I want you to imagine with me what positive and worthy things could be done with that much money. But let's not imagine it all way with our wish lists of favorite charities. I don’t want us to spend a single dime of that money. Instead, lets image what we could do if we put all that money into a charitable trust where two laws applied:
1. The principal or the corpus of the $11.6 trillion could never be touched. So, you might be thinking, if we can’t touch it then what good is that, what can we do with it. That’s where the second law comes in.
2. The foundation managing the trust could only tap the annual earnings from the interest and they could only spend the proceeds for charitable and philanthropic activities.
Lets use college scholarships for example. There is a lot of talk these days of making college more affordable or providing students with cheaper loans. But every time the government gets involved, offering a subsidy for student for example, the cost of education just goes up. It never goes down.
Government subsidies have a way of creating what has properly been referred to as economic bubbles. These bubbles are caused when the price of something is artificially inflated. That happens because there is money available for more people to enter the market for that item. Remember the housing bubble? Economic bubbles eventually collapses.
Just like the housing market that crashed and gave us the greatest recession in decades, there is a higher education bubble caused by artificially inflating college education. The colleges are charging too much for a product that is not equal to the value, graduates are unable or unwilling to pay them back and I predict we are just a few years away from a collapse of higher education and that will see many colleges go under. Did you know that 85% of all law schools are losing money, despite the fact they charge $300,000 to attend, and they could go under in the next few years.
Now, instead of that happening, in just a decade we could provide free college education to anyone who wanted it without anymore taxes, student loans, debt and defaults or economic bubbles.
How many colleges do you know of where students can attend for free?
I think there are maybe three colleges in the whole country where someone can attend tuition free. One of them is, Berea College in Berea KY. I know it first hand because that is where my son attended and graduated. The only reason Berea College can offer a quality education to all its students is because it has a $1 billion dollar endowment. The interest earned annually on a billion dollars is enough to educate over 1,600 students each year for free. At Berea, every student must be in the work study program to attend, in other words they have to put in a little sweat equity into their own education, but that’s another reason it’s an exceptional and rare program.
So the point is that the interest on a billion dollars can do a lot. Right? Absolutely, and a billion dollars is just chump change for the federal government. Think of it this way.
The largest charitable foundation that exists in America today (and I think in the world for that matter) is the Bill & Melinda Gates Foundation with $42.3 Billion in assets. Last year, in 2013, using just some of the interest earned on $42.6 billion dollars it gave away $3.6 billion in grants to all sorts of worthy causes and organizations. For example: The United Negro Fund, where a mind is a terrible thing to waste, received $1.37 billion for scholarships from them. Save the Children got $112 million for its work to save newborn lives. Rotary International, a great civic organization I use to be a member of, got a huge boost in their long time commitment to eradicate polio from the globe. The Gates foundation gave them$355 million. That kind of money along with the volunteerism of the Rotarian's and I think they will actually defeat polio. That’s the power of an endowment. That’s what an endowment of just $42.3 billion can do.
Since its inception the Gates foundation has given away a total of $31.6 Billion. This is truly remarkable. With that kind of money, think about it, thirty-one colleges could become Bereas. Thirty-one colleges could provide tuition free education to nearly 50,000 young people every year.
So now imagine what would a foundation with $11.6 trillion in assets be able to do? Apparently it can do a lot more good than our leaders in Washington are able to imagine. A foundation with $11.6 trillion in assets, the same amount that has been wasted in the last five years, could produce - are your ready for it - $580 billion annually. That is a conservative estimate. If the money was invested and managed well and the market was just fairly good, it could be twice or even three times that amount. Now imagine with me what could be done with that kind of money? Here are just some exciting possibilities.
1). 580 colleges could get a $1 billion endowment. In just four or five years, every college in the country would have a billion dollar endowment. Or we could do it another way which would stimulate competition and thus keep the price of education down. Instead of granting it to the colleges we could give the money directly to the students and they could choose the colleges they wanted.
2). Every year, nine million college students could get a $64,000 scholarship. This equates to free college for everyone. Students spending less than their $64,000 grant could use it for other things to prepare themselves for adulthood. So instead of graduating with debt, our nation's college students could graduate with healthy savings accounts and a good start on life. What a boost on the economy that would be.
But wouldn't a lot of that be wasted? A good portion of those students would just waste it and that would be no different than the government. But unlike the government, when they waste it the economy is helped. If college students use some of their money to purchase goods and services, lets say they go out and buy a new car, they are contributing the the Gross National Product and that would be a good thing.
3). 58,000 charities, from hospitals to food pantries could each receive a $10 million grant each and every year. Or, 136,000 charities could get a $5 million grant. Or, every charity currently in existence could get nearly a million dollars a year in grant money. I know what that would mean to Patrick Henry Family Services.
Just think of it. Hundreds of thousands of charities would be helped over the years. Hundreds of millions of people would benefit every year. But maybe, like our example of the colleges, it would be better if we helped people directly instead of giving it to charities where some of those funds will be used for administrative costs and maybe even wasted.
4). 5.8 million families could receive a $100,000 grant to buy their first home or pay off an existing mortgage, send their kids to decent schools. In ten years, nearly 60 million poor and middle class families could own their own home. Or 5.8 million families could pay off health care debt. No more government housing needed. No more bankruptcies. Imagine the boost to the economy if every American owned their own home and if no one had medical debt. But also imagine how much better off children and families would be if those kinds of economic pressures were removed, if they had the good things they need. There would be all kinds of positive social ramifications resulting from prosperity.
Now that is not to say that money can fix everything. I don’t take the government's view that you can throw money at problems. But I do believe that money invested in the right way for children and families would solve a host of social and personal problems.
In short $11.6 trillion in a charitable foundation could provide universal health care for poor Americans, a college education for every student despite the need, or it give decent housing to every American that can’t afford it. And here is the best part. We could do any one of these things and many other worthy things without relying on any of the tax money currently being taken from the earning of hard working citizens.
Instead, what do we get with our $11.6 trillion of our tax money? We get wasteful government projects that don’t stimulate the economy. We get temporary jobs that cost the taxpayers a lot of money per job. We get more corrupt politicians. We get bloated bureaucracies where workers are the only ones getting any real benefit. We get more and more national debt that threatens to bankrupt the country. And we get a divided country where different interest groups constantly battle each over the funds sloped at the government feeding trough. It’s an absolute travesty.