Inspired by this thread (http://www.thefastlanetomillions.com/showthread.php?t=512) about charity, here's my short opinion on what's wrong with the way a lot of charity works, and how I think it should work (and the way I'll be doing it in 2-5 years from now).
Case 1: Current charity model
- Beg for donations on street corners, tv spots, magazines, radio, etc.
- Get $100,000 (for example)
- Pay professional charity "beggers" and advertising bills: -$40,000
- Pay themselves and their overheads: $-20,000
- Keep some "in reserve": -$10,000.
- Send $30,000 to ABC country to "solve" XYZ problem
- Money alleviates pain temporarily, in many cases (a charity's core competencies often lie in moving money, not solving problems forever).
- Wait a few months, repeat.
Case 2: How I'll do it
- Go to ABC country. Design a proper, PERMANENT solution. Work out up-front and monthly cost for this to work.
- Take $x from my own investment profits (enough so that interest more than covers monthly operational costs
- Invest it in 10% (for example) government bonds (good reason for this) in the US/Australia, etc.
- Take 5% interest, pay for operational costs directly overseas.
- Other 5% is reinvested in bonds. This offsets inflation and grows the investment by about 2% (give or take) forever.
- The really cool part: this way, the money NEVER runs out, and increases in real terms (after inflation) by 2% a year (or so).
What I'll be using this for:
- Plan to build a small school in a third world country to teach business (including agri-business) to kids so they can lead their communities, solve their own problems, and teach their own kids how to do the same. Use technology trees to build precursor technologies to help the community grow (eg: what do schools produce? Employees. Employees run economies. Teach kids how to be bankers, merchants, investors, etc. They can then start banks, trade with each other, invest in each others' businesses.)
- Example operating cost of a small school in a third world country per month: $1,000.
- Investment required at 10%: $240,000. Only take half the interest. Pay it to the school monthly.
- Audit the school's performance. Audit the community's performance (ensure improvement)
- Adjust and repeat as required.
Here's my formula for the money: Investment amount = Start-up costs + (monthly costs/(investment return-growth rate)).
Why government bonds? Risk-free investment. The risk is debatable, but their are few investments with this low level of risk. It means that as long as the USA or Australian governments exist, so does the money. It means security for the future income stream for the school. A similar amount invested in stocks might return more, but could do an Enron and turn to shizzle, if you get my drift. No more school then.
Summary: the money lasts forever (does not erode from inflation, but gets bigger). School lasts forever. Kids become leaders and teachers. They solve tomorrow's problems. Their schooling is free, based on a simple promise: when they graduate, they'll "pay" for their education by working on community projects as they see fit, and those who earn money can contribute a small amount to aid in educating the next generation, as well as returning as a guest teacher.
As my investments grow, I will build more schools.
How cool would it be to know that a school I build will be powered forever by a single little investment like $240,000, and will perpetually educate the people of a region to help themselves. One investment can do so much good, potentially forever.
Oh, and a very cool benefit: doing this without a shred of religious ideology being transported to these countries. I'm not religious, and there's a major charity here that I have a major beef with: it takes donations (almost some from me as well, before I did my due diligence), doesn't tell anyone it's a catholic charity (I had to read annual reports. Nowhere on donation web pages does a mention of their religous affiliation exist), and spends lots on admin, and some on overseas projects. Now, during the project, their volunteers/staff, who are there on the donor's dollar, spend some of their time to set up religious "education" programs. I haven't been there, but if the organisation who has more money than you thought existed in the whole world came knocking on your door and gave you some to build a well, housing and schools, would you be able to abstain from participating in their sunday schools and so on? I have absolutely nothing against religion, but it's the issue of the charity's power, and the potential inability of the recipients to obtain aid without hearing religious messages which they may consider to be attached to their receipt of aid. They may have their own religions and culture, and I believe this might even be a form of cultural destruction.
I acknowledge the good work they've done, but I think it needs to be done in a neutral way. That's why I've designed my own.
Sorry, it's late here and this might not be clear (or even coherent! Numbers may also be out, but they're only examples). I can barely see the screen, and after 19 awesome hours of investing, work, socialising, business planning, driving, sport and even a few minutes of Futurama, it's time for bed!
Daniel
Case 1: Current charity model
- Beg for donations on street corners, tv spots, magazines, radio, etc.
- Get $100,000 (for example)
- Pay professional charity "beggers" and advertising bills: -$40,000
- Pay themselves and their overheads: $-20,000
- Keep some "in reserve": -$10,000.
- Send $30,000 to ABC country to "solve" XYZ problem
- Money alleviates pain temporarily, in many cases (a charity's core competencies often lie in moving money, not solving problems forever).
- Wait a few months, repeat.
Case 2: How I'll do it
- Go to ABC country. Design a proper, PERMANENT solution. Work out up-front and monthly cost for this to work.
- Take $x from my own investment profits (enough so that interest more than covers monthly operational costs
- Invest it in 10% (for example) government bonds (good reason for this) in the US/Australia, etc.
- Take 5% interest, pay for operational costs directly overseas.
- Other 5% is reinvested in bonds. This offsets inflation and grows the investment by about 2% (give or take) forever.
- The really cool part: this way, the money NEVER runs out, and increases in real terms (after inflation) by 2% a year (or so).
What I'll be using this for:
- Plan to build a small school in a third world country to teach business (including agri-business) to kids so they can lead their communities, solve their own problems, and teach their own kids how to do the same. Use technology trees to build precursor technologies to help the community grow (eg: what do schools produce? Employees. Employees run economies. Teach kids how to be bankers, merchants, investors, etc. They can then start banks, trade with each other, invest in each others' businesses.)
- Example operating cost of a small school in a third world country per month: $1,000.
- Investment required at 10%: $240,000. Only take half the interest. Pay it to the school monthly.
- Audit the school's performance. Audit the community's performance (ensure improvement)
- Adjust and repeat as required.
Here's my formula for the money: Investment amount = Start-up costs + (monthly costs/(investment return-growth rate)).
Why government bonds? Risk-free investment. The risk is debatable, but their are few investments with this low level of risk. It means that as long as the USA or Australian governments exist, so does the money. It means security for the future income stream for the school. A similar amount invested in stocks might return more, but could do an Enron and turn to shizzle, if you get my drift. No more school then.
Summary: the money lasts forever (does not erode from inflation, but gets bigger). School lasts forever. Kids become leaders and teachers. They solve tomorrow's problems. Their schooling is free, based on a simple promise: when they graduate, they'll "pay" for their education by working on community projects as they see fit, and those who earn money can contribute a small amount to aid in educating the next generation, as well as returning as a guest teacher.
As my investments grow, I will build more schools.
How cool would it be to know that a school I build will be powered forever by a single little investment like $240,000, and will perpetually educate the people of a region to help themselves. One investment can do so much good, potentially forever.
Oh, and a very cool benefit: doing this without a shred of religious ideology being transported to these countries. I'm not religious, and there's a major charity here that I have a major beef with: it takes donations (almost some from me as well, before I did my due diligence), doesn't tell anyone it's a catholic charity (I had to read annual reports. Nowhere on donation web pages does a mention of their religous affiliation exist), and spends lots on admin, and some on overseas projects. Now, during the project, their volunteers/staff, who are there on the donor's dollar, spend some of their time to set up religious "education" programs. I haven't been there, but if the organisation who has more money than you thought existed in the whole world came knocking on your door and gave you some to build a well, housing and schools, would you be able to abstain from participating in their sunday schools and so on? I have absolutely nothing against religion, but it's the issue of the charity's power, and the potential inability of the recipients to obtain aid without hearing religious messages which they may consider to be attached to their receipt of aid. They may have their own religions and culture, and I believe this might even be a form of cultural destruction.
I acknowledge the good work they've done, but I think it needs to be done in a neutral way. That's why I've designed my own.
Sorry, it's late here and this might not be clear (or even coherent! Numbers may also be out, but they're only examples). I can barely see the screen, and after 19 awesome hours of investing, work, socialising, business planning, driving, sport and even a few minutes of Futurama, it's time for bed!
Daniel
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