2008/11/11 Anthony wikimail@inbox.org:
Don't forget the private foundation excise taxes. A 501(c)(3) which relies solely on interest income to support its needs, fails the public support test.
Where can you safely get 5% interest, anyway? The 30-year bond is around 4%. Long-term municipal bonds are around 5%, but they're not totally safe nowadays. And this is, as Gregory pointed out, before inflation. The chance that the US is going to start adding zeros to its dollar bills in the next 30-years is non-negligible.
Those numbers were thrown together to show that even with some very generous assumptions the approach was impractical.