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Comment by fastball | Hacker News Reader

Technically it's not a donation, it's a 0% interest loan that doesn't need to be repaid until 2068. And $50M was the initial amount, but it's up to ~$100M now.

https://en.wikipedia.org/wiki/Signal_Foundation

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This is a tangent, but what's the financial rationale for setting up this kind of an arrangement instead of a donation?

Loans get paid back... donations don't. An organization that takes donations (like wikipedia) will have to keep asking for donations... while an organization that has a debt can take the time to figure out a revenue model not driven by ads to allow them to repay the debt.

Wikipedia's average donation is tiny. That's why they keep asking. The way you've written this it suggests that if instead of giving wikipedia a $2 donation, we have them $2 no-interest loans, weed be helping them prepare for the future and they wouldn't have to ask for more donations (or loans) from us. That's not how it works.

To whom? To the 'donor' (as it were) it's probably (jurisdiction varies, IANA tax advisor, etc.) a decent inheritance tax avoidance (obligatory 'as opposed to evasion') - helps out a cause he believes in, while leaving the capital (hopefully/in theory) for his inheritants.

To the recipient.. I don't know why you'd prefer it to a (stipulation-free) donation, but in general it's probably easier to get big loans than big donations.

Since it's 0% interest you could probably make enough profit by investing it in the stock market instead that you could pay inheritance tax and still get more than the initial amount out of it after 50 years. So I would not call this a tax avoidance scheme, it seems more like "help this cause I care about and if it becomes successful enough to be able to pay my children back then that's great".

Oh absolutely, but we're comparing donations and loans to the same cause, not arbitrary 0% loans and more efficient/profitable 'schemes' right?

I think it actually is more helpful to the business to get a loan instead of a donation. With a huge donation you can do whatever you want with it and may overinvest or spend wastefully, until the cash reserves run out. A loan means that the business has X-many years to be self-sufficient. So I think it helps the business's culture as it's developing.

This is like the awful paternalistic version of my thought. Ha. My guess is that there's a implied agreement, "keep to your promises about how Signal will be run and developed and eventually the loan will be forgiven altogether; try to burn me on those promises, like Zuck did, and that'll be a $100 million gamble." And sure, with inflation, the longer they're around, the less daunting the figure will be, but that may be the point, or the loan could be refreshed with more money that just keeps the prospect of repayment a perpetually serious prospect (it was doubled once already).

Oh, I like that explanation better actually. They very well may have an agreement like that where he'll forgive the loan as long as he's still happy with how they're running it

Sir that's a 300 IQ move, admirable.

> while leaving the capital (hopefully/in theory) for his inheritants.

With inflation $100M will probably buy an ice pop in 50 years.

In the event of a sale, the loan remains and will either be paid out or carried on to the new owner.

This is an extremely good point. So many small idealistic companies are bought out, with the "baggage" of a big loan anyone who did want to buy out Signal for profit would have to now pay 100 million dollars.

If I had oodles of money I'd probably do this, "I'm just giving you this money now, but if you got bought up by someone without those same ideals they need to pay up.”

Given it’s the former WhatsApp CEO even more reason to be skeptical.

Why the skepticism? Sounds great to me.

I'm reading it as, "Given it’s the former WhatsApp CEO [who's already been burned once, they have] even more reason to be skeptical [of acquirers holding to the values of the acquired]".

Ah yeah, that makes sense!

Yep that was the correct interpretation! CEO being reasonable.

We went on this tangent yesterday in this very same discussion. HN needs better search.

Sounds like mostly a donation to me. In 70 years, assuming 2% inflation, inflation will have reduced the value of the debt by 70%.

> In 70 years

2068 is in 47 years. A long way away, yes, but still a big difference.

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