Volume 13, Issue 03: September 2020
navigating life’s crossroads
FAMILY RANCH RODEO FEST
MANAGING VOLATILITY AND MARKET DECLINES
LOCAL NEWS AND INFO
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publisher's note
September is here! We have officially made it into the ninth month of 2020 and oh what a ride it has been. While I know that this year has been hard for everyone, we are blessed that there has been an outpouring of help for those in need during this time. One such organization that has really stepped up to help out the local community is Hill Country Family Services. If you aren’t very familiar with HCFS you may think that they are a local food pantry. While they do provide healthy groceries for their clients, that is just one of the many services offered by this incredible organization. Check out this month’s cover feature to learn all about them! While there have not been many events going on during the COVID-19 crisis, we now have one the whole family can look forward to! The Kendall County Youth Ag & Equestrian Center will be hosting their Family Ranch Rodeo Fest on October 3rd. Be sure to get your tickets and support this event that raises funds for the KCYAEC and their
efforts to support our local youth! Also in this issue be sure to check out the articles from local experts. Prime Capital Investment Advisors share with us tips to Managing Volatility and Market Decline, ADKF helps us learn how to Reduce the Risk of Fraud from Within our businesses and Covenant takes a look at Generosity in a Changing World. I hope you all enjoy this September issue of Boerne Business Monthly. Be Happy, Be Healthy, Be Blessed!
Lauren Stumberg Owner/Publisher
FACEBOOK.COM/ BOERNEBUSINESSMONTHLY INSTAGRAM @BOERNEBUSINESSMONTHLY
FOR MORE INFORMATION 210.219.6735 | LAUREN@DISTINCT-GRAPHICS.COM | WWW.BOERNEBUSINESSMONTHLY.COM
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B oerne B usiness M onthly | September 2020
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September 2020 Saturday October 3
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7:00 pm Live Mu with Gary Glen
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food, beer, wine available for purchase
08: finances
Supporting the Kendall County Youth Ag & Equestrian Center, home to 4-H, FFA and Jr. Livesto
Managing Volatility and Market Declines: Coronavirus is New, Market Declines Are Not
by Christopher Bouffard, CFA – Prime Capital Investment Advisors
11: calendar 14: ribbon cuttings 16: cover feature
Hill Country Family Services: Navigating Life’s Crossroads
by Lauren Stumberg | photos by Ron Pritchett
20: fraud
How You Can Reduce the Risk of Fraud from Within by Steven Guerra, CPA, Audit Manager – ADKF
22: real estate
New Home Sales ‘Exploding’ as Homebuilders Race to Meet Demand
24: for a good cause
Family Ranch Rodeo Fest Benefits the Kendall County Youth Ag & Equestrian Center
28: giving
Generosity in a Changing World by John D. Eadie – Covenant
CPA, CFA, CFP®, PFS, CLU®, CIMA, CKA®
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B oerne B usiness M onthly | September 2020
Boerne Business Monthly is published by Distinct Media, LLC, copyright 2020. Reproduction is strictly prohibited without prior consent of the publisher. Opinions expressed in Boerne Business Monthly are those of the writers or sources and do not necessarily represent the views of the publisher, nor do they constitute the endorsement of products or services herein. Although the information and recommendations in this publication have been compiled from sources believed to be reliable, Boerne Business Monthly makes no guarantee as to, and assumes no responsibility for, the correctness, sufficiency or completeness of such information and recommendations.
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finances
Managing Volatility and Market Declines CORONAVIRUS IS NEW, MARKET DECLINES ARE NOT KEY POINTS: ● While coronavirus may be new, market downturns and volatility are not. ● Bottoming is a process, it is important to keep a long-term perspective and not make emotional decisions.
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● Short-term market volatility is the price of admission to achieving long-term market returns. ● Diversification helps mitigate the risk of relying on any single investment, helps lower portfolio volatility, and helps to temper emotions during market turbulence.
Market disruptions occur frequently and one can always find a reason to sell. Markets have encountered shocks and crises in the past ranging from political & geopolitical events, assassinations & wars, epidemics & pandemics, and natural disasters. The good news is that markets have always come back. The bad news is that it can sometimes take a while to come back… and the waiting can create a lot of anxiety. It is bad enough when markets get hit by an exogenous shock, it’s worse when it is hit by more than one. We were already dealing with the coronavirus epidemic and then Monday (3/9) added an oil shock to the mix. But, as they have done throughout history, the markets went through the process of digesting and recovering from those impacts. Bottoming is a process, it is almost never a oneand-done phenomenon. This is especially true after record-long bull markets and from record high levels (which also came with very few pullbacks). It is improb-
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able to have as much market dislocation as we just experienced (in volatility, in yields, in currencies, in lost market capitalization, and in business disruption) without weeks of accompanying back-andforth buy-versus-sell battles, that will bring bouts of forced selling, tests of technical levels, and sharp shifts in sentiment. That is what must happen for markets to find a bottom and what they are now working through. Importantly, and to reiterate, this is not a new process. As mentioned above, it occurs regularly. Below is a chart that is used frequently to demonstrate that in any given year markets can typically fall by double digits. There are several observations worth noting about this exhibit.
S&P 500 Intra-Year Declines vs. Calendar Year Returns
Despite average intra-year price declines of -13.5%, annual total returns were positive 81% of the time.
Source: Bloomberg
• As the subtitle states, the average intra-year downturn is -13.5%, yet annual total returns were positive in 25 of 31 years, or 81% of the years. • Of the 31 full calendar years depicted, 16 had at least a double-digit drawdown (or 52% of years). • The S&P 500 price index was down -33.9% at its worst point in 2020 on March 23. The average annual intra-year price decline is -14% and in only two other years of the past 31 years had the intra- year loss been as bad or worse than the 2020 drawdown.
B oerne B usiness M onthly | September 2020
• Note that just 5 months later the S&P 500 had recovered to positive territory for 2020. Here is another, even longer-term perspective. Using data for the S&P 500 data going back to 1950, Capital Group identified the frequency and average duration of various levels of market declines. Again, the takeaway is that we’ve been here before and markets have bounced back from crises in the past.
Market downturns happen frequently but don't last forever Standard & Poor's 500 Composite Index (1950-2019) DIP
CORRECTION
SEVERE CORRECTION
BEAR MARKET
Size of Decline Average Frequency* Average Length* Last Occurance Source: Capital Group, Standard & Poor’s. *Assumes 50% recovery of lost value. #Measures market high to market low.
Empathy, not just facts. The purpose of providing this material is not to drown you with facts and statistics. Rather, it is intended to add perspective – to help you contend with the recent market gyrations. Facts alone won’t suffice, but investors were bombarded with alarming headlines during the pandemic and there is a need for some counterbalance to control anxiety and emotional reactions. Here’s a sampling of some headlines shouting at the public after during the March turmoil: Headline Risk: The Sky is Falling! Reuters Wall Street clobbered as crude plummets, virus crisis deepens
2020
continued on page 10
Saturday October 3
Tickets On-line www.RanchRodeo.org 4:00 pm Ranch Rodeo
Mutton Bustin’ to Follow Goat Ropin’ To Follow 7:00 pm Live Music with Gary Glen Trail Boss Sponsor Adults $10 / Kids 8 & Under Free
food, beer, wine available for purchase Supporting the Kendall County Youth Ag & Equestrian Center, home to 4-H, FFA and Jr. Livestock youth boernebusinessmonthly.com
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continued from page 09
CNBC Dow sinks 2,000 points in worst day since 2008, S&P 500 drops more than 7% NYT Markets Spiral as Globe Shudders Over Coronavirus WSJ Stocks Fall More Than 7% in Dow’s Worst Day Since 2008 USA Today Dow plummets 2,000 points, oil prices drop as global recession concerns mount Bloomberg ‘Trying Not to Panic’: The Collapse in U.S. Markets Spared No One The benefits of diversification. The COVID pandemic was a perfect time for a friendly reminder of how a properly diversified asset allocation, by design, lost less than the U.S. equity indices cited in these headlines during the crisis. Long-term investing is a journey that will inevitably, and necessarily, be bumpy. But using a diversified portfolio should help smooth the ride. Through Tuesday, March 23, the S&P 500 Index fell -34% from the start of the year to mark its low point of 2020. But a typical 60% equity and 40% bond diversified portfolio was down much less than that at about -22%. And through August 27, the diversified portfolio has recovered those loses and is up +2.9% for the year. YEAR-TODATE (YTD)
LEGEND
2020
AT 2020 LOWS
SINCE 2020 LOWS
JAN 1, 2020MAR 23, 2020
MAR 24, 2020 AUG 27, 2020
2020 JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
Source: Bloomberg. “60/40 Allocation” is a weighted average of ETF proxies: 30% U.S. Bonds, 5% International Bonds, 5% High Yield Bonds, 10% Large Growth, 10% Large Value, 4% Mid Growth, 4% Mid Value, 2% Small Growth, 2% Small Value, 18% International Stock, 7% Emerging Markets, 3% Real Estate.
Investors behaving badly. There are well-publicized statistics from firms such as Dalbar and Morningstar that show the investors’ returns consistently trail actual investment returns. In other words, because of cognitive biases and irrational (emotional) decision making, many investors have a tendency to make behavioral investment-timing choices that tend to harm their long-term investment returns. Emotional reactions to unexpected events, like a new epidemic or a market decline, are perfectly normal. It is important to acknowledging those fears and anxieties, while also recognizing the context of the bigger (longer-term) picture. Doing so can help ease worries and provide reassurance to stay the course. And make no mistake, there is plenty of fear from these market gyrations. There are plenty of metrics that show sentiment is reaching extremes that has marked capitulation in the past. Again, bottoming is a process, so it may not be the capitulation, but it is certainly signaling some capitulation. The CNN Money Fear & Greed Index CNN's tracks seven indicators of investor sentiment. Currently, it is at a level of 3 (out of a total of 100), which indicates “Extreme Fear” Each of the seven components are at “Extreme Fear” levels as well. In early March, it was at continued on page 15
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B oerne B usiness M onthly | September 2020
-Since 1900-
september events
EVERY SATURDAY FARMERS MARKET AT THE CIBOLO 9:00am to 1:00pm | Historic Herff Farm 33 Herff Road – Boerne Shop fresh local produce, farm-fresh eggs, bread, jams, jellies, local honey, and Texas Hill Country arts and crafts at the historic Herff Farm at the Cibolo Nature Center in Boerne. Enjoy free live music, gardening classes, cooking demonstrations, and children’s craft activities, too.This popular Texas Hill Country outdoor farmers market will be open to the public every Saturday from March through November. SEPTEMBER 3 GBCC RIBBON CUTTING FOR THE SCIENCE MILL ON FACEBOOK LIVE 11:30am to 12:00pm The Science Mill is a family destination offering 50+ cutting edge, interactive exhibits, a 3D theater and an on-site cafe. Discover the fun of science at the Science Mill in Johnson City! SEPTEMBER 7 LABOR DAY
When the dust settles we’re still right here D RI V E T H RU H OU R S | M-F 8: 0 0 - 5 : 3 0 LO B BY H O U R S | M-F 9 : 0 0 - 5 : 0 0
O N LIN E B A N K IN G | S o no r aB an k. c o m B O E RN E E A S T 1 5 70 R i v e r R o ad | 8 3 0 - 3 3 1 - 8 3 0 0 B O E RN E W E S T 1 2 2 We s t B an d e r a | 8 3 0 - 3 3 1 - 9 1 1 8
SEPTEMBER 8 GBCC RIBBON CUTTING FOR JB GOODWIN REALTORS ON FACEBOOK LIVE 1:30pm to 2:00pm LIVE from the Boerne Chamber Facebook Page.
B OER N E | BU LV ER D E | W I M BER L EY | S A N A N G ELO | SONORA
CITY COUNCIL MEETING 6:oopm to 8:00pm | Livestream Meeting See ci.boerne.tx us for link to meeting. SEPTEMBER 9 GBCC RIBBON CUTTING FOR ST. HELENA'S EPISCOPAL CHURCH & SCHOOL ON FACEBOOK LIVE 9:00am to 9:30am LIVE from the Boerne Chamber Facebook Page.
continued on page 19
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ribbon cuttings
Greater Boerne Chamber of Commerce August 2020 Ribbon Cuttings
HUDDLE HAVEN The Chamber was live with Huddle Haven for their Ribbon Cutting! Huddle Haven fitness programs are uniquely designed, immune-system boosting workouts hosted outside in safe, clean, fresh-air settings. Huddle Haven brings fitness to you with their mobile, outdoor concept. They also host podcast each week and strength & agility athletic training classes. Learn more about Huddle Haven by calling them at (210) 727-9406 and visiting their website huddlehaven.com.
EXPRESS EMPLOYMENT PROFESSIONALS We are LIVE with Express Employment Professionals Boerne/Kerrville, TX now to celebrate the grand opening of their new office in Boerne with a ribbon cutting! Express Employment Professionals is a leading staffing provider in the U.S. Canada and South Africa. Everyday, they help job seekers find work and help businesses find qualified employees. If you or anyone you know that is looking for a job, contact Express Employment Professionals to help with the process! Call (830) 331-1000 or visit their website expresspros.com/ boernekerrvilletx for more information!
UVALCO SUPPLY We are live at Uvalco Supply in Boerne to celebrate them with a ribbon cutting! Uvalco Supply is your farm and ranch supply resource! Uvalco offers fencing, pipe and structural steel, water supplies, livestock equipment, trailers and accessories, paint and hardware, plumbing and welding supplies, mowers, specialty UTVs and much more. They also provide many different repair services as well as metal building construction. Uvalco Supply in Boerne has all your outdoor, farming & ranching needs! Stop by and visit them today at 39700 I-10 W, Boerne, TX 78006. Learn more by calling (830) 7554948 or visit their website uvalco.com.
DIVORCE GENIUS Join us live to help us celebrate the Grand Opening of Divorce Genius with a ribbon cutting! Divorce Genius was recently developed by successful Texas Hill Country attorneys who understand that not every marriage needs to end with excessive legal fees. Divorce Genius is 100% online and is a easy, fast and cheap way to file your divorce. Learn more about Divorce Genius on their website divorce-genius.com. For any questions call (830) 331-2772 or email divorcegenius@gmail.com!
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B oerne B usiness M onthly | September 2020
continued from page 10
the extremely low levels where markets typically begin to turn around. In those prior periods however, it took several weeks for conditions to turn around and sustain improved levels. Those March 9 Fear levels actually marked the lows and this indicator has steadily improved since. As of August 27 it now is at 76 (Extreme Greed), a remarkable turnaround. The Bottom Line The bottom line is that periods of short-term market volatility is the price of admission to achieving long-term market returns. Given how erratic markets have been, investors may not realize that Monday, March 9, marked the anniversary of the longest bull-market in history as it turned 11 years old. The S&P 500 Index was at 676 on March 9, 2009 and now stands at a new all-time high of 3,484.6 (close on August 27, 2020). That bull market had a total price advance of 415%, or 15.4% annualized through August 27, 2020. But those returns were only achieved if investors were invested on March 9, 2009, and stayed invested through several other material drawdowns. Those include the fourth quarter of 2018 and the 2020 pandemic. .
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cover feature
navigating life’s crossroads by Lauren Stumberg | photos by Ron Pritchett
P
Prior to retirement, Ron Fielding knew he needed a plan for how he would fill his time. “I had decided that I should give one-third of my time to my wife and my dogs, another one-third to staying connected in business through for-profit boards and the other third I would spend volunteering and giving back,” said Fielding. While Ron has found this balance to work out just great for how he envisioned retirement, he was unaware when deciding to volunteer his time with Hill Country Family Services just how rewarding the experience would be. In addition to serving on the Hill Country Family Services (HCFS) Board of Directors as the Treasurer and Internal Affairs Committee Chair, Fielding is the former EVP of Hormel Foods and the current Chairman of the Advisory Council for the UTSA School of Business. HCFS feels blessed to have access to Fielding’s Fortune 500 financial experience and knowledge that he brings to the board. According to Ron, “I am extremely proud to be a part of this organization. When the Covid-19 crisis hit, HCFS didn’t skip a beat. They stepped up to help the local community in such a way that it was as if they had been preparing for this all along.” Fielding continued his praise by saying, “It has been really rewarding to be able to be apart of
an organization that was able to respond to people’s needs immediately. So many people’s lives changed instantly this past spring and through the excellent leadership and the team that has been built here at HCFS, it was remarkable to watch as they leveraged their skills and talents to provide essential help to the local community members in need.” Staci Almager, Chief Executive Officer at HCFS added, “We were ready! Not only were we able to help people with their financial needs, but with their emotional and psychological needs as well. This agency helped so many people to deal with the constant and enormous pressures of a society that shut down.” Almager credits the success of HCFS to her staff and the hundreds of local people, like Fielding, that volunteer their time each year to keep the organization running like a well-oiled machine. According to Staci, “Each year we have approximately 12,000 volunteer hours logged!” Having celebrated its 35th birthday this past August, Hill Country Family Services has been helping Kendall County citizens to not only survive a crisis, but to learn how to thrive in the community since 1985. HCFS serves Boerne, with 85% of the families they serve living inside
pictured (left to right): Staci Almager, CEO of Hill Country Famlily Services and Ron Fielding, HCFS Treasurer and Internal Affairs Committee Chair
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B oerne B usiness M onthly | September 2020
the Boerne city limits. For those unfamiliar with HCFS and what they do, you may think that they are simply a local food pantry. However, the reality is that providing food for families in need is only the tip of the iceberg. In addition to providing healthful groceries from their Corner Cupboard Grocery and Nutrition Center, they aim to foster mental and physical wellness as well as stability and independence for individuals and families who are in crisis. They are committed to providing case management services, innovative support including supplemental self – selection groceries and emergency financial assistance for individuals and families in the community who are experiencing a crisis. “The demographic that we serve is not those who have experienced generational poverty. Our clients are most likely people that have not had to ask for help before. They are here because of some sort of crisis that has occurred and we are available to help them navigate their way out of that,” said Almager. “One of the most important things that HCFS does is to make sure that those they are helping do not feel like they have lost their integrity,” Fielding added. “At HCFS we understand that a crisis can happen at any time: the diagnosis of a life-threatening illness, the loss of a job, the end of a relationship, an automobile accident leaving a family without transportation, the loss of affordable childcare, substance abuse, mental illness or a sick child. Our first step is to address the crisis and meet the basic needs of the family. From there we work on developing a plan to return to a state of self-sufficiency. For most of our clients that timeframe is twelve to eighteen months long,” said Staci. “For those being helped by HCFS, they are here to get out of here, the end game is their success! We want people to be successful and we measure every step along the way.” According to Fielding, “HCFS has thrived under Staci’s leadership. She has done an incredible job of building brand credibility and awareness within the community in addition to the outstanding results and success rates of those being helped by the organization. The financials of HCFS have been able to remain strong through this current COVID-19 crisis with continued support from the local community.” Ron and his friends that frequent The Dodging Duck often discuss the importance of measuring success for the local and national organizations that they choose to support. He added, “Donors look at the outcomes being produced and recognize the impact that HCFS is having in Boerne and Kendall County. HCFS tracks client outcomes and not only during COVID-19. They use the Life Skills Curriculum and measure client
continued on page 17
text to donate:
Text FEEDTHEFAMILY to 44-321
Inside of the Corner Cupboard food pantry. boernebusinessmonthly.com
17
continued from page 16
success in several categories to ensure that within 12 months at least 75% of families who seek emergency services at HCFS are self-sufficient again.” “We have so many great local partnerships that help us to do what we do. We have never lacked for support,” said Staci. “The City of Boerne, Kendall County, individuals, corporations and religious organizations strongly support us. We have great partnerships with other local non-profits as well. We realize that no one organization can do it all. Sometimes HCFS is not the right fit for what the individual needs and we can point them to an organization that is better suited for them.” HCFS frequently works closely with more than 30 local nonprofits to help with services available in the community including: healthcare and prescription assistance, legal services, affordable housing, mental health counseling and addiction treatments and assistance, dental and vision evaluations and education and workforce development. During COVID-19, many local businesses reached out to help and to pledge their support for HCFS: • Little Gretel Restaurant provided quiches for Mother’s Day and fresh soup for clients every month. • Civic organizations including
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the Boerne Sunrise Rotary and Fair Oaks Rotary Clubs rallied together to write national grants to help provide emergency food. • Boerne Rotary and their members started the Boerne Strong fundraising initiative to match the small business and nonprofit funds from the City of Boerne. • The Boerne Education Foundation, Kronkosky Place and HCFS fed 100 kids for breakfast and 100 kids for lunch when HCFS found out that BISD was not serving meals on Good Friday. • Fetch & Friskers Barkery and Bow-tique donated hundreds of pounds of dog food to provide for client’s pets during COVID. According to Almager, “We love being able to see a need and figuring out a way to make it happen.” A great example of that was recently when multiple local churches banded together to raise just over $59,000 to keep our neighbors from eviction and foreclosure due to COVID! “We made the decision to pay the full rent or mortgage for those that needed help, rather than just a portion of it. We wanted to provide them with that peace of mind that it was taken care of and one less thing to worry about. All the people that were helped were referred and fully vetted. We really dig into the situations that we are providing assistance to and then follow through with a plan to help those individuals thrive moving forward,” said Staci. Another great source of funding for Hill Country Family Services is their high-end resale shop, Random
B oerne B usiness M onthly | September 2020
Hangers. “About thirty percent of the income that supports HCFS comes from the retail shop,” said Fielding. Random Hangers and The Warehouse are a thrifter’s dream. Jill Ramsey, manager, and her team carefully select items for the store to ensure that excellent quality merchandise and modern styles are available at all times. New merchandise is available daily so no two days are the same! You can find seasonally appropriate designer clothing, shoes, handbags and accessories at Random Hangers and art, household goods and gifts items at The Warehouse. Random Hangers and Warehouse accepts donations of new and gently used clothing, household goods, kitchen items and furniture. All donations are sold to aide HCFS clients in their journey to self-sufficiency. All of the efforts of Hill Country Family Service point towards one goal. The case managers and life skills volunteers work to help clients to learn how to future proof their lives. Clients learn how to prepare for the unexpected through life skills classes, financial literacy and budgeting, ESL classes, time management, and gain the tools and resources to create a safety net for the future. “We are an honest agency and often that means we have to say hard things, but the end goal is to bless and release. It is very easy to stay stuck in a particular situation, but at HCFS we know that a crisis doesn’t last forever and we give our clients the skills to be able to succeed!” BBM
To learn more about Hill Countr y Family Ser vices or how to volunteer or donate visit
HCFSTX.ORG
Boerne churches banded together to raise $59,235 to keep our neighbors from eviction and foreclosure due to COVID. Teamwork is always the solution!
CALENDAR OF EVENTS | cont’d SEPTEMBER 10 GBCC RIBBON CUTTING FOR TRIO REHABILITATION & WELLNESS SOLUTIONS' 5TH ANNIVERSARY ON FACEBOOK LIVE 11:30am to 12:00pm Trio Rehabilitation & Wellness Solutions specializes in Outpatient Physical, Occupational, and Speech Therapy clinic for ages 11-102! They are Stroke Certified,Vestibular Certified (dizzy therapy),VitaStim certified (swallowing disorders), LSVT Big & Loud. SEPTEMBER 12 BLUEGRASS JAM AT THE AGRICULTURAL 11:00am to 1:00pm | The AgriCultural Museum 102 City Park Road – Boerne Every second and fourth Saturdays of the month, bring your instrument and play along, or just come to listen to the Bluegrass Jam at The AgriCultural! (Formerly the Agricultural Heritage Museum) This event is free and open to the public.
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MOONDANCE CONCERT SERIES 7:00pm to 10:00pm | Cibolo Nature Center Amphitheater 140 City Park Rd. – Boerne Enjoy live music beneath the Texas stars at the Cibolo Nature Center Amphitheater this summer! Bring lawns chairs, blankets and picnics for a cozy outdoor concert experience.There will be food trucks onsite as well! Members: $10 Non-Members: $15 Students: $5 12 & Under: Free Event. SEPTEMBER 12-13 BOERNE MARKET DAYS Saturday 10:00am to 5:00pm; Sunday 10:00am to 4:00pm Main Plaza – Boerne Since 1850, Main Plaza has been a center point of trade for the people of Boerne. In the present day, on the second weekend of every month, Main Plaza is home to a magical outdoor market that blends the traditions of the Texas Hill Country with the creations of today’s culture. Hundreds of festive booths display everything from collectibles and remembrances of the past to modern innovations that will bring a smile of wonder to those who stroll past. SEPTEMBER 14 KENDALL COUNTY COMMISSIONERS COURT 9:00am to 11:00am | Kendall County Courthouse 201 E. San Antonio Ave. – Boerne
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fraud
How You Can Reduce the Risk of Fraud from Within
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by Steven Guerra, CPA, Audit Manager – ADKF
While reading the news one morning, you may come across a story of fraud occurring within an organization. It may seem so distant, but have you ever stopped to consider whether or not fraud occurs within your own organization? As technology evolves, the capabilities of a fraudster will too. If you don’t implement the proper internal controls within your organization, you may be susceptible to fraud. Before beginning, you first need to overcome the trust and tenure of your employees. Based on the stories you hear, it only takes an opportunity for an individual to commit fraud, regardless of the perceived moral opinion of the individual. There are a number of other actions you can take to prevent or reduce the risk of fraud within your organization. A majority of the fraud within a company occurs when an employee steals money. There are a few ways you can combat this. We recommend management reviews all invoices and any other additional support for an expenditure, before ever signing a check. You should also confirm that the payee, address, and amount on the check match with the invoice. A prime example of fraud would be seeing two checks made out to your local utility company, when in reality, there should only be one. Another example is seeing disbursements to an unfamiliar vendor. Any concerns you have should be referred to the individual who authorized the expenditure in the first place. To combat potential fraud, most financial institutions offer positive pay for disbursements to eliminate check fraud. Positive pay is an automated fraud detection tool that matches all the information of each check presented for payment against a list of checks previously authorized and issued by the company. For incoming receipts, we recommend having someone outside of the accounting department open all mail and maintain a log of all of receipts received each day. This log should be used during the review of the bank reconciliation to verify the receipts were properly recorded in the accounting software and to make sure that receipts received by mail were actually deposited into the company’s bank account. If any cash is received, ensure a two-person system to acknowledge and document such collection. If possible, consider cross training your staff to perform other job functions within the company. This would provide your company the
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B oerne B usiness M onthly | September 2020
ability to rotate responsibilities, and create a system of checks and balances, which can be especially helpful if you have concerns of potential fraud. Questions and recommendations may result from this new perspective and give you a chance to identify and resolve any inconsistencies or loopholes in your current processes. Additionally, cross training of staff also allows your accounting staff to take vacations without missing a beat, thereby interrupting the fraudster’s system of being able to commit the fraud without being detected. Lastly, as you strengthen your controls and procedures, confirm with your human resources department that a background check is performed prior to hiring any accounting or administrative candidate. Red flags include personal bankruptcy within the last five years; lawsuits filed to prevent foreclosure of assets by the candidate or suits filed to demand payment against the candidate; and felony or serious misdemeanor convictions, including check fraud. Some of these suggestions may already be in place at your company; others may be considered appropriate to implement, and some may not be possible due to cost constraints and other limiting factors. In order to prevent fraud within your organization, review your procedures and challenge your internal processes annually. At ADKF, we’re committed to providing you with the proper tools and controls to ensure your organization’s prosperity and reduce the risk of future fraudulent activity. If you have concerns of fraud within your company or wish to receive an outside perspective on your current procedures, don’t hesitate to reach out to our team of trusted advisors. BBM Steven Guerra, CPA, is an Audit Manager at Akin, Doherty, Klein & Feuge, P.C. (ADKF). ADKF is a full-service accounting firm with offices in San Antonio, Boerne, and New Braunfels. Steven graduated with his BBA in Accounting and master’s in accountancy from the University of Texas at San Antonio and has over ten years of public accounting experience. Steven works in ADKF’s audit and assurance practice with a broad array of industries including non-profit, manufacturing, and employee benefit plans.
During this challenging time, Akin, Doherty, Klein & Feuge, P.C. is here to do more than file tax returns. Our team continues to keep our clients up to date on new legislation regarding the COVID-19 Pandemic. We are using this knowledge to identify tax saving opportunities for individuals and businesses. We can provide necessary guidance, no matter what stage your business is in, and we’re always available to assist you with all your tax planning needs.
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real estate
New home sales ‘exploding’ as homebuilders race to meet demand
N
New home sales are “exploding,” says a Texas housing expert, and homebuilders can’t keep up with the demand. This means home prices will continue to go up as existing supply shrinks. “Now is a good time to buy a home,” says Dr. Jim Gaines, chief economist for the Real Estate Center at Texas A&M University. “There are many other reasons why that’s so. “Interest rates are low, mortgage lenders are generally approving loans easily, and future prices will be higher. Market demand is now focused on the middle - to higher - income groups who have remained employed during the pandemic. This means higher-priced homes have been more active than lower-priced homes sought by workers more impacted by COVID-19.” The supply of available properties is the primary restraint on today’s housing market, said Gaines. Aging in place, the high number of refinancings at low interest rates, and lingering fear about COVID make sellers less aggressive. “The homebuying process can be done completely online without face-to-face communications, he said. “Most people would probably prefer not to do business remotely, especially older millennials, but the younger age group is much more receptive. Service providers are accommodating the changes in processes and technology.” The Real Estate Center housing expert isn’t worried about interest rates either. “It’s not likely the Federal Reserve will increase interest rates anytime soon,” said Gaines. “They are on record as saying they
will allow inflation to go to 3 percent or more and stay there for a while to get the overall economy moving.” Millennials are a big factor in the current housing market, said the Center’s chief economist. “Millennials are not sitting out the housing market,” said Gaines. “The Real Estate Center just reported record homeownership rates for second quarter 2020. “There’s a bifurcated market, especially among the millennials. The better-educated group with jobs that continue during the pandemic are active and now acquiring homes. The other part of the millennials, including the very youngest segment of the cohort, may have had jobs more susceptible to closing and simply are going to have to get through the recovery process before becoming homeowners.” When evaluating the healthiest housing markets, Gaines said buyers should consider the types, distribution, and continuity of jobs; income distribution; and local land costs. A new study by WalletHub compares 300 cities of varying sizes for 24 key indicators of housing-market attractiveness and economic strength. Three Texas cities made the top ten best real estate markets. Frisco is No. 3, Austin No. 7, and Denton No. 9. BBM Information courtesy of the Real Estate Center at Texas A&M University. Funded primarily by Texas real estate licensee fees, the Real Estate Center was created by the state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers, and the public. The Center is part of Mays Business School at Texas A&M University.
CALENDAR OF EVENTS | continued from page 19 SEPTEMBER 17 GBCC RIBBON CUTTING FOR VANDYK MORTGAGE CORPORATION ON FACEBOOK LIVE 11:30am to 12:00pm VanDyk Mortgage Corporation is a full service mortgage broker with an experienced staff offering expertise in every area of mortgage lending from purchase to refinance to construction lending. SEPTEMBER 22 CITY COUNCIL MEETING 6:00pm to 8:00pm | Livestream Meeting See ci.boerne.tx us for link to meeting. SEPTEMBER 24 RAINBOW SENIOR CENTER'S SPEAKEASY
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HOT SEPTEMBER NIGHTS GALA 7:00pm to 10:00pm | The Kendall It’s the bee’s knees! It’s the cat’s meow! Hot September Nights Gala is coming up! Join them for a SPEAKEASY event with entertainment brought to you by Jazz performer Doc Watson! This year will look a little different, and they’ve gotten creative by introducing new sponsorship levels and two options for participation, as guest safety is our top priority: OPTION A: LIVE IN PERSON EVENT! • Opportunity to attend live event at The Kendall • Includes a live jazz performance • Watch live event in person • Wine and dinner provided by Peggy's on the Green • Opportunity to participate in the live auction,
B oerne B usiness M onthly | September 2020
silent auction, and raffle OPTION B: ENJOY THE EVENT AT HOME! • Opportunity to participate in event from the comfort and safety of your home • Ability to watch virtual event, which includes a live jazz performance • Wine and dinner provided by Peggy's on the Green will be delivered by a Meals on Wheels Volunteer • Opportunity to participate in the live auction, silent auction, and raffle If you are interested in becoming a sponsor for this exciting event or purchasing a table (virtual options available) please call or email the following contact. Emily Perry (210) 475-2428 emily@rainbowseniorcenter.com continued on page 25
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for a good cause
P
Family Ranch Rodeo Fest embraces American values key to youth development
Perhaps now more than ever, Americans cherish our country’s unique freedoms, boundless opportunities and core values. The values that Americans strive to teach their children--courage, optimism, self-reliance, authenticity, honor, duty and compassion—are alive and well in the character of the ranching cowboy. The Family Ranch Rodeo Fest at the Kendall County Youth Ag & Equestrian Center (KCYAEC) on Saturday, October 3 will give
folks a glimpse into the real day-to-day life of ranch cowboys and cowgirls as well as their outstanding character. Differing from a professional rodeo, the ranch rodeo features tasks that ranch hands regularly encounter such as rounding up cattle for doctoring and loading for transport. Ten teams—many from Kendall County—will compete for prize money, buckles and other awards. To reflect the very real makeup of many ranching
YOUTH ARE KEY TO THE FUTURE OF OUR COUNTRY AND POSITIVE YOUTH DEVELOPMENT PROGRAMS CAN PREVENT A VARIETY OF RISK BEHAVIORS AMONG YOUNG PEOPLE AND IMPROVE SOCIAL AND EMOTIONAL OUTCOMES. OUR JR. LIVESTOCK, 4-H AND FFA PROGRAMS ARE HELPING TO CULTIVATE THE NEXT GENERATION OF LEADERS WHO WILL CREATE A HEALTHIER SOCIETY.
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families, the rules call for at least one of the four team members to be a female or a youth under the age of 17. The Family Ranch Rodeo Fest promises an afternoon and evening of fun for the entire family featuring, mutton busting, goat roping, kids’ activities, an online auction, live music, food and refreshments. Proceeds from the event will support KCYAEC, a 501 ( c ) (3) non-profit that operates with a large volunteer base and no paid staff. The Center is home to some 400 4-H, FFA and Jr. Livestock members who participate in agriculture and equestrian activities, competitions and educational enterprises. KCYAEC supports youth in many ways: • $30,000 in Scholarships, 2018-2020 • Kendall Co. Jr. Livestock Show & Sale (2020 auction record: $1,487,337) • Boerne & Comfort FFA chapter shows • 4-H Horse Club activities • 4-H meetings • Judging competitions • Farm Bureau’s annual, county-wide ag day for school children • Positive youth development programs This year KCYAEC was proud to award four $2,500 scholarships to Kendall County youth: • Cameron Bourgeois, Champion High School, Texas State Technical
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continued on page 26
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CALENDAR OF EVENTS | continued from page 22 SEPTEMBER 26 BLUEGRASS JAM AT THE AGRICULTURAL 11:00am to1:00pm | The AgriCultural Museum 102 City Park Road – Boerne Every second and fourth Saturdays of the month, bring your instrument and play along, or just come to listen to the Bluegrass Jam at The AgriCultural! (Formerly the Agricultural Heritage Museum) This event is free and open to the public.
OCTOBER 3 FAMILY RANCH RODEO FEST 648 FM 289 – Comfort 4:00 pm Ranch Rodeo Mutton Bustin’ to Follow Goat Ropin’To Follow 7:00 pm Live Music with Gary Glen All the proceeds from the event support the Center, including $10,000 in annual scholarships! BBM boernebusinessmonthly.com
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continued from page 25
College, Major: Diesel Mechanics • Cole Dutton, Geneva School of Boerne, West Texas A&M University at Canyon, Major: Agribusiness • Brooke Secor, Geneva School of Boerne, Texas Tech University, Major: Animal Science/ Equine Veterinary Science • Abigail Walser, Comfort High School, Texas Tech University, Major: Biology/Orthopedic Surgery While the Center is offered rent-free throughout the year to youth, it is available for rent to other organizations to help offset operating expenses. At 82,000 square fee, it is the largest, weatherproof event center in the county, and is ideal for fundraising galas, corporate events and private parties. The venue is situated atop a bluff adjacent to Joshua Springs Park, and offers an open-air feel with beautiful Hill Country views. Rental bookings have included youth rodeos, youth livestock and equestrian clinics and shows, team ropings, dog agility trials, non-profit galas and large market-day events with approximate-
ly 12,000 attendees at one of them. Many of these Center events have a positive impact on the county’s economy as visitors spend money at hotels, restaurants and stores. The Center’s beginning dates from 2007 when the Kendall County Commissioners Court voted to grant a 99-year lease of 33 acres of county park land to the Kendall County Jr. Livestock Show and the Kendall County 4-H Horse Club, which support wholesome youth development programs. “The Center is really unique because it is structured as a public private partnership benefiting the public good,” explains Andra Wisian, KCYAEC President. “One of my favorite adages comes to mind—‘If you want to go fast, go alone. If you want to go far, go together.’ The Jr. Livestock group and the 4-H Horse Club both support youth development, but offer different programming. Through their collaborative effort, each organization is able to have the use of a great facility while sharing overhead expenses and management duties.” The Center is managed by a 13-member board of directors including five representatives from Junior Livestock, five from the 4-H Horse Club and three members from the community. Current directors are Rhonda Aikens, Kathy Estes, Dale Garner, Russell Garza, Kristen Jay, Joe Lozano, Kristopher Pressler, Mark Weekley, Andra Wisian, Aaron Wyle, Ty Young, Duane Zoeller and Wayne Zoeller. BBM
$10 for adults. Kids 8 & Under free.
For More Info: www.ranchrodeo.com PROCEDURES/GUIDELINES REGARDING COVID-19 • The rodeo will operate at a limited capacity. • As per the Governor's Office, face masks are required.
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B oerne B usiness M onthly | September 2020
• Social Distancing is required. • Announcements will be made regarding social distancing and loitering of groups.
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giving
Generosity in a Changing World
T
The COVID-19 pandemic has upended the lives of millions – both medically and economically. Typically, when a natural disaster hits, the world watches as one community is affected and offers support to that area through donations and aid. It’s different this time, as people everywhere are struggling with the devastating effects of the pandemic. Many non-profits have been challenged through COVID-19, as well, as donors have become more focused in their giving by pivoting to provide aid when and where it is most urgently needed. These organizations will value your generosity as we emerge from the pandemic in what is hopefully the near future. But, how do you as a donor best implement your philanthropic plan? Most people will continue to simply give cash directly to their passions, and the non-profits will highly value these gifts. However, if you would like to be more targeted or long-term focused in your giving, there are other strategies to consider. Two of the better methods to make a gift today and get an income tax deduction in the year of the gift, but retain the ability to designate the ultimate charitable recipient some time in the future are donor-advised funds and private foundations. A donor-advised fund is like a charitable investment account for the sole purpose of supporting charitable organizations you care about. When you contribute cash, securities or other assets to a donor-advised fund, you are generally eligible to take an immediate tax deduction. Those funds can then be invested for tax-free growth and you can recommend grants to any qualified public charity when you are ready. A private foundation is like a donor-advised fund where you can give assets to the foundation and receive an immediate tax deduction for the gift. Private foundations can offer more flexibility to the giving family due to the fact that family members can be employed
28
by John D. Eadie – Covenant CPA, CFA, CFP®, PFS, CLU®, CIMA, CKA®
by or serve on the board of the foundation. The private foundation retains full control over the grantmaking. If you closely follow IRS procedures, donors can make grants to charitable programs undertaken by individuals, scholarship programs and other entities, making the foundation a very flexible charitable vehicle. The flexibility of the private foundation does come with some administrative limitations that are not imposed on donor-advised funds. Private foundations are legal entities and will require assistance from your attorney and/or CPA to help set it up and get it qualified by the IRS. Private foundations also require that 5% of the value of the foundation assets be distributed to a charitable organization each year, whereas as donor-advised funds have no requirement to make annual distributions. Private foundations are not totally “private” either because they are required to file an information return each year, and that return is part of the public records. Donor-advised funds do not have the same filing requirements and provide more privacy for donors who prefer to remain anonymous in their giving. Finally, earnings on the investments held inside of a private foundation are subject to an annual excise tax. Earnings on the investments inside the donor-advised fund are fully tax-exempt. Speaking of the investments inside a private foundation or a donoradvised fund, contributors to these entities generally are passionate about doing good in the world and doing so with a purpose. As a result, impact investing has become a popular way to implement portfolios ultimately directed towards charity. By definition, impact investing is the act of purposefully making investments that help achieve certain social and environmental benefits while generating financial returns. Impact investing can be a confusing and broad term, but generally refers to investing in companies with an explicit mission aligned with
The contents of this article are provided for informational purposes only. It is not an exhaustive list and is not intended to provide any legal or tax advice. Please consult your respective legal, tax and financial advisor before taking any action.
B oerne B usiness M onthly | September 2020
your values while avoiding investing in companies that do not meet those criteria. Combining impact investing with your philanthropic gifts to a private foundation or donor-advised fund can be a great way to align your values and passions with your family legacy. For those of you older than 70 ½, you may be able to leverage your generosity by making a qualified charitable distribution from your taxable IRA. In effect, you simply transfer assets directly from your IRA to the charity of your choice. If you are over 72, these charitable transfers can be used to fulfill all or a part of your required minimum distribution. You are limited to charitable transfers of up to $100,000. The primary benefit of the direct transfer is that the IRA distribution is not included in your taxable income, which may keep you in a lower tax bracket, and reduce other detriments caused by higher taxable income. Finally, if you are looking for an income stream while also providing a gift to charity, you might consider a charitable remainder trust. A charitable remainder trust is a “split interest” giving vehicle that allows you to make contributions to the trust and be eligible for a partial tax deduction, based on the trust assets that will pass to charitable beneficiaries. You can name yourself or someone else to receive the income stream for a term of years up to 20, or for life; and then name one or more charities to receive the remainder of the donated assets. COVID-19 has created a huge need for philanthropy, and while so many want to give, they simply don’t know the best way to go about it whether for impact or financial benefit. If you are looking to begin a journey of generosity, reach out to your advisor so he or she can begin to lead you down that road that meets your philanthropic intentions. BBM
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B oerne B usiness M onthly | September 2020
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