for the executives, that is. I wrote about one such operation a few months ago. Consider Nehemiah Corp. of America. In 1997, Don Harris, a lawyer and part-time minister, saw that many of his parishioners had jobs and a decent credit history but lacked the money for a down payment on a house. He sought to get them a down payment. He did so by going to home sellers and builders asking them to donate the down payment to a charity he had founded; this charity would then give the donated down payment to the buyer. He started the non-profit, Nehemiah, to implement his idea. Since FHA would provide mortgages to first-time buyers who could come up with a 3% downpayment, Mr. Harris also found banks willing to provide mortgages. Sounds good, doesn't it?
It was good until Harris met a broker and marketer, Ron Mellon, for a local home builder. Mellon saw possibilities in Harris' idea. He and Harris formed a marketing company, a for-profit marketing company which they called Invision. They took the idea national. Builders and sellers paid Nehemiah 6% of the selling price, a 5% gift for the down payment and a 1% fee; Invision kept a third of the fee.
Nehemiah did well; $67,000,000 in revenue in 1999, $139,000,000 the next year. Invision also did well, between 1998 and 2002 its share of Nehemiah's revenue was $42,000,000. During this period, Harris owned 38% of Invision. Their success spawned competitors.
Perhaps, one reason for Invision's ability to sell home builders across the country was indicated by an IRS audit which found that, in some cases, the sellers simply tacked the 5% gift onto the selling price. The IRS is now questioning whether the 5% money was a legal charitable deduction. In the meantime Harris is being sued for "unseemly wheeling and dealing in the non-profit world".
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