[leetcrew]

assuming the gates foundation is one of the "good charities", why is this better than taking sustainable withdrawals from the endowment and spending ~8bn/year in perpetuity? $8 billion every year until the end of civilization is a whole lot more than $150 billion plus appreciation over twenty years.

[bluGill]

The assumption that the gates foundation is "good" today does not imply that the foundation will be good in the future. There are several family foundations that I'm sure are supporting things that the original "robber baron" who earned the money would strongly opposed to.

[tlb]

It's a "good charity" because Bill is actively involved in deciding what are the highest-impact projects. Once Bill dies, it'll be managed by a succession of people who probably aren't as effective.

Also, the Gates foundation funds projects that create benefits that continue indefinitely, such as eradicating diseases. Better to do that now and have malaria-free populations contribute to their own increasing prosperity than to keep the money in a bank for later.

[logfromblammo]

The actuarial calculation will show that the amount you spend now is exactly equal to the present value of periodic amounts spent into perpetuity, if your assumptions about future rates of return hold forever.

My personal hypothesis is that spending is better for the economy than investment, so I would prefer to spend 10% and invest 90% for 20 years, then spend the remainder, than to spend 3% and invest 97%, forever.

[LeifCarrotson]

8*20 is 160 billion, so your endowment's investment return is pretty optimistic.

More importantly, inflation and opportunity costs will take a big chunk out of your investment. Assuming consistent 2% exponential growth, and a civilization lasting millenia, that generous $8 billion you set aside today for budget year 3018 is worth about $20 in today's dollars.

http://www.in2013dollars.com/2018-dollars-in-3018?amount=20&...

[leetcrew]

I assume a withdrawal rate of 5% (slightly aggressive) and assume the endowment will be $150bn after the remainder of gates' assets are donated. I don't think thats terribly unrealistic. I certainly dont mean that they would spend $8bn nominal dollars each year; I am aware of inflation and the impact it has on returns.