I definitely agree that financing charities is an issue, but there are various possibilities. You could finance them through donations for a few years while declaring that, from x years time onwards, your funding would depend on the results obtained using the money you donated; from that point on, the system would be self-sustaining for effective charities, and not for ineffective ones (which would be, I think, a good thing). Or they could borrow money from lenders who want to support charitable causes and are willing to lend at lower interest rates, or through a social impact bond structure where lenders provide money in return for some or all of the future results-based payments should the charity be effective. Or, finally, through borrowing at market rates, though I agree that this is likely to be uneconomical, at least until there is more evidence for judging which charities are likely to be able to produce good results and repay the money they borrow.
So the charity would … borrow the money, at market prices? Rather, try to borrow, what with typically having little securities and all.
They can use equity financing of course. The money you’ve promised becomes the profits, to be distributed to shareholders in the event of success.
I definitely agree that financing charities is an issue, but there are various possibilities. You could finance them through donations for a few years while declaring that, from x years time onwards, your funding would depend on the results obtained using the money you donated; from that point on, the system would be self-sustaining for effective charities, and not for ineffective ones (which would be, I think, a good thing). Or they could borrow money from lenders who want to support charitable causes and are willing to lend at lower interest rates, or through a social impact bond structure where lenders provide money in return for some or all of the future results-based payments should the charity be effective. Or, finally, through borrowing at market rates, though I agree that this is likely to be uneconomical, at least until there is more evidence for judging which charities are likely to be able to produce good results and repay the money they borrow.