When King Solomon asked of the Lord heavenly wisdom, the narrative of 1 Kings 4 indicates the divine answer as “The Lord gave Solomon a large heart, like the stars of the sky and the sands of the seashore.” This illustrates the biblical fact that the leading edge of wisdom consists in charity, especially to those most needy of essentials (called “mercy”). Likewise, the NT has it that Jesus taught the reciprocal truth that “blessed are the merciful, for they shall obtain mercy.”
A financial instrument exists in our day, and many others similar to it, that can be used as a way of creating a brand new way to accomplish strategic, that is “leveraged,” charity. This method, or something much like it, should enable the most significant innovation in the history of philanthropy, a systematic interdependent network of trusts that together empower extra-ordinary charity over a very long period of time.
An irrevocable (ir REV uhk uh bull) trust can be used like a workhorse to produce large sums of money — by way of diversified investments in the global marketplace (This yields an average of 10% per year) — whose principal is protected, while each year 50% of its earnings then gets reinvested back into the fund. This causes the principal to “snowball” over time, and it means that one can begin such a trust with as little as 20, 000 clams. For the sake of illustration here, I will use 50k as my starting point.
The “Rule of 72” imparts the truth that, when you divide the interest rate you earn into the number 72, it yields a number representing just how many years it will take to double your money at that rate of return. At ten percent then, our money in the irrevocable trust will double every 7.2 years. But since we are only reinvesting half of the return back into the trust, we must double the length of time to 14.4 years. This gives us 7 doublings in 100 years. Now this trust is created ideally to last indefinitely, while we know, of course, actual mileage may vary.
This means that the trust will must needs be placed under the authority of a trustee most likely to last for the longest possible duration of time. The terms of the trust should be set so that the trust only begins to pay out once it becomes large enough to make its payout of a worthwhile size. The project calls for the eventual creation of a single network of 1, 000 charities, either carefully chosen, or else created (or both — it is relatively easy to create a 501c3 charity), which will include medical centers, universities, libraries, hospitals, a small business-creating fund (like the US gov’ts SBA), and others that promote the values and infra-structure (institutions) of Solomonic deism — i.e. free market capitalism, vegetarianism, medical mercy abroad, education, science, world peace, etc.
The idea works this way: the charities are set up as a kind of “catcher’s mit” — set in place in advance, and then a single “feeder trust” gets funding, and its payouts “pitch” to all the charities, equally, at the same time, in single (annual) payout sums. These are spread out across the globe to ensure maximum likelihood of long-term survival.
How the funding works. Over 200 years, the feeder trust fund would double 14 times. If we begin it with 50, 000 dollars, the doubling process would look like this — 100k, 200k, 400k, 800k, 1.6m, 3.2m, 6.4m, 12.8m, 25.6m, 51.2m, 102.4m, 204.8m, 409.6m, 819.2m. This ends the first two centuries of reinvestment, and (falsely) assumes no contributions will be added to speed its growth rate.
Over the next two hundred years, its growth would look like this: 1.6b (rounded down), 3.2b, 6.4b, 12.8b, 25.6b, 51.2b, 102.4b, 204.8b, 409.6b, 819.2b, 1.6 trillion (rounded down), 3.2t, 6.4t, 12.8t, etc. Continued long enough, one can see that eventually the fund would reach its maximal value — the total amount of money in existence. And in principle, it wouldn’t take that long — say 500 years. Great Britain has been around for twice that long. Ancient Egypt lasted some 3100 years.
Albert Einstein once averred, “There is no such thing as magic in the real world. But the closest thing to it is compound interest.” These numbers are designed to highlight that magic. We must put this recursive leverage to use to empower the Charity Machine by employing time like a lever. Solomon wrote: “A patient man has great understanding.” He was the richest man in the world. This fund begins with only 50k, or an even smaller sum is possible. Time makes the difference.
A trustee has to be paid, so this will add a slight drain to the potential growth of the fund, but only as long as it remains relatively small. But this cost can easily be offset by accruing contributions to the fund as a second stream of income that causes its accelerated growth. Why would someone wish to donate to this fund and who would do it?
1. every dollar donated feeds 1,000 diverse and excellent charities worldwide. No other charity fund can do this. So corporate donors will prefer yours at the years end when they donate typically to find a tax deduction.
2. every dollar donated grows and is fed by other contributions, and by your reinvestment strategy, until it becomes worth, say, 1 million dollars. No other fund will cause someone’s donation to grow with this kind of telescoping power, the power of time and compounding interest. Corporations and other large-scale donors will find these unique and remarkable features irresistible. Everyone wants his/ her dollar to have maximal impact on those whom the gift is intended to bless. And remember, each gift will also collapse the time frame necessary to grow the fund, calibrated as it was (above) without such gifts figured into the equation.
Now, the “network of charities” (charity machine) would probably need to begin its size more modestly, starting with perhaps 20 to 50 charities in its “target array,” and with a research team causing their number to grow organically. But such a team would have plenty of time to accomplish this since the fund only pays out one time each year. And it does have other logistical considerations that will have to receive attention of course. Large-scale administrative projects always do. But the research team is up to the task, and will learn as they go sufficiently.
Summary: the charity machine amounts to the creation of 1. a charity-donor fund (with 1000 components worldwide), and
2. A mutual fund, where the mutual fund reinvests in itself half its earnings, and then diverts the rest to the charity-donor fund.
The new innovation of the charity machine promises to promote and effect the most advanced and powerful kind of strategic charity ever witnessed on this planet thus far, having made good use, as it has, of advice from the collective testimony of Solomon’s Proverbs, and from the advice of Doctor Einstein implied in the quote provided above.