Comment by kvinogradov
1 day ago
The explanation is simple — nobody can predict exact annual returns, and they tend to fluctuate. We aim to spend at least 5% per year on OSS grants and need to decide if we can spend more on them or should reinvest based on specific annual results. And target earnings should overcome inflation.
Reasonable answer, but this part:
> Why not build something super minimal that requires less management and operating costs? That doesn't have the market risk at the center of it all? That doesn't have more points for fraud and abuse?
could still be usefully addressed.
The best long-term protection from fraud and abuse are aligned incentives through skin in the game. That’s why we legally require all people in governance to be Members ($1000+/year donation). This is an important topic, and here you can find more context on this: https://kvinogradov.com/osendowment/
I think this is really missing the point of the question. I know that it is common for endowments to be invested "in the market" - people believe that's the most responsible thing to do. But the question was about why do things the normal way? Why link up market performance of a set of investments with funding mechanisms for OSS? If you're going to be bold and try to fund something that is, in market and economic terms, quite off-norm, why do that using entirely normal systems that are at the core of a capitalist economy?
1 reply →
“super minimal that requires less management and operating costs” - that’s exactly our current setup, and always will be the target!
Now OSE has no paid employees - the team is 100% volunteers. Its Board Directors and the Executive Director are required to personally donate $1000+/year. Operating costs are close to zero.
As organization evolves there might be higher operating costs, but our commitment to keep them as low as possible.