Category Archives: Business Analysis

Non-Profit Fundraising: Why Asking your Network for Donations is not being an Asshole

Many non-profits, when holding fundraisers, often ask you to raise money from your network. This can take many forms, from asking friends & family to support a favorite cause, to asking strangers to pledge money as you run/walk/disco for a cause. As the non-profit directs you to spam people on your address book, it encourages you by telling you of all the good you are doing – feeding orphans, working towards a cure, ending poverty.

However, aren’t you also bugging the hell out of your contacts? After all, if they cared about a cause, wouldn’t they just donate directly to that cause?

To draw an analogy, in the multi-level marketing (MLM) world, where you earn a commission by selling products and getting other people to sign up to sell products, you are universally encouraged to start out by selling to friends and family. Since they already know and trust you, unloading some of your useless products onto them is a lot easier than selling to strangers. Since MLM companies are often regarded as being sketchy as hell, why are non-profits using the same technique?

And so, for the longest time, I was hesitant to raise money for non-profits, afraid that I would be bothering my friends and family, afraid that I’d be ‘forcing’ them to make donations and imposing my desires on others. But then, in my travels, as I meet a lot of travelers who been going around volunteering in southeast Asia, I’ve realized why this entire thought process is wrong.

Instead, you should think about it this way:

1) People want to do good and are willing to donate money, but they don’t know who to donate to. They are too busy with their everyday lives to go out and seek out a good cause, and even if a non-profit comes and asks for money directly, how do they know if the non-profit is any good? There are numerous bad non-profits out there that squander the majority of their fundraising on self-promotion and executive salaries.

2) However, if you ask your network for donations on behalf of a non-profit, something curious happens: trust in you becomes trust in the non-profit you are sponsoring. It’s the same concept as with MLM – because your friends and family trust you, they will trust products that you recommend. (See movie: the Joneses)

So when you ask your network to donate to a cause, it’s a double edged sword. Yes, many of them will donate, because of the trust that you’re conveying to the non-profit, but you also need to do your homework and make sure the non-profit is indeed legit.

Business Analysis: Scuba Diving on Koh Tao

Ladies and gentlemen, I am pleased to present: Jonathan Lee, the certified PADI advanced open water scuba diver!
Scuba diving on Koh Tao - with partner

Or I would, but unfortunately all the pictures from scuba diving are still being developed, so in this post, I’ll be doing a business analysis of Scuba Diving on Koh Tao.

Continue reading Business Analysis: Scuba Diving on Koh Tao

The Backpacking Industry

From my travels in Australia, I’ve noticed that there’s an entire industry here that doesn’t exist in the USA – the backpacking industry.

Going around any big centers of activity – tourist hot spots, city centers, nightlife areas – and you see all sorts of businesses absent in America – hostels, backpacker flights centers, backpacker ‘hubs’ offering free (really crappy) wifi while selling you on travel experience packages (and invariably full of people checking facebook).

Continue reading The Backpacking Industry

Best Exchange Rates

When traveling, you naturally want to get the best exchange rate, so that your money goes further – which is especially important given how the USD has been steadily weakening.  This article will tell you exactly how to get the best exchange rates while overseas.

1) Find out if your current bank has a partnership with any overseas bank.  For example, Bank of America has a partnership with WestPac in the Australia region.  If you use your existing bank card with a partnered bank, you not pay zero bank fees, but you also get favorable exchange rates!

It’s important to note, the partner bank may offer to convert your withdrawal into your home currency at it’s cash “buy” rate, as shown below.  Note how this dialogue box is intentionally ambiguous, not telling you what will happen if you skip conversion.  But don’t do it!  If you skip conversion here, it will be automatically converted at a much better rate (the Visa daily rate).
Exchange rate - visa trap

No, skip conversion at this horrible rate!  (VISA rates were at ~1.04 at this time)

2) Open a brokerage account with Charles Schwab, and you will automatically receive a Charles Schwab Checking account and accompanying debit card.  Use this debit card to withdraw money at any ATM.  You will have to pay a bank fee, but Charles Schwab will refund that money to you at the end of each month.

Using either option 1 or option 2, you will exchange money at the daily Visa rate.

3) Use a credit card.  Depending on your card, you will have to pay a foreign exchange fee around 3%. There are special cards that charge no foreign exchange fee, but I find that not only is it a hassle to apply, but there are often annual fees.

4) Bring USD, and use a money changer in the city.  You will have to pay a foreign exchange fee (spread) of around 5%.  From personal experience, I have found that small exchange kiosks (foreign exchange businesses) usually offer better rates than big banks.

Here’s an example of some pretty bad exchange rates being offered by a bank:
Exchange rate - bank rates

5) Bring USD, and use a money exchanger at the airport.  Foreign exchange fee of around 8%.  Ouch!

Exchange rate - horrible rates

6) Use your regular ATM / debit card at a non-affiliated bank.  You will typically get charged a $2-$10 bank fee.  If you don’t like carrying too much cash, and make many small withdrawals, these add up very quickly!

For a demonstration, you can check out the numbers in this real-life example:

Date Service Charge AUD Amount USD Fee USD Stated Rate Effective Rate Daily Visa Rate Difference
3/6/2013 Amex 36 36.91 0.99 1.02527778 1.052777778 1.02677 0.026008
3/6/2013 Schwab ANZ 102* 104.72 1.02666667 1.026666667 1.02677 -0.0001
3/8/2013 BoA Visa 71 73.08 2.19 1.02929577 1.060140845 1.02933 0.030811
3/11/2013 BoA Westpac 100 102.11 1.0211 1.0211 1.02876 -0.00766
3/11/2013 BoA Westpac 100 102.11 1.0211 1.0211 1.02876 -0.00766
3/13/2013 BoA Westpac 200 205.52 1.0276 1.0276 1.03396 -0.00636

* I withdrew $100, and was charged a $2 bank fee, but Charles Schwab refunded it at the end of the month.

As you can see, I paid the lowest exchange rates when using options 1 and 2 – using my existing bank card at a partnered bank, and using my Charles Schwab debit card.

Other travel websites often give alternate ‘expert’ advice that is often more trouble than it’s worth

– Traveler’s check: These tools are useful, but you often have to pay a fee to get your bank to provide the check..  In a world where ATMs are everywhere, if you can withdraw money without paying ATM fees, traveler’s checks are outdated.

– Services that “deliver” foreign currency to you while overseas: you can get good exchange rates with these services, but they are a tremendous hassle, since you have to book well in advance.  I prefer the flexibility of being able to find an ATM anywhere.  This option may be useful if you need access to very large amounts of money.

When to get Life Insurance

A couple of weeks ago, some friends asked me for advice on choosing life insurance.  In response, I wrote up this essay.


Every year, people will die unexpectedly.  The chance of it happening to you in particular is pretty low (see actuarial tables:, but when it does happen, it’s pretty rough for everyone involved.  And so, the original idea behind life insurance, as well as insurance in general, is to pool risk.  Everyone contributes some money, and the proceeds are divided up to those who got the short end of life’s straw.  When insurance companies come into the equation, they basically look at actuarial tables to determine how much you should contribute per year, based on the probability of you dying, plus a little extra to cover administrative expenses, etc.  They then take the proceeds and invest them “prudently” to keep assets (the amount of money on hand) greater than liabilities (the amount they have to pay out).

Traditionally, a form of insurance called term life insurance has been used.  In this scheme, you agree pay $X per month for the next year / 10 years / 20 years.  If you die, your family or beneficiaries receive a predetermined payout.  If not, woohoo!  You’re still alive and can continue to be the breadwinner for your family.  This is your basic “vanilla” insurance scheme, and it’s quite boring. On the other hand, you’ve got something like whole life insurance.

There are a lot of variations, but the general gist is that you pay a much larger monthly payment, but a portion of your premium is allocated to some “cash balance”.  If you die, your family or beneficiaries receive the predetermined amount.  If you keep living though, you can someday decide to “cash out” of the policy and decent chunk of change, or borrow against the balance (for a mortgage, etc).

So basically,
Whole life insurance = term life insurance + additional forced savings.

I believe that the most efficient way to do things is to get term life insurance when you need it, but otherwise just put your money in a savings or retirement account, which will basically get you the same results as whole life insurance.

The Three Factors of Whole Life vs. Term Life insurance:

Premium costs:

– Premiums for term life insurance are much cheaper than whole life insurance premiums
– The mortality rate for young folks is pretty low, and so short term life insurance premiums are very low, but will go up every year that you renew your insurance
– In contrast, since whole life insurance has typically fixed premiums, you start out paying a lot more, since you’re also covering the higher chance of you dying in your later years.  The forced savings component also increases premiums


– Insurance companies make a lot more money from selling whole life insurance than they get from selling term life insurance
– For term life insurance, there are basically no fees.  You keep paying your premiums, and if you die, money is paid out to the beneficiary.
– For whole life insurance, there are usually a lot of fees.  Fees for cashing out of your policy early, annual fees for investing your cash balance, etc.  If you drop your whole life insurance part way through, you could lose a lot of money.


– You’ll probably get better returns from just investing with Vanguard’s index funds (and lower fees too), instead of relying on whole life insurance for savings.

Reasons for getting life insurance:

There have typically been two motivations behind getting life insurance:

1) This is important – taking care of dependents in case you can no longer be a breadwinner.  To illustrate, I do not have life insurance – I don’t need it.  If I die, hopefully my friends will come to my funeral to send me off into the great beyond, but my death isn’t screwing anyone over.  I don’t have kids that I’m responsible for, I’m not supporting a wife, I don’t have a mortgage, my parents should be fine without me.  In contrast, think about a husband, with a pregnant stay-at-home wife and mortgage.  He wants to get life insurance – so that if he gets hit by a bus, his wife will have enough money to raise the children and keep the house.

This is also where term life insurance is very useful – to cover those 20 years of your life when you have many dependents but few assets.  After you’ve built up a nest egg, even if you kick the bucket, your savings should provide some protection to your family.

2) Taxes and estate planning.  Life insurance premiums are not (currently) taxed – and the insurance industry does a tremendous amount of lobbying to keep it this way.  In contrast, if you want to pass money directly to heirs, you usually have to pay some sort of estate tax.  This is usually a concern for people a lot more wealthy than us.


Without knowing your individual circumstances or the plan they’re offering you, I can’t recommend that you take any particular path.  However, just by looking at the overall financials, if you decide to get life insurance, I recommend that you go with term insurance instead of whole life insurance.  But before that though, I do recommend that you make sure you need life insurance, and you’re not getting it just because you can.