The main reason I like microcredit is that when you donate money, it makes the microcredit banks increase the speed at which they operate. In other words, it's a gift that keeps on giving. What's more, the people who use the microcredit start producing more wealth, so it's a gift that keeps on giving gifts that keep on giving. Then it occurred to me that, although in the short term the wealth being in third-world countries may produce more happiness, in the long term the wealth will trickle around, so I would be better off with a charity fostering the creation of the most wealth. It would be something profitable. Something that people give loans to for a profit. In short, it should invest money.

The charity would be like a mutual fund, only they'd never let anyone take their money out.

There are some problems with this.

1. There's the idea of someone just getting new loans to pay off their old ones, like the US government. Normally, a bank would learn to avoid people who'd do this, and cut their losses by taking the collateral when it happens. This charity would be quite capable of letting someone do this literally forever, and they may very well never notice. Someone could potentially take unlimited amounts of money, and just say that they're paying huge amounts of interest.
2. While at first it could invest in whatever the market picks as the best, or even just invest at random and let the market even it out by investing in the places the charity missed, at some point the charity becomes a big portion of the market, or even most of the market, and this no longer is possible.
3. As the amount of money in this charity grows, so does the power of the executor of the charity. If he gets corrupt, it would cause a lot of damage to the charity.

We could prevent problem three by giving a specific method of finding what to invest in, such as buying stocks from the 100 companies worth the most. Unfortunately, this makes number two a bigger problem.

The simplest way to stop problem two would be to donate money to other charities when this one gets too large. That would make number three a bigger problem. The charity could just burn the money, which would cause deflation and effectively just give everyone money in proportion to how much they have. The problem is that this will diminish the value of the charity. It's probably a good idea to keep it going until it actually starts losing money.

I think all of the problems I listed so far could be stopped, or at least significantly mitigated, by making the charity split periodically. The pieces that get more interest would become a larger portion of it, and the ones that actually lose money would disappear. Also, nobody would be in charge of the whole thing, so they wouldn't be too corrupt. It would also be the people who aren't corrupt and who are competent who chose the new leaders.

Does anyone have any arguments to the basis of the charity, any more problems with it, or any more possible solutions to problems already listed?

DanielLC wrote:in the long term the wealth will trickle around

I think you should discount expected return quite a bit for the uncertainty of this claim (not to mention the kind of uncertainties about long-term payoffs I was just describing to Alan here). Several prominent economists/mathematicians think it's at best much more complicated than that, at worst false.

I think you can do much better by putting money into causes that either pay off sooner, or that at least that have a scientific consensus behind them.

What uncertainties are you referring to? I can't imagine that it won't cause an increase in investment, and the investments will certainly tend to be worth while. The charity will diversify the investments, so it's not going to disappear unless everyone in the world stops paying their debts. It's not as if we will run out of things to invest in any time soon. I'm sitting on a six sextillion tonne pile of resources and under a power source giving off enough energy to mine it all every week.

Toby Ord said that donating to the Fred Hallows foundation is over 42,000 times better than keeping the money. It would take 219 years at 5% interest per year for this charity to be better than that. Certainly, the charity would last longer than that.

I admit, I have no idea how much interest per year is normal. Can someone tell me so I can make that last part realistic?

I recently found a place that actually does this: the Time Travel Fund. That's not what they're trying to do, but unless someone discovers time-travel, it amounts to the same thing.

Ha! I suppose that if anyone who has contributed to the Time Travel Fund dies, that is evidence that (i) time travel will not become possible for us (ii) future folk aren't interested in retrieving us, (iii) the fund just doesn't have enough money yet, or (iv) it is possible to change the past.

Or (v) they're very good at tricking out time.

I decided against this idea because for a reason explained in Donate vs. Invest.

I'm probably not the only person who suspects the Time Travel Fund might end the world, but I probably the only one that thinks so for reasons other than time travel paradoxes.