There's your first mistake. If you are basing the marketing and fundraising goals of your organization off of the hopes that paying railfans will storm the gates, wads of cash in hand when pressure is raised, then you are grossly misinformed about the makeup and composition of any railroad museum's visitorship, both actual and potential. By your own flawed logic IRM's coffers and the coffers of every museum should be running over because rail fans will pay to restore steam.



There's lots of poles at IRM. Most of them hold up the overhead.

In some cases, I'd argue that most of your potential visitorship knows nothing about the difference between the two. That's where the educational mission of any non-profit comes into play.

You are young and have a lot of enthusiasm. I like that. Learn more of the business side of running a non-profit you'll learn how to better make your goals and dreams a reality.

Whether your choice of motive power is steam, diesel or electric, they are just props and educational tools that are part of telling a larger story. Thankfully those Ina decision making capacity at IRM grasp that.

I'll preface by saying that I have always enjoyed operating steam and have a deep respect for many of the fine mechanical folks who make it work especially in the environment we live in today. I hope we continue to see it grace the rails of this country, mainline and otherwise, for a very long time.

With that said, NOTHING in rail preservation is more over-preserved than operating steam. The very last thing that IRM needs to do is dump this money down the bottomless hole of operating steam. They have one of the more (perhaps the most?) exhaustive collections in terms of variety, rarity, and signifigance. How many other unique and deserving projects could they undertake and complete with that money -or- they could inject themselves into operating steam, blow ALL of the money on ONE steam project and if history is an indicator have a pile of parts sitting around waiting for the next cash infusion. No reflection on the IRM steam folks, but I contend that for every operating tea kettle there is one more disassembled for rebuild that'll never see a temperature above ambient unless it's hitting the furnace at the steel mill.

The Nebraska Zephyr, the CB&Q E-5, the Baldwin center cab diesel, are just a few of the unique things that pop to mind on an early Sunday morning as examples things they either have done or could do. What a delightful collection of diesels, passenger cars, and juice jacks could be made operational at a fraction of the cost of one more tea kettle.

And finally, as I head for the bunker to ponder my final hours, anticipating multiple bombing runs for muttering this "blasphemy" and with all due respect to the fine folks in Roanoke, the last thing we need in rail preservation is another mainline 4-8-4. Seen that show and got sick of it. If you just have to restore another steamer while the rest of the collection suffers*, go get that Pacific from Columbus, or better yet it would be awesome to see a little Virginian steam....

ETA

* As a footnote, and before I get fussed at, I will give the devil his due, the VMT collection is in much better shape than I can remember in a long time, and continues to improve, in no small part as a result of the cooperation between VMT and the Roanoke Chapter. The comment is more of a where it could be if the money and effort about to be dumped into 611 were redirected.

I've seen a lot of speculation in this thread on how IRM will (or should) be using this money...

What a lot of people don't realize is almost all competent organizations (not just non-profits) have long term strategic plans and in this situation, the starting point for discussion by the boards of directors of such organizations is "how does this windfall fit with our plan?"

They may also have other financial policies that come into play.

Bob H

Minnesota Transportation Museum was recipient of a similar bequest recently, their first use of the money was to buy power operated track equipment. Tamper, Tie Inserter, etc.

-Hudson

By the reverse of that logic, IRM's attendance should have dropped drastically when steam was NOT running, but that did NOT happen.

The sky did NOT fall.
The roof did NOT cave in.
IRM was NOT carried away by a plague of locusts.
The museum did NOT fall into bankruptcy.

Everything went on, pretty much as normal.

Yes, I'd expect a few people to come crawling out of the woodwork if and when steam finally makes a regular return to IRM, but not many.

Jeff

What a lot of museums would do with that kind of money would be put a roof over their collection. IRM has about 70% of its collection under a roof or in a building so I suspect they will continue to add buildings as they wish. They're just lucky they got all that acreage to put their collection on. In the end I'm sure the money wil ldo wonders for a museum that deserves it.

I didn't know about the pass through rules. On the other hand the idea of investing for high income through dividends probably is the best strategy for an endowment for one simple reason. When think of this money like an investor and not like a lottery winner, every dollar you have is able to earn you 10more in the future. Unlike a person who is saving for their retirement where they understand realistically if they have a pile of money and don't start burning it up by the age of 60-85ish they likely will never get to enjoy it as far as I know there is no published life expectancy of a museum so how do you figure out what to spend vs. reinvest? I would think that is quite a difficult question to answer.

So perhaps the best answer is to go out and find really good dividend paying long term safe stocks and just buy those, spend the income while also enjoying the growth. Think Coca-Cola, it pays out almost 3% right now, and is about as safe a stock as they come. So at least this way you get $30K per year in cash to spend, plus over time Coca-Cola will still give plenty of growth museum so one day maybe those $30K/yr dividends become much more and if you ever get in real trouble you can always sell the stock.

Keep in mind you can't spend the dividends. Under the current UPMIFA law, all earnings from the endowment must be plowed back into the endowment for accounting purposes. UPMIFA forces all gains to be equivalent, whether they are interest, dividends or capital gains. Once that has been settled up, then you look at the total valuation of the endowment and make a decision how much to draw. That is legally mandatory. It's a new world.

Like I say, there's pretty much a "gold standard" for the proper way to invest an endowment. A lot of very smart people developed it, they use what works, and none of us are smarter than them. By example, here is how WRM allocates their endowment.

25% Bonds and bond funds
5% Foreign Bonds - emerging markets
35% Domestic large company stocks
5% Domestic small company stocks
15% Foreign stocks - first world
10% Foreign stocks - emerging markets
5% Derivatives

That's pretty much gold standard - stocks should be 60-80% of the portfolio.

Each of those is an asset class. Within each one, you must diversity into many individual stocks, unless you have a strategic reason (other than the pursuit of money). E.G. buying buffer land like at IRM, or buying into a supplier like Strasburg.

WRM is too small to hire a manager just to pick stocks. "A manager picking stocks" is what a mutual fund is, so you simply buy shares of mutual funds.

Now most active fund managers charge the fund about 1.5% per year for their service. There's plenty of hard science to show that these managers don't actually beat the market averages. Why not just buy the whole market, then? That's what index mutual funds do, and since the management is very simple, the fees are very low. For instance VTSMX (every US stock) is 0.17% per year and that covers both domestic large and small companies.

Fees are your #1 investment risk. Reduce fees by 1%, that's the same as getting a guaranteed 1% better return, and that's a big deal. That's another 1% per year your organization can put to good use, if you're drawing off 4%/year, now you can draw 5%.

So golly, look at that. There's an investment roadmap for any sub-$20M endowment.

People make things complicated (especially: brokers)... but it really is simple.

without reading all these posts, why not get that next barn built and plan up the next one to get more equipment inside.

But really, manage the money smartly to make it last, if some kind.
You can spend 1 million as fast as you can spend 1 dollar, money does one part of IRM, but its the volunteers doing more.
If there are some projects not getting a needed boost that need a good jumpstart, pop it some.
But let regular donations do their job as well, try to save the money, find even a minimal earnings way to save and earn, perhaps give that solar field a boost.
Keep on IRM trips like CTA save this car etc etc.

Per a post earlier today on IRMList from our general manager:

Jeff

Sweet. Yeah, I had a hunch that the limiting factor in car-barns was not strictly funding per se.

Has It been decided what motive power Barn 14 will house?

Typically each department gets an allotment and it is then determined by pieces of equipment (more than motive power) that have their indoor track space charges paid, as well as other factors. Long story short, there's a process that has been in place for many years now.

Of course, I'm sure that won't stop people from making demands, and saying that if said demands are not met, they will loose respect for IRM.