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Comment by srvo | Hacker News Reader

This is the way that foundations and endowments should operate.

Too many well-intentioned organizations wind up milquetoast tax-exempt hedge funds aimed primarily at self-preservation because the received wisdom is that they should focus on building endowments and keep their withdrawal rates below 4% in order to achieve immortality.

I'm a big believer in research-driven philanthropy and mission-driven organizations. But i've seen the institutional desire for self-preservation supersede essential purposes at a few of them, with disastrous implications for their effectiveness.

The Gates foundation probably controls ~5% of the ~$2T that charitable foundations have in endowments globally. If the majority of these organizations adopted these sorts of depletion goals, their program budgets could probably more than double.

Thank you for coming to my TED talk.

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> Thank you for coming to my TED talk.

Ha ha, well here's mine. First, I'm way ahead of Mr Gates: I'm already worth almost nothing.

But if I had billions to give, I would be supporting Science Education, Democracy and Journalism. Scholarships for bright, motivated students.

With all due respect to Mr G, I don't believe any of his objectives is possible with stable, educated, science-orientated social progress. Humanity depends on it.

* s/with/without/

They fund students through grants to PIs. I suspect the amount is on the order of 100M$.

That’s like 25 research groups for 5 years, there are about two orders of magnitude more than that.

That could help in the long run, but you could also help people not die. Both are good causes and need funding

>Too many well-intentioned organizations wind up milquetoast tax-exempt hedge funds aimed primarily at self-preservation because the received wisdom is that they should focus on building endowments and keep their withdrawal rates below 4% in order to achieve immortality.

Which charities are giving away less than 4% a year? Charitable foundations in the US are required to give away at least 5% of their endowment a year:

https://www.ncfp.org/wp-content/uploads/2018/09/The-Five-Per...

If wealth can be immortal why deplete it?

All money spent is voting for allocation of resource. Sometimes there is too much money fighting the same goods in which case it may not be a good allocation of resources. That money can sit to become more money.

At a societal level, immortal wealth is incredibly bad.

At a personal level, because wealth sitting still, having 4% pay for the overhead of maintaining the 96% and then using the pennies left doesn't accomplish much of significance.

You can always wait another year. And then another. When is it time? 50 years? 100 years? "We will maximise good by donating it all in 1000 years" is questionably not a charity at all; it's just a massive pile of money that isn't used for anyone but paying the people sitting on it.

Even if you trick-feed donations to charity over 100 years, the sums may be insufficient to reach a usable scale. - A big investment in research. - A concentrated push to vaccinate against a Disease so it goes away for good. - An infrastructure investment that lifts a community out of poverty.

These themselves produce "good over time," perhaps even faster than the money in the fund rises in value. It's a balance, but immortal trickle donations are likely quite far off to one direction of that scale.

Nobody allows money to sit. People deposit the money into banks. Due to fractional reserves, that's equivalent to loaning the money out so that others can efficiently allocate it instead. That's how money becomes more money.

Charities that aren't actually spending money to do good are just banks in disguise. Banks that don't pay out interest. Why would anyone donate even one cent to banks?

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