[Foundation-l] Putting the Foundation back in WMF
saintonge at telus.net
Sat Nov 17 22:27:06 UTC 2007
> On Nov 16, 2007 4:41 PM, Lars Aronsson <lars at aronsson.se> wrote:
>> the WMF set up a long-term fund and move some of this year's money
>> there, as a reserve for future meager years?
> Not to any significant extent, for at least two reasons.
> 1) There would be negative tax consequences to doing so.
> 2) The only remaining check the community has on the power of the
> board (the power of the purse) would disappear.
> Incidentally, 2 is actually the reason for 1.
Of course it would be unwise to not consider the tax consequences. Any
concrete proposal must be viable in its own right before we even
consider the tax effect. Once we get that far we need a clear
evaluation of the tax effects and the possible mechanisms to avoid them.
When did the community ever have the power of the purse?
>> If the interest rate
>> is 4% then a fund which is 25 times bigger than the budget can
>> support it in whole for ever.
> If there's never any inflation or taxation, maybe. But in the real
> world, no, a much larger fund (or a much higher interest rate) would
> be necessary to support the foundation forever.
Sure, but let's not deal with forever until we get there.
>> (Some people would claim they can easily earn more than 4% annual
>> interest. Obviously, they should start savings banks.)
> Too many regulations, unfortunately. It is easy to earn more than 4%
> annual interest, in US dollars, though. Even long term treasury bonds
> can do better than that. Use something like prosper.com and you can
> probably get at least 8%. Don't know about other currencies, except
> that interest rates vary greatly among them.
I agree that planned investment can do better than 4%, and still be
relatively safe, but needing the funds in the very near future severely
limits investment options.
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