Donation Certificates

This is an idea that I've been working on for a while. The core concept is that we should be building our civilization on a foundation of wealth instead of a foundation of debt.

The idea behind Capitalism is that capital is made available by people who have it to those that need it. That usually comes with a price. That price is interest rates. If you borrow money from a bank, they will charge you interest on that debt. If you have money in the bank, they pay you an interest on that wealth, because they can offer that money to other people in the form of loans. That is the basic concept behind banking.

There's nothing wrong with that, except that the people who have money are getting more benefit than the people actually using that money to improve our lives. The current system of borrow and spend, then pay back with interest does only one thing. It consolidates the wealth of our economy into the hands of those with the money.

That means it consolidates the power into the hands of those with money. And that's against everything that the United States stands for.

I believe that our growing economy should be the funding source for our charities while at the same time providing a steadily growing source of financial security for our future. Social Security was never meant to be a savings program. It's an insurance program for those who need a boost. If we don't need it, we should leave it to those people who do.

If you open a high yield savings account, you can get interest on that money. Let's use 4% for our examples. My idea is to split that return in half. 2% would build the balance of the account, and 2% would go to a charity or cause that you support. That's the core concept.

A charity could sell bonds and handle the account. You would buy the bonds, and they would put the money into an account earning 4%, and each month when the bank paid interest on the account, half of that interest would be available to the charity to fund their programs. So, if you buy $100.00 worth of bonds, at the end of the year you will have $102, with $2 going to the charity. Doesn't sound like much? What if you buy $1,000 worth. At the end of the year, you will have $1,020, and $20 will go to fund the charity. $20 per year is a standard annual membership fee for many non-profit organizations. Get some friends to also buy some bonds, and the account balance goes up. And with many banks, the higher the balance, the higher the interest rate they will be willing to pay, because it means that they have more money to lend out at 10% to people buying homes or financing a business venture.

President Eisenhower said it this way:

Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.

This world in arms is not spending money alone.

It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children.

The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities.

It is two electric power plants, each serving a town of 60,000 population.

It is two fine, fully equipped hospitals.

It is some 50 miles of concrete highway.

We pay for a single fighter with a half million bushels of wheat.

We pay for a single destroyer with new homes that could have housed more than 8,000 people.

This, I repeat, is the best way of life to be found on the road the world has been taking.

This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron.

What the President was leaving out was the fact that investment in infrastructure, be it a school, a power plant, a highway or a hospital, provides the community with value for years or decades into the future, but spending it on a bomb means that as soon as that bomb explodes, that money is gone. And since there is no purpose to building a bomb except for it to explode, even building the bomb is a waste of the money when compared to other potential uses. And it must be said that the money goes to the military contractors.

I'm not saying that we should not have a military. I'm saying that we should understand the true cost of what we are putting our money towards. If it is still worth that cost, so be it.

In finance, a similar principle can be cited. Every dollar that goes directly to a charity goes to do good work. But the money once given is gone. With our economy building the way it is, there is a better way. With Donation Savings accounts and Non-Profit Bonds, the main advantage to the donor is that the amount of money never goes down. Nobody loses money. It's an investment that always grows and never loses value.

This is not going to replace direct donations. Many charities have budgets of a million dollars or more. To get that from a 4% Interest rate would take an account balance of $50 million dollars. While this might not be impossible for someone like Bill Gates, it's still a heck of a lot of money. And in order to be comfortable with that amount of money "just sitting in the bank" will take a major adjustment in our attitudes about money and a better cultural understanding of the entire monetary system.

However, considering the money that we raise for nationwide political campaigns, $50 each from one million people doesn't seem that impossible anymore.

Please send me feedback. I need help to get this off the ground. You can post a comment on this blog post, or send me an email.