Risk Management
jrosenberg@brwealth.com
ACCOUNTING & TAX
Audit and Assurance Services
Tax Services
Advisory Services
info@bernathandrosenberg.com
Solutions Designed for Success
127 Route 59 Monsey, NY 10592-3626 - (845) 356-6400
1430 Broadway, 7th Fl. New York, NY 10018 - (212) 221-1140
Securities offered through Cetera Financial Specialists LLC (doing insurance business in CA as CFGFS Insurance Agency), member of FINRA/SIPC. Advisory services offered through Cetera Investment Advisers LLC. Cetera entities are under
separate ownership from any other named entity.

M A R C H 2 0 1 5 17J A N U A R Y 2 0 1 5 7
PROPERTY MANAGMENT
LICENSED NJ REAL ESTATE BROKERS
Facilities Management
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MANAGEMENT
FIRM.
Tel. 732.364.5938 • Fax 732.901.1096
info@mslmgmt.com • www.mslmgmt.com

Leveraged Funds of Funds:
A Strategy To Address
Today’s Market Challenges
BY
Abraham Biderman
and Howard Horowitz
Grand Central Capital Management

M A R C H 2 0 1 5 19
E
quity markets are teetering at record
highs. Bonds may well be heading
for trouble if interest rates rise later
this year. What’s an investor to do?
Leveraged funds of hedge funds offer
an excellent way to thread the needle.
Unlevered (read: plain vanilla) funds
of funds, with their second layer of
fees and middling returns, have fallen
from their once lofty perch as one-stop
diversification vehicles and due diligence
departments.
Enter the “leveraged fund of funds,”
the next step in the evolution of hedge fund investing.
True, leveraged funds of funds have two layers of
fees, but if what you care about is the actual return you
get after all fees are deducted, levered funds of funds are
worth a serious look. And when it comes to paying for
portfolio managers, sometimes the fee justifies the service
provided—you wouldn’t hire the cheapest surgeon, would
you? So why hire the cheapest portfolio manager?
With a levered fund of funds, the investor gets an
actively managed portfolio of typically 15 to 30 hedge
funds, rotated as market conditions change. What you get
specifically is a wide variety of market-neutral, arbitrage,
and other hedge fund strategies: long/short equities in
different industries, market caps, and countries; event
driven; merger arbitrage; capital structure arbitrage;
convertible bond strategies; floating rate loans; and global
macro—among many other approaches and asset classes.
Higher-octane cousins to the original fund of hedge
funds, prudently levered funds of funds offer all the
diversification, due diligence, access, and safety their
unlevered cousins do, but without asking investors
to sacrifice superior returns. Indeed, by taking a
diverse cluster of carefully selected hedge fund managers
and modestly levering them, a levered fund of funds can
offer returns as good as or better than single-strategy
hedge funds with far less strategy and manager risk. This
is because such funds are not wed to any one asset class
or hedge fund manager. They can move between and
among hedge funds as market conditions require.
A fund of funds, levered perhaps only one time, can
also yield more than bonds with far less sensitivity to rising
interest rates. At the same time, a levered fund of funds
COVER STORY

can generate double-digit, equity-like returns without
simply tracking the market. This is especially valuable in a
record-high stock environment.
What if rates rise, you ask? Won’t levered funds of
funds have to pay more for their capital? Perhaps, but the
very arbitrage strategies these
funds focus on tend to become
more profitable with higher rates
because their profit margins,
called “spreads” on the trading
floor, typically increase as rates
rise.
Do all levered funds of funds
earn their keep? In a word, no. As
with other strategies, managers
matter, portfolio construction
matters, due diligence matters,
structure matters. In
evaluating a levered fund
of funds, inquire about
all of these.
What is the manager’s
pedigree? Does the manager favor
certain strategies over others?
What is the turnover in the
portfolio? A levered
fund of funds
manager is an end
user of hedge funds.
Just as a hedge fund manager
buys, sells, and levers individual securities, funds of funds
managers buy, sell, and lever individual hedge funds. Find
out why, how, and when they do so. And find out how
much leverage the manager uses.
The luxury leverage affords is that the manager does
not need to chase the returns of the underlying funds.
Indeed, the highest-performing hedge funds are often also
the most concentrated, illiquid, or levered themselves.
Levered managers can—or, at least, should—focus on
the stability of the underlying funds they choose because
they will lever their diverse and dependable managers
to maximize returns. So understand what sorts of funds
your levered manager is picking. For example, a levered
manager selecting a handful of
volatile commodity funds may
look great one moment and
suffer a large loss the next.
A more prudent levered
manager will seek to offset the
risk of his or her own leverage
by selecting lower volatility
underlying strategies. After all,
risk management is one of the
key elements such funds of funds
offer.
Is a levered fund of funds for
everyone? Not necessarily, and
not for all one’s assets either. But
in a tip-toppy stock market and
rising-rate bond environment,
levered funds of funds offer some
of the best risk-adjusted returns
available.
As long-term investors
will point out, the power of
compounding safe returns is
one of the most powerful forces
in investing. With today’s challenging environment,
considering a levered fund of funds is something every
sophisticated investor should do.
Abraham Biderman and Howard Horowitz serve as the senior
officers of Grand Central Capital Management which provides
levered funds of funds products. They can be reached at howard@
gccapitalny.com or at 212.867.6200.
"...in a tip-toppy stock
market and rising-rate
bond environment,
levered funds of funds
offer some of the best
risk-adjusted
returns
available."

T
here are several variables
which the estate planner
must take into consideration
in designing a plan which meets
the client’s objectives. Obtaining
accurate and current financial
information from the client,
prioritizing the various goals of
a client and providing access to
liquidity and the appropriate amount
of cash flow at all times is a multi-dimensional and dynamic
structure to build. There are however certain axioms in life
which no client can avoid, and which estate planning is built
upon: death and taxes. Ironically, as “certain” as these two
events may be, the laws and legislature surrounding these
two events are far from being certain or defined.
This article will serve several purposes by venturing
into the “uncertain” terrain of estate and tax planning,
which a New York taxpayer should be aware of. The reader
will first be given a brief historical perspective on the
development of the New York State and Federal estate tax
laws, as well as an understanding of the interplay between
the two regimes over the past century. A synopsis of the
current estate tax laws will be laid out to help us delineate
the landscape within which the taxpayer presently stands.
An analysis of the conflicts and concerns will be presented
in order for the reader to gain a deeper understanding
into the complexity underlying the current laws and how
this affects one’s estate and tax planning. Finally, various
insights and alternative approaches are offered to the
reader to help alert those who may need to take steps so
they do not fall into the avoidable pitfalls or make certain
choices which did not need to be made until now.
In order to properly give this topic the proper attention
it deserves and to effectively provide the reader with new
insights, a clearer understanding, as well as, a practical
and beneficial perspective, this article will be broken
into two parts and published in multiple issues. This first
installment will provide a historical and economic context
within which to relate to the New York State Executive
Budget (“NYSEB”), as a reaction to the Economic Growth
Tax Relief and Recovery Act (“EGTRRA”). The second
installment will assess the new regime and provide an in
depth analysis into how it works and in which ways clients
and advisors must plan in consideration of it.
The “Uncertain”
Terrain of
Estate and
Tax Planning
BY
Adam Katz
Katz Law Firm,
PLLC

M A R C H 2 0 1 5 23
A HISTORICAL AND ECONOMIC
BACKGROUND TO THE NEW YORK ESTATE
TAX REGIME
Since January of 2014, the New York estate planning
world has been abuzz with the implications and effects
of the proposed changes Governor Andrew M. Cuomo
announced would take place in just a few months’ time
with the NYSEB. The Governor had expressed that the
intent behind the legislative changes was to deter New
York residents from moving out of state towards the end
of their lives by implementing more estate tax incentives.
Paradoxical as it may seem, the legislature which was passed
on April 1, 2014, just a few months later did not include
all of the proposed changes, has little effect on some New
York taxpayers, and what is worse, actually increased the
estate and income tax liability for others.
As a backdrop to provide the context within which the
most recent changes to the NYSEB are taking place, there
are effectively three different eras to be mindful of. The first
of these eras is the pre-EGTRRA era prior to 2001. The
second era is the EGTRRA years, from 2001 to 2011, as
the provisions of which were intended to sunset in 2011.
The third and final era is the post-2011 years when many
of the EGTRRA provisions were permanently adopted
rather than “sunsetting” as planned. In addition, there are
various phase-out periods which are very pertinent as well
as the 1997 Taxpayer Relief Act (“TRA”), signed into law
by President Bill Clinton. These will be discussed as well
but the macro eras require the most attention.
Below is a chart which summarizes the Federal and
State estate tax rates and exemptions during the three
main eras which lead up to NYSEB.
NYSEB: A SECONDARY REACTION OR
COMPRISE TO EGGTRA
To a large extent, the changes occurring during these
three eras were reactions to EGTRRA. However, it would
be more accurate to say that classify these changes as a
secondary reaction; a “compromise,” after the realizing
the implications and ramifications of New York’s initial
reaction to EGGTRA, as it related to the New York
taxpayer. This can be demonstrated by tracking the
courses that New York State and Federal lawmakers have
chartered over recent years to illustrate where these two
courses have aligned and where they have deviated from
each other. From an understanding of how and why New
York initially digressed from the Federal law, we will see
that though New York is purporting to have plotted a
route back to the Federal gift and estate tax regime, in
reality it might just be another ruse.
HISTORICAL BACKGROUND – HOW DID WE
GET HERE?
1. Pre-EGGTRA Era
Before the 1997 Taxpayer Relief Act (“TRA”) every
state had an estate tax that was calculated by referencing
the Federal government’s maximum state death tax credit.
Under this arrangement, for every dollar of state estate tax
a person paid, he or she would receive a dollar-for-dollar
credit against his or her federal estate tax. Without this
arrangement, the taxpayer would owe the same amount of
estate tax, except that it would be paid entirely to the federal
government. Thus, this new arrangement “picked up” and
redirected the amount of the state death tax credit from
the federal government’s revenue, rather than it coming
directly from the taxpayer. Seen from this perspective,
one might wonder why the federal government would
Federal Estate Tax New York State Estate Tax
Rate Exemption Rate Exemption
Pre-EGTRRA 55% 600,000 16%* $600,000*
EGTRRA
(2001 – 2011)
2001-
2009
Decreased
to 45% by
2009
Increased to $1M
in 2001 to 3.5M
by 2009
16% $1M
2010 No Estate
Tax
No Estate Tax 16% $1M
2011 55% $600,000 by
design
16% $1M
Post-EGTRRA
(Prior to 4/1/2014)
55% Increased to
current $5.34M
16% $1M
* This is based on the maximum federal tax credit for state estate tax

permit the states to redirect a portion from their revenues.
Based upon constitutional law, the state death tax credit
can be reframed as more of an agreed upon “commission”
of sorts, whereby the state governments were actually
granting permission to the federal government to levy an
estate tax on residents living within the state.
2. Transitioning to EGGTRA
By the time EGTRRA came
around (four years after TRA)
all states were still accounted
for except for New York and
five others who were already
starting to drift away from
the federal scheme. This
decoupling was in anticipation
of the federal exemption
increasing from $600,000 to
$1,000,000 by 2006. As its
name implies, EGTRRA was
intended to spur economic
growth by lowering the estate
tax rate and increasing the estate
tax exemption.1
These measures
were purported to be a tax
cut. As with all tax cuts, from
where would the lost revenues
be found? Farewell to the state
death tax credit; the third salient
provision of EGTRRA fully
phased-out this credit by 2005.2
While a deduction for state
estate taxes paid was instituted
in lieu of the state death tax
credit, this meant that by 2005,
the Federal government would
no longer be sharing the estate
tax revenues with the state
governments. In other words, the tax cut shifted
the burden to the states to make up for the lost
revenues from the states’ share of estate tax revenue.
To illustrate, a three million dollar estate in 2003
would pay $145,250 less than a pre-EGTRRA estate of
the same size in estate taxes. In other words, the federal
government’s “tax cut” meant that it would collect 6.1%
1) It gradually lowered the top marginal estate tax rates from
55% in 2001 to 45% in 2009 and it increased the taxpayer’s
lifetime exemption from $1,000,000 in 2001 to $3,500,000 in
2009 (see the chart above).
2) EGGTRA provided for an accelerated phase out of the state
death tax credit over a period of four years (25% reduction per
year) beginning in 2001, to being completely eliminated for
deaths occurring in 2005 and after.
less in 2003, while a pickup state would collect a full 50%
less than it would have in 2001 from the same size estate.
3. EGGTRA & Decoupling
In response to this revelation, the remaining coupled
states were left with three choices. Some remained pick-up
states in that they kept their estate taxes linked to the
federal governments. Though they remained pick-up
states, by the end of 2004
there was effectively nothing
left to “pick up” and they
have essentially lost a revenue
stream. Others partially
decoupledbyretainingtherates
that existed prior to EGTRRA,
but raising their exemption
amounts in-line with the
federal government’s changes.
New York, among other states,
chose to react differently; this
particular reaction was to
fully decouple by affixing their
estate tax scheme to the laws as
they existed on July 22, 1998,
prior to EGTRRA. In effect,
this reaction entailed retaining
the estate tax exemptions that
are lower than the federal
exemption, as well as, retaining
the higher estate tax rates. The
states in this last category, by
fully decoupling have retained
their revenue stream. In other
words, rather than taking
the hit themselves, the fully
decoupled states, including
New York, have parried
the burden, shirked by the
federal government, onto
the individual taxpayer’s estates.
In fact, some consider this to be
an entirely new tax.
4. Post-EGGTRA Era
This “new tax” exists in New York until
today. It has forced estate planners to develop complex
plans that consider the tax schemes of dual governing
bodies by melding together various mechanisms such as
Credit shelter trusts, marital trusts, and QTIP trusts. It
has been tolerated in New York for years but its tolerance
was due to the fact that EGTRRA was designed to sunset
in 2011. But alas the main features of EGTRRA have been
permanently adopted, which meant that without a state
response, the new tax would also be permanent.
"This “new tax” exists in
New York until today. It
has forced estate planners
to develop complex
plans that consider the
tax schemes of dual
governing bodies by
melding together various
mechanisms"

M A R C H 2 0 1 5 25
After the passing of the new Budget on March 31,
2014, the New York State exemption increases from the
$1 million amount, as follows:
New York planners (and clients) have to pay attention
to EGTRRA and the newest Executive Budget because
without proper planning, it is possible that at a certain
point, every dollar a New York resident earns will cost
more money than the value brought in. In other words,
instead of two steps forward and one step back, which is
bad enough, a person may end up in a scenario where one
step forward leaves one two steps back.
DECOUPLING TO RECOUPLING?
From a narrow perspective, the NYSEB appears as if
there is a recoupling of the two regimes though notably
at a significantly higher exemption amount than pre-
EGTRRA. However, if anyone was optimistic about
the New York increase of the exemption amount, their
excitement surely dissipated when they calculated the
ramifications of the new law in its entirety. The new
Budget contains several provisions that protect New York
State revenues despite the increased exemption amount.
Among the most notable (and now infamous) elements
that will be discussed in this article are the so-called estate
tax “cliff”, its phase-out of the exemption structure, and
state portability (or lack thereof). In order to comprehend
what it means for New York to have made these decisions
however, a brief synopsis of the context within which this
is all happening will not only be helpful, but will heighten
both our appreciation and concern for what lies ahead of
us.
THE RESPONSE OF NEW YORK STATE
LEGISLATURE
As mentioned earlier, the NYSEB seems to be a
compromise, a secondary reaction to the New York
taxpayer’s realization of being levied a new tax. Also
mentioned earlier was how the main elements of the new
budget - the increased exemption amount, its phase-out,
and the decisions surrounding state portability- were
purported to be a recoupling, a realignment of the charted
courses, a return to pre-EGTRRA days, but that they were
possibly just another ploy.
In the second installment we will see just how New
York State is able to “afford” this exemption increase. By
way of preview, it would seem that there are two traditions
at play in this new legislation. The first is burden shifting,
its third cameo in this article. And the other tradition, a bit
more classic, is when all else fails, shift the taxes towards
those with deeper pockets.
Though we tend to think of society as comprised of a
trio of classes - the proletariat, the middle class, and the
rich - in reality there are more nuanced subdivisions of
these classes. Since New York State’s deviation from the
Federal scheme, there has been much planning required
for the “moderately wealthy”; those whose estates exceed
the New York State exemption but are still within the
protection of the Federal exemption. These estates, even
if they are only marginally over the state exemption, are
sharing in the burden of this new tax. The new legislation,
rather than eradicating the tax, has created a very crafty
way to protect this particular middle class- by pushing the
uber wealthy over a cliff.
Adam Katz, JD, LLM, is the founding and managing attorney of
Katz Law Firm, PLLC, a boutique firm specializing in trusts and
estates, whose clients range from high-net worth individuals, busi-
nesses and estates. Adam’s unique background in finance, law and
tax enables him to design comprehensive and sophisticated estate
plans as well as administer trusts and estates visavi post-mortem
planning. Adam has published articles, taught classes and spoken
in variety of forums. Special thanks is extended to Kenneth Renov,
a JD candidate and paralegal at the firm, for his assistance in the
preparation of this article.

FORAFREECONSULTATIONCALL516.279.2791
adam@katz-law-firm.com | www.katz-law-firm.com
77 Spruce Street, Suite 201, Cedarhurst, NY 11516
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M A R C H 2 0 1 5 27
T
he phone rings, the licensed MLO (mortgage loan
originator) takes the call and someone on the line
begins by asking something along these lines,
My friend just got a mortgage for 2.56% can I?
Do you mind if I ask you what the rate is today, ok so
can you lock it for me now?
My house isn’t going to be ready for a while can I get
today’s rate?
I’m going for a first time homebuyer with a co-signer
can you do those?
Inevitably the petitioner is looking for something
beneficial and hoping one phone call wraps up the ultimate
amazing for them.
Fact is one of the most irritating questions to the MLO
from an uneducated consumer are rate related. Obviously
it is a different story when the client is seasoned and you
already have an established relationship with their relevant
information.
My purpose in this article is to bring some perspective
to the process and help a searching consumer choose
wisely, manage expectations and know what helps the deal
work well.
RIGHT WAY
RATE WAYvs.
TIPS TO OBTAINING MORTGAGE FINANCING
NICK LEIMAN & ISAAC GLUCK

A buyer will need to use services from multiple
industries while transitioning into becoming an owner, no
doubt a competent team is needed to help throughout.
Think about it - to list a few sectors you will likely
interact with: realtor, builder, attorney, insurance agent,
inspector, appraiser, title company, surveyor, architect,
subcontractors. The buyer is the one who must assemble
their team and work with them throughout. Cooperation
between parties is needed, and the better the people
working for you work together, the more seamless the
project will be.
We believe that a seamless
transaction is the best kind
of experience a client should
have and we strive and aim to
deliver exactly that, after all
our client wants to continue
their life uninterrupted and
that’s why they are entrusting
the task to a professional.
The process begins by
qualifying the borrower for
a loan, components are the
same in each deal but the
details vary. Slight variations
will often result in major
differences making one deal
very different from another.
Income, credit, assets,
liabilities, ability to prove
show and support statements
made are integral to every
deal. Dollar amount or
percentage of down payment,
size of loan- is it jumbo or
is it particularly small, unit
size- is it a single family or
multi-unit, building type
-is it a condo, co-op or free
standing, usage type- is it
owner occupied, investment,
or perhaps a second home,
what is the Loan to value being borrowed, the higher the
LTV (loan to value) the greater the chance of running
into Mortgage insurance becomes, all these play a role
in what the rate will be. Why does this matter and how
does it actually affect rate? The answer is simple the
risk is determined by the GSE (government sponsored
enterprises) which are the buyers of the originated loans,
they in turn put in pricing adjusters to deflect the risk.
Speaking to the consumer directly is important. A
personal face to face meeting is invaluable as so much can
be discussed in a short amount of time. Figures and facts
can be learned and shared, strategy developed and planned.
How much they should put down, what price range they
should be looking for, how much they can afford. How to
deal with various liabilities like student loans, car loans,
new jobs, establishing credit or correcting credit issues
like judgments, collections, such as Sprint, Verizon and
medical matters.In short it allows for proper planning and
focused looking. When it’s done on the fly a quick call by
a borrower shopping around then having some discussion
with a neighbor, friend or family member that knows it
all, chances are an important
aspect can be overlooked. It
is a large undertaking and
should be done properly.
The key ingredient in any
risk and reward business is
trust; this means to say the
broker doesn’t get paid until
and unless the deal closes. It
is a huge investment of time,
money, and resources on
the part of the broker to get
involved and make it happen,
something they would be
unwilling to waste time on
unless they felt it has a strong
chance of success.
This distinction is one of
the many differences between
utilizing a broker service vs
say a brand name bank. They
don’t nurse loans and hand
hold as the broker does.
Hence when the broker
accepts a file, works it,
communicates with the client
and instructs them on details,
it is for one reason only- so
the deal can close without a
hitch.
Think about it this way,
customer arrives without a clue and broker sorts it out,
sets it on course, and is focused on one thing only, getting
it closed smoothly. What is the client doing for the broker;
hopefully they’ll be satisfied and refer a customer.
Now imagine a client constantly calling the broker
saying “what’s the rate”, the competition says they can do
such and such why can’t you, I’m going to go there. They
are doing themselves a disservice as they are sucking the
oxygen out of the deal.
Generally speaking the rates offered in the local market
are competitive and in the zone. Most any broker will be
"Take the time to
understand the
process, schedule an
appointment, bring your
list of questions, and see
who you feel understands
your situation best."

M A R C H 2 0 1 5 29
behindthe
Underwriters,
behindthe
Banks,
behindthe
Papers,
there are
People.
732.987.6477
leimanmortgage.com
It’s a hand-holding guarantee.
Nechemia
Leiman
President
Isaac
Gluck
Mortgage
Loan Originator
LICENSED MORTGAGE BANKER NJDOBI AND NYSDFS. NMLS #17280

off from the next on avg is about an 1/8th or so. From
time to time there are programs made available via other
venues that aren’t available to brokers or small mortgage
banks.
What will the broker need to start the file? Assuming
our discussion is about a purchase not a refinance; a
property will need to be identified,
an attorney selected and a contract
written to make sure you are
protected. Some suggestions to
protect your money pertain to
having a mortgage contingency
and how your EMD (earnest
money deposit) escrow will be held
and how it may/ may not be used.
Of course there are multitudes of
other points to be aware of. Make
sure you are protected; make sure
you choose a competent attorney
who will be there for you.
After executed contracts are
released from attorney review, the
race to obtain a mortgage is on.
After completing the application
and the signing of disclosures you
will need to supply tax returns for
at least one or 2 prior years. They
will be checked against IRS files
via a 4506t, paystubs, complete
bank statements, Trimerge credit
report. Many more detailed
aspects are put together to create
a complete file which include an
appraisal and title all of which are
reviewed and must be approved by the lender.
Should the loan profile meet muster, a conditional
approval will be granted. The conditions will typically
require proof to support information that was submitted
in the application. For instance an appraisal supporting
the value of the purchase price will be needed, clear title,
hazard insurance, proof of income, and similar such
requirements.
Clients will often times ask why the underwriters are
so stringent and detail oriented, why they can’t apply
logic? Let’s keep in mind logic means something different
to various people. Why do they need a paper trail and
LOE or LOX (letters of explanation) for every silly detail?
Granted these demands can be frustrating and annoying,
so why all the bother. The answer is because the lender
funding the loan is selling the loan post-closing onward
in the market place. Usually these arrangements are made
prior to the funding. There is a concern of a buyback and
that is why companies require that every effort be made to
dot each "i" and cross each "t" so the file is flawless, thus
mitigating the repercussions of a loan gone sour.
So to sum it up the broker is working for you, the
client. He has one goal, to close the loan and have a happy
client. It goes without saying
that the broker will get you the
best rate available at the time the
loan is lock ready. Pushing the
broker to act sooner that when
the loan is ready actually hurts
the client, since lock extensions
may be needed, or market shifts
in a favorable direction and
lower rates for cheaper payments
become available. You can’t time
the markets. Patience can work
in your favor and haste can make
waste.
The motivation to give the
client a high rate is nonexistent
since the broker or banker today
sets an agreed to price prior
to beginning work as to how
much they will be collecting for
services about to be provided,
kind of a contract
price for services
rendered. There
is no incentive to
steer the borrower
to a higher rate.
Take the time
to understand the process, get references, schedule an
appointment, bring your list of questions, and see who
you feel understands your situation best. Trust your choice
and watch something complex seem simple.
Remember, do it the right way, not the rate way and
you will end up with a great rate and a great experience.
Best of luck
Leiman Mortgage Network is licensed in NY and NJ
and operates as a broker avoiding heter iska concerns,
placing loans and arranging them with excellent third
party providers.
Nick Leiman or Isaac Gluck can be reached at
o-732-987-6477 , nick@leimanmortgage.com, Isaac@
leimanmortgage.com
" Think about it, to
list a few sectors you
will likely interact
with realtor,
builder, attorney,
insurance agent,
inspector, appraiser,
Title Company,
surveyor, architect,
subcontractors."

N
obody in their right mind
would voluntarily agree to let
someone douse them over the
head with a bucket of ice water. Yet the
Ice Bucket Challenge took the world
by storm, with thousands of people
volunteering to get soaked, raising a
cool $100 million+ in the process.
What components went into making
the campaign such a raging success?
“Do it big, or stay in bed” is the
motto of David Sable, global CEO of the Young and
Rubicam (Y&R) Group and that saying could easily
be applied to the Ice Bucket Challenge.
BY
Yitzchok
Saftlas,
President
Bottom Line
Marketing
Group
Analyzing a
Campaign that
Generated
$100 Million

M A R C H 2 0 1 5 33
In case you were living in a cave for the last year, the Ice
Bucket Challenge enlisted volunteers who agreed to have a
bucket of ice water dumped on their heads to raise money
for the ALS Association. ALS is a neurological disease
where the brain can no longer control the body’s muscles.
ALS, is also known as Lou Gehrig’s disease. Gehrig, the
legendary New York Yankee first baseman known as the
Iron Horse, played in 2,130 consecutive games, yet he
died of ALS in 1941 at the age 37.
The origin of the Ice Bucket Challenge is not totally
clear,however,themostcommonlyacceptedversioncredits
the idea to Peter Frates, a former collegiate baseball player
from Boston, diagnosed with ALS in
March 2012. It took off in mid-July
of this year when Matt Lauer, host
of the Today Show, became the first
major celebrity to do it live and in
living color.
It caught on, spreading across
America, and throughout the
world, with the wet-heads donating
money to the ALS Association, and
challenging their network of friends
and colleagues to follow suit, although
it’s usually advisable not to wear your
finest suit when getting doused.
This totally unorthodox
fundraising campaign spread like
wildfire.
The actual dousing takes only a
few seconds, allowing for a catchy
and short clip suitable for easy and
fast upload on social media. By the
end of August, more than 2.4 million
videos of Ice Bucket Challenges were
uploaded to Facebook. Some 28 million people posted,
commented, or liked these videos and it’s more than likely
that a good number of those 28 million donated too.
As more and more people decided to get soaked, the
ALS Association basked in success. By summers’ end, it
hauled in some $113 million in donations; quadruple the
sum it fundraised from all sources in 2013. The average
donation was $46.25 and the single largest donation was
$100,000.
There are several reasons why I think this campaign
knocked the ball out of the park like Lou Gehrig did 493
times in his illustrious career.
The campaign utilized a wide range of proven
marketing concepts. The timing was perfect. It reached a
peak at the beginning of the summer, when people are
looking to chill. An ice bucket concept wouldn’t have
worked in the winter, unless maybe you live in Miami
Beach or Hawaii.
The fact that so many big-name celebrities got into
the act certainly helped. Former President George W.
Bush, Bill Gates, and Mark Zuckerberg were among
those who took the plunge. This is an important point to
remember for any organization looking to raise awareness.
Relationships matter and you must leverage connections
to your best advantage.
Finally, the spirit of
competition made it fun. The
attitude of: “If he can do it, so can
I,” spread.
The Ice Bucket Challenge
picked up steam, if you will,
precisely because it was a unique,
out-of-the-bucket concept that
helped people to understand this
very complicated disease and
empathize with those suffering
from it.
Sharing his own thoughts on
his LinkedIn page at the end of
August, Y&R’s David Sable noted
that while using social media to
raise awareness is what “click and
shout” is all about, the next step is
to ensure that the social part is tied
to an action in the real world.
“The entertainment is proof
that a good idea, and a great story,
engages people. That’s marketing
101,” writes Sable. “But at the end
of the day, there is no substitute for the pure emotion that
helps to motivate behavior. The real push is for dollars that
can be used to cure this incredibly insidious disease.”
Bottom Line Action Step: Build a successful marketing
campaign by timing it right, leveraging relationships and
thinking out-of-the box.
Yitzchok Saftlas is the CEO of Bottom Line Marketing Group, a
premier marketing agency recognized for its goal-oriented brand-
ing, sales, and recruitment and fundraising techniques. Serving
corporate, non-profit and political clientele, Bottom Line's notable
clients include: Beth Medrash Govoha, Dirshu and TeachNYS. He
can be reached at ys@BottomLineMG.com
“A good idea, and a
great story, engages
people. That’s
marketing 101. But
at the end of the day,
there is no substitute
for the pure emotion
that helps to motivate
behavior.”

O
ne must be a real optimist to start
a company! How else would they
get past the endless permits and
paperwork, cope with the stress and lack
of sleep, and overcome the insurmountable
odds in pursuit of a slice of the American
dream? If one is fortunate enough to partner with a like-
minded optimist, or even two, they can share the burdens
as well as the successes. However, by their very nature,
optimists don’t dwell on the possibility of death or disability.
Unfortunately, in reality these things do happen and their
impact on a business and its remaining partners can be
devastating.
Let’s start with the seemingly worse scenario – the
death of a business partner. While deeply unsettling in the
short run, the death of a business partner can be managed
quite effectively if a buy-sell agreement is in place. The
buy-sell agreement includes provisions for owners to buy
out the interest of a co-owner in specific cases, such as
in event of death or total disability. In the small business
marketplace, these agreements often include provisions to
fund a buyout with life insurance in the event of death.
The inability of a partner to continue working due to
serious injury or illness is quite another matter. Yet, it
appears that it is less common to find provisions within
buy-sell agreements that fund a buyout in the event of a
disability with disability buyout insurance.
In general, a buy-sell agreement is a written legal
contract that might specify what happens to the business
interest in the event that an owner dies, becomes disabled,
or retires from the business. It helps the remaining owners
ensure the continuation of their company and provide
financial security for their family. These agreements can
be structured in several different ways. A knowledgeable
advisor will help to choose the right approach based on
variables such as the number of owners, number of buyers,
relationship between owner and buyer, tax consequences,
etc. A properly written and funded buy-sell agreement
should achieve the following:
• Establish a ready market to purchase a business
interest
• Establish a purchase price of the business interest
• Identify the future buyer(s) – typically co-owners or
key employees
• Identify the events that would trigger the buy-sell
agreement
• Create a legal obligation for all parties involved
• Provide the source of funds necessary to make the
buy-sell arrangement effective
While business owners will often put in place a buy-
sell agreement for the event of a death, many business
owners – and their advisors – don’t explore the disability
exposure. This may be because they don’t know about
disability buyout insurance or, if their advisors do, they
often lack the confidence to bring up the subject with their
clients. What they may not realize is just how important
The Buy
BY
Jacob
Akerman,
President
Akerman
Financial Inc

M A R C H 2 0 1 5 37
this insurance can be to the ongoing functioning of a
business.
This tendency to ignore the disability exposure is
not uncommon. According to a 2010 study from the
Council for Disability Awareness (CDA), 64% of wage
earners believe that they have a 2% or less chance of being
disabled for 3 months or more during their working career.
This outlook is quite removed from reality. In December
2013, 8.9 million disabled wage earners – over 5% of U.S.
workers – were receiving Social Security Disability (SSDI)
benefits, according to Social Security data reported by
CDA. SSDI compensates for long-term disabilities and its
benefits are subject to stringent qualifications, so the SSDI
figures represent just the tip of the disability iceberg.
Let us analyze a common story:
Two partners were in business
until one partner had a stroke at the
relatively young age of 48 and could
no longer work. The two of them
did have a buy-sell agreement, but it
was only funded with life insurance.
Because there was no disability
buyout insurance, one partner
wound up buying out the other’s
interest from current cash flow.
The life insurance did eventually
pay — but that didn’t happen until
nine years later when the disabled
partner died.
During that time, there was
one owner performing the job
of two while the business was
still compensating two partners.
This left the business without the
funds to hire someone to replace
the disabled partner. While this
business managed to survive, many
businesses in such situations do not.
They often end in bankruptcy or
lawsuits with the disabled partner’s family members.
This story highlights the need for businesses to establish
buy-sell agreements with specific provisions addressing
both death and disability of a partner. A properly drafted
buy-sell arrangement should cover more than just the
purchase and sale agreement, it should answer vital
questions such as:
1. How will the value of the business be determined
for the purchase and sale of the business?
Determining the value of the business is a crucial
part of the business succession planning process.
Most business owners think they know the value
of their business, but are surprised at the actual
value when all the relevant factors are analyzed.
2. How is “disability” to be defined, and who will
determine eligibility?
3. How will the healthy owners pay for the purchase
of the disabled owner’s interest?
4. How will the disabled owner’s share of business
expenses be paid during the period of disability?
5. Will a disabled owner continue to be paid during
a period of disability prior to the execution of the
purchase and sale?
It’s always advisable to seek the guidance of a trusted
legal advisor who understands the intricacies of structuring
the operating agreement to properly accommodate the
disability buy-sell arrangement.
Business owners should continue to
meet with their advisors to discuss
and review such agreements every
few years to make any adjustments
necessary as the business grows or
changes.
Business owners have told me
time and again that disability buyout
agreements are rarely discussed.
When they are considered, small-
business owners tend to defer –
either due to the added insurance
expense or unrealistic expectations
about the likelihood of becoming
disabled. However, I have found
that when the risks and benefits are
properly explained, a good advisor
will be able to effectively structure
a solution that properly addresses
each client’s financial security
without breaking the bank.
IRS Circular 230 Disclosure: To ensure
compliance with requirements imposed
by the IRS, we inform you that any U.S. tax advice contained in
this message was not intended or written to be used, and cannot be
used, by any taxpayer for the purpose of avoiding penalties under
U.S. Federal tax law, or promoting, marketing or recommending
to another party any transaction or matter addressed herein.
Jaocb is the President of a firm dedicated to the long term disability
insurance marketplace. We specialize in navigating complicated
disability insurance contracts, and finding and customizing a right
match for our clients. For the past ten years we have assisted our
clients ranging from large hospital and doctor groups to clients in
the HVAC instillation business and all in between obtain coverage
tailored to their unique needs. Jacob can be contacted directly at
Yjakerman@finsrvcs.com or 917-318-5634.
"It’s always
advisable to seek
the guidance of a
trusted legal advisor
...to properly
accommodate the
disability buy-sell
arrangement."

The recent and
far-reaching
New York State
Not-for-Profit
Revitalization
Act (“NPRA”)

M A R C H 2 0 1 5 39
BY
Ethan Kahn, CPA
and Partner
Weiser Mazars,
LLP
G
overnance properly
administered is the bedrock
of today’s not-for-profit
organization. The way in which
boards serve an organization, and their
commitment to excellence in good
governance, plays a significant role in
setting a tone of integrity and ensuring
the ultimate viability of programs. The
accelerating pace of revised standards and expectations,
increased regulation and oversight, and other emerging
issues in the marketplace have raised the bar on delivering
quality services and challenge all members of the not-for-
profit community to critically review performance practices.
The not-for-profit industry has recently become
a focal point for additional oversight and control by
funding agencies and government entities. A primary
example of these efforts is the recent and far-reaching New
York State Not-for-Profit Revitalization Act (“NPRA”).
These sweeping regulatory changes have shown the
importance of crafting different oversight regimes based
on organization type: large vs. small,
complex vs. simple and well-funded
vs. insufficiently funded. The lead
thinkers of the sector have expressed
significant concerns about a host of
ambiguities contained in the statute.
While the standard setters remain
committed to clarifying these in the
near future, not-for-profits in New
York still face an era of uncertainty.
Although the ultimate goal of
the regulation is to improve service
for not-for-profit constituents and to
ensure that funds are spent for their
intended purpose, it is often the case
that the board and staff do not have
the bandwidth to both comply with
the new regulations and to focus on
quality services.
APPLYING THE LAW -
COMPLIANCE VS MISSION
Although all not-for-profit
organizations are held to the
same level of compliance with the
standards, there is no simple, cookie
cutter method for each organization
to comply with the law. Tailoring
compliance to each organization is
key to coping with the many new
requirements. The challenge ahead
is for not-for-profit organizations to
find the right balance between being fully compliant and
providing quality services to the public. Unfortunately,
smaller organizations may find the increased cost of
compliance translates into compromised quality of service.
In order for an organization to adopt the standards
appropriately, it is important to understand the initial
intent of the government. The stated governmental goal
is to preserve public confidence in the industry. Public
confidence will then translate into increased and ongoing
private and government funding, as they will trust their
dollars are being spent prudently.
NPRA does incorporate a few thresholds that separate
larger organizations from smaller ones, including audit
thresholds, a whistleblower policy, and audit committee
requirements. However, annual revenue of $1,000,000
is the main threshold and organizations of that size have
already expressed difficulty meeting compliance.
Leaders of not-for-profits need to take a step back and
determine how these new standards apply to them, as
there are several notable differences in the treatment of a
complex organization from a simple one, including:
• Quantity and complexity of
funding streams (various Federal,
State and City grants, fundraising
income, sponsorships, endow-
ments, etc.).
• Software used and the integration
of that software to share and
reconcile information (general
ledger, fundraising, human
resources, billing, staff hours
worked, staff program allocations,
internal compliance software etc.).
• Geographical location (multiple
sites versus a single site, and
location of the multiple sites).
At times, organizations have
legal responsibilities and
compliance requirements in other
states, without being aware that
they exist, based on fundraising
activities.
• Foreign affiliates, subsidiaries, and
relationships with for-profit
entities.
• Filing requirements such as an
independent CPA’s audit report
versus a review report, OMB
Super Circular audit requirements
which include the A-133/
OMB Super Circular audit
"The challenge
ahead is for
not-for-profit
organizations
to find the right
balance between
being fully
compliant and
providing quality
services to the
public."
missioncompliance

requirements, HUD filings, pension audits,
Consolidated Fiscal Reports, etc.
Next, the complexity of the organization must be
examined. Below are several practical examples showing
the different application of the new laws in terms of
entities of various levels of complexity:
• Conflict of interest policies became New York State law
under NPRA. However, the details included must be
“reasonable” for the size of the organization. Currently,
James Sheehan, the Chief of the Charities Bureau for
the New York State Office of the Attorney General
(the “AG”) has indicated that he will not be posting
a sample conflict of interest policy on their website;
this is because the complexities that a large hospital
would face are different
than those of a small
startup not-for-profit.
Therefore, the detail
and protection for each
agency varies and must
be designed to be “within
reason.” An agency with
a board most of whose
members are related to
the constituents of the
non-for-profit (common
at schools and universities
where the board members
are often parents), would
create specific guidelines
relating to their risky
areas within the conflict
of interest limitations.
It would be inefficient
to implement unnecessary nuances to smaller
organizations whose risks of conflicts are considerably
less.
• The board agenda of a large and complex organization
would likely have many more components than that
of a small, simple entity. In particular, the law requires
the board to oversee the financial processes of the
organization. Financial processes can be very lean at
a small entity with one employee, a single site, one
funding stream and one software system. There is less
tracking of allocations, fewer kinds of software and,
therefore, a mitigated need to prepare and to review
reconciliations, allocations and tracking systems. It
is important to note, that the board requirements
should be tailored to each organization. Additionally,
under normal circumstances, the board would not be
involved in day to day detailed activities. Rather, it
functions as a governing and oversight body.
• Required filings differ between organizations and
they are often accompanied by added processes that
are necessary to allow various reports to be generated.
Those extra steps would create additional oversight
needs.
• An organization may have to have a full time employee
as a compliance officer as opposed to an individual
dedicating a percentage of their time to that function.
The above examples show how the implementation
of the law would differ between entities. It is up to
the leaders of each organization to design appropriate
processes to maintain ongoing compliance and to gauge
whether experts are needed to guide these activities in the
appropriate direction.
There are multiple processes involved in adopting any
new policy or procedure,
including designing the
policy to be suitable for
the size and complexity
of the organization,
then implementing and
monitoring that policy.
To an extent, not-for-
profits find themselves in
a friendly environment
– the Attorney General
has indicated that he will
begin with a “soft touch”
approach by inquiring
whether organizations
are compliant with
the NPRA. He will
be looking for full
compliance or serious
efforts to become compliant in the near future. These
inquiries will be made on a random and calculated basis
and it is therefore incumbent upon organizations of all
sizes to embrace these laws and work towards compliance
with them.
THE RIPPLE EFFECT - POST NPRA
HEIGHTENED EXPECTATIONS
With the issuance of Sarbanes Oxley (designed for
public companies) there was an immediate ‘trickle down’
effect to exempt organizations, whereby they were expected
to comply with the whistleblower and conflict of interest
policies and related processes. Current events within the
not-for-profit industry and the passing of NPRA have also
generated a domino effect, bringing NPRA’s compliance
expectation to other government agencies, oversight
agencies and, at times, vendors. Government contracts
are being revisited and modified to incorporate specific
elements of NPRA as well as additional requirements in

M A R C H 2 0 1 5 41
line with NPRA’s intentions.
Below are some examples of the unintended ripple
effects of the law:
• On a governance level, in light of the focus on
conflicts of interest and related parties, companies
offering Directors and Officers Insurance policies
have realized that their exposure has increased based
on new legal requirements of the board. The insurance
companies have not yet fully reacted to this new reality
– organizations should monitor developments going
forward as costs are likely to go up and specifics within
insurance contracts will almost certainly change.
• Similarly, banks offering loans to the sector have been
considering NPRA requirements
and seeking advice from their
risk management teams about
how the added regulations
would affect approval of a loan
or deem a potential client ‘high
risk.’ Some institutions are
contemplating adding items to
their screening questionnaires
such as checklists with particular,
relevant components and more
deliberate questions, such as;
“Is the organization compliant
with all laws and regulations?”
where an affirmative response
would be representative of many
compliance processes being in
place at the entity seeking the
loan.
• Another governance ripple
effect has been with board
composition. NPRA requires a
minimum of three independent
board members (as needed
for the Audit Committee),
however, oversight agencies such as the BBB
Wise Giving Alliance requires five voting members.
Therefore, the minimum size of a board has increased
by 2 voting members.
• Accountants follow the Generally Accepted
Accounting Principles (GAAP). However, GAAP has
not been a focus of oversight agencies other than their
knowing it exists and making reference to it. Today,
we find ourselves in an environment where the AG
is aware of accounting and auditing requirements
and has incorporated various components of these
into the screening process for exempt organizations.
Examples include AU section 316 (formerly SAS 99)
for consideration of fraud, and risk assessment of an
organization prior to articulating the audit plan for
field work amongst others.
THE BOARD MEMBERS PERSPECTIVE
It is normal for board members to feel apprehensive,
to act cautiously, and to feel the need for formal board
training. A board member should understand that these
rules are not insurmountable, but require effort and a
focus on learning and complying with the new duties.
A prudent approach for board members would include:
• Do your due diligence - read the certificate of
incorporation and bylaws to gain an understanding
of the organization’s legal status and processes,
inquire about the transparency of
management and the interactions
the board has with the various
members of management (program
directors, finance, compliance,
HR, IT, etc.). Review their form
990’s and state filings and other
key documents that provide insight
about their programs and size.
Review the financial statements
and independent audit firm
communications to management,
(including any comments about
deficiencies noted throughout the
audit.) Inquire about adequate
insurance coverage and key internal
controls that would mitigate
risky issues. It is also useful
to review the organizational
chart, become familiar with the
internal controls and processes of
the organization and the integrity
of the other board members and key
employees.
• Make sure you understand
the duty of loyalty, care and
obedience and how these three categories translate
into overseeing the respective agency - there are
many specifics that are embedded within these three
overarching umbrellas of responsibilities.
Within each phase, documentation is the key
component to proving to an auditor that the process has
been fully incorporated. It is common for auditors, the
IRS, or state agencies to inquire about whether a particular
policy is in place, or whether a process is being followed;
the staff tend to respond firmly that ‘yes we do have that
process and follow the rules,’ yet upon further research
there are no documents to prove the process was ever
done. The rule of thumb is ‘if it is not documented it was
"The rule of
thumb is ‘if it is
not documented it
was not done.’"

not done.’ This is both the motto of and effective approach
for auditors and oversight agencies.
MOVING FORWARD
Juggling regulatory changes while maintaining quality
services can be a challenging endeavor, especially in an
environment of “doing more with less.” From a standards
perspective, great leaps have been taken by standard
setters, regulators and users of reports to improve the level
of transparency and reliability of the elements comprising
audits and filings. These changes may have initially
appeared detrimental, yet upon incorporating them into
our practices, it is clear that, despite the growing pains,
these new standards have been beneficial for the industry
as a whole.
Not-for-profit organizations strive to operate with
speed without sacrificing quality, to be efficient and
effective. Organizations have embraced these changes
and, perhaps to a degree, rebounded from the attack on
their integrity. Sector leaders should carefully consider
the nuances of the laws, contractual agreements and
other relative guidelines to craft a well-planned strategy
that will ensure the long term viability of their individual
programs.
Ethan has more than 16 years of experience delivering audit,
accounting and consulting services to a range of clients, partic-
ularly in the not-for-profit sector. He provides clear and sound
advice to senior management and Boards of Directors.
Ethan is an expert in helping clients overcome strategic planning
challenges, as well as performing internal audits, ensuring compli-
ance, assisting with mergers and acquisitions, reviewing internal
control structures and preparing audit packages for the annual
audit. He has a successful track record of helping clients achieve
their goals.
Ethan has completed financial statement audits and tax fil-
ings for organizations ranging from income of $50,000 to
$200,000,000—including those requiring audits pursuant to
OMB Circular A-133. He also has extensive experience in gov-
ernment funding and cost reports including in SED funding,
CFR preparation and reporting and its respective rate setting
methodology.
Other services include: assessing grant reimbursements, trend anal-
ysis, agency-wide budgeting, assisting with government audits,
efficiency analyses, trainings (fiscal, program and board), building
business models, quality control, oversight of finance departments
and outsourced CFO.
Ethan’s effective and timely approach has earned many trusted and
loyal client relationships, and his audit recommendations have sig-
nificantly improved his clients’ operations.
Prior to joining WeiserMazars, Ethan led his own accounting and
advisory practice. He has also worked at large regional firms servic-
ing the not-for-profit industry.
Ethan received his B.S. in Accounting from Touro College. He is a
Certified Public Accountant in the State of New York.
CONTACT: WeiserMazars LLP Ethan Kahn | Partner
135 West 50th Street New York, NY 10020 (P) 212.375.6794
(Email) Ethan.Kahn@WeiserMazars.com

M A R C H 2 0 1 5 43
PLEASE CONTACT:
Ethan Kahn / Partner
646.402.5799 / www.WMexactlyright.com
Ethan.Kahn@WeiserMazars.com
TOUGH ENVIRONMENTS
CAN LEAD TO
AMAZING GROWTH
EXTREME CONDITIONS HAVE ALLOWED
SELENITE CRYSTALS TO BECOME AS MUCH AS
40 FEET IN LENGTH, WEIGHING 55 TONS.
WWeiserMazars creates conditions that are exactly
right. We deliver the expertise, hands-on service and
global resources that help your company grow even
in the most challenging business environments. Our
services help you build on opportunities,
achieving maximum success.

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