Non-profit finance fund set up

Investment in an economy, especially in businesses, has to be non-profit, otherwise the investor will seek abusive bosses to suck money from workers on his behalf. Eventually the entire leadership strata of a country comes to consist of people abusers, resulting in corruption, war and dictatorship. If it is not feasible to avoid this by implementing sound laws, it may be possible to do set up the correct investment system on a smaller and private scale. In the end that will not be enough, and this fund is likely to be seen as the deadly enemy of all for-profit investors, but it is a start to one day press all for profit finance out of an economy, ending its dangers for the productive economy. Because of this nature and promise, the fund may see rough handling by certain authorities and powerful groups manipulating money and credit, worse if the success becomes better. It is important to realize this when confronted with a fund failure of some kind. In a badly set up economy that allows for profit finance, this kind of fund is an activist kind of enterprise. It is more or less: the People versus the banks, in real life and people can die. At the same rate, people who are indifferent to the issue will probably come over to non-profit finance sooner or later, even if that can take centuries and many set backs. On the other hand, this kind of finance can offer immediate benefits to its participants (as fair loans and/or labor conditions).

The total cost of the system is: cost of maintenance and wages of fund managers + cost of the investment capital and loan defaults + potential overhead from legal or illegal manipulations by Capitalist authorities, the for profit finance establishment and for profit investors. The first two costs are unavoidable, the second probably ends when the law of a Nation is set right.


Participants send two monthly payments, one payment to build up and maintain the investment sum (capital account), and the second to pay the investment fund managers for their expenses and wages (service account). The managers should never be payed out of the capital and/or profit on loans, but only through direct taxes on the participants and the service account. The payments to the capital account would first need to be higher to build up the fund, later these payments would only be necessary to maintain the size if there are losses. If the fund asks rent on loans these capital account payments could even become zero or profit. If there is profit, it is important it is returned to the participants and not to the managers, keeping both kinds of money separate at all times, thus preventing a profit motive from occurring. It may be necessary to verify the fund accounting independently, to maintain the separation of the accounts and therefore the integrity of the non-profit nature of the service.

From this one can see this is a real productive business, where one pays for a service, unlike giving money to a bank or for profit investment fund, where one would "miraculously" get payed on top of getting a service. There is no miracle with for profit finance though: the money is taken from the productive people, from their wages, from your wage; you pay through bad labor conditions and low wages (unless you are in the boss/investor category yourself).

The fund can deliver two kinds of loans: consumption credit to individuals including mortgages (if the fund size allows it), and business upstart or business expansion project credit. The business upstart credit should be given to people who are unlikely or who promise not to abuse their workers with unfair wages compared to company profit, that is not a major difference in income between owner/boss and workers. In this the fund would act in an opposite way to for profit finance, which is the goal.

It does not matter in principle whether loans are given with or without interest. If they are with interest, the additional income goes to the capital fund, putting the cost on maintenance of the fund on the lenders and not the participants. Since the profit does not go to the managers, no profit motive occurs. An indirect profit motive may occur from the side of the participants though, with the negative effects of stimulating abusive bosses. This may however be off set by the knowledge that lower costs on the credit system through high interest loans comes back to haunt the participants in their professional lives as low wages and bad labor conditions. When loans are without interest, or only inflation correction interest, the capital account will need to be replenished more often with funds from the participants. In general it may be a easiest to decide one interest rate a for all loans, and never deviate from that rate: keeps it simple.

Loans could be made to the participants in the fund only, or to everyone. If made to everyone, the persons who take the loan should take the cost of the maintenance of the system proportional to their loan: they would then pay for the service and the general cost of loan defaults (default means loan is not payed back) proportional to the risk (size of the loan compared to generally associated default cost) and effort involved. Participants would already be meeting these costs when taking a loan from the fund.

For people who never take out a credit loan, the system can still be of use, because they may come to work in businesses that were funded with non-profit service cost finance, which protects the living standard and working conditions of just about everyone who is not in the financial for profit establishment, or the boss structures it maintains in the economy. In an economy that has sound laws, disallowing for profit finance, the cost of this non-profit finance would come back as taxation. It is therefore a to be expected cost of life in a technical society. Someone has to pay for minimally needed services, just as someone has to pay for roads and water lines. However once for profit finance is gone from a Nation, the total cost of the credit system is likely to drop because it will not be fought against in all manner of ways by for profit finance.

For additional positive economic effect, it could be agreed that a business invested in by non-profit finance goes into the hands of the workers once the original owner/boss goes away. The original boss/owner will receive compensation from future profit, for instance as if still an employee without actually working at all. Since this is not feasible with very small businesses, the cut off point could for instance be: if there are 1 owner plus 9 or more employees, it goes to the employees, if less the owner can do what it wants.

To keep the integrity of the fund high, it may be a good idea not even to accept people as participants or lenders who own shares and stock or who are associated with money gambling in the productive economy, who have banking capital and the like, because these can be mechanisms to infiltrate and take over the fund. That kind of money is contrary to the way it is supposed to work, it brings in people with wrong ideas who may only be looking to take the fund over and make it a failure somehow. One would also need to be careful if such a fund is set up, that it is legitimate, and not a scam set up by for profit investment interests, who are looking to discredit the idea by setting it up and then mismanaging it. A form of democratic control by participants over the managers is therefore needed: to defeat infiltration and mismanagement.


* The service and capital accounts remain separate at all times.
* Participants pay 2 sums, one to a service cost account, one to the capital sum account.
* The fund managers make sure to award funds to businesses who are unlikely to abuse their workers with a high income disparity between owner/boss and workers.
* Gaining the highest possible interest on a loan is a goal to be avoided, especially for business upstart/expansion credit, because it is low wages and bad labor conditions for workers that is likely to end up paying that price. For workers: the participation fee is a cost (A), the lesser disparity between boss and worker is profit (B), and the expectation clearly is: B is greater then A, hence profit for workers, while bosses are not getting less then their employees either.
* This kind of system is not enough and may not even have any measurable real results. But it is a start to setting the law of a Nation right, which is the ultimate goal, at which point the difference in the economy over time should become great and overwhelming, more or less transforming the economy from injustice to justice, especially when combined with some other sound laws such as for land-distribution, no for profit monopolies (such as infrastructure), and seriously democratic Government ...
* It may take centuries and a lot of struggle and cost to get the law of a Nation right, but every time a Nation disintegrates under pressure of its own bad law and hence bad leaders, there is a great opportunity presented.

"Money selling"

Isn't the above scheme "money selling" ? In a wide sense of the word: yes, it is money selling, and can even be lending on interest. The difference with simple money selling, where the profit comes from the interest on the loan and hence the need to seek a high return on the interest and seek parties able and willing to provide a high return, is that the profit does not come from the sale of the money, but rather from the regular contributions of the participants, which are (supposed to be) impervious to the interest or other return on the lending activity itself. Technically it can be called money selling, because that's more or less what happens: money changes hands for a price. On the other hand, the system is meant to cut out the profit motive, replacing it with a "motive to please the participants, who are supposed to be pleased with a well managed credit system that does not promote abusive business bosses." For profit and non-profit investment lie very close to each other, and the system that's non-profit as an investor system, can (and should) still be profitable for the fund managers, who can make a livelihood out of it.

Since it's all so close, a little sophistry may be useful: "this isn't selling `money,' but selling a `service that sells money.'" Technically that is correct, since the fee to the service account is for a general service being provided to anyone, the contributions to the capital account are to provide the system with the tools it needs. This results in a "service that can be delivered," not unlike insurance. If there's interest on loans then that is not "profit" (as in price difference resulting in profit in a sale), but rather repair for incurred damages on the size of the capital account from loan defaults, like paying ahead of time for damages to a rental car business.

This line would be crossed when a loan is given and somehow its proceeds or excess ends up as profit for a fund manager. This type of fraud could happen if a fund manager (in breach of the system) demands an excessive payment to the service account to make a loan, or if the system is directly broken by moving funds from the capital fund directly to the fund manager's income (service account), or deceptive schemes making loans to friends that then default, and the like (a "for profit" activity at least, though more like a common crime). Such practices would put a profit motive on the fund managers on where to place the money, breaking the system (turning it into a form of fraud, probably hidden from sight for the participants).

To prevent problems like this requires adequate oversight. It could help if there are objective rules for when a person can get how high a loan, and to make loan agreements public knowledge. It may also help to separate the consumption credit and business start/expansion credit loans: to make the system for business loans more difficult, have more of a say from the participants in whether to agree to such loans, since it can be difficult to predict the risk, the risk is likely high, and there can be long term consequences (positive and negative) from such an investment (growing up a good or bad business).

Undermining the profit motive when dealing with money itself can be or is complicated, because naturally/usually everyone likes to have money.

Excess currency

An interesting way to invest excess currency, is to buy land. The land can then be rented to a company and the income used to repay the cost, risk and labor involved. When the land has re-payed itself, the right to use or rent it out could be awarded to the participant(s) who have been longest in the fund. A percentage of the potential income for the new land-user/lender could be returned to a new account, to build up more funds to buy more land, an so on. The legal ownership (if that exists) can be retained by the fund, so that proper and fair use/rent policies can be enforced. The land could be awarded per National part, so that in theory if everyone was in such a fund, and all land became owned by such funds, the whole system would be in operation: [DA] The fund is overseen, steered and funded by the participants: Democratic Authorities, [DV]: it grows up companies that when viable end up owned by the workers: Democratic Ventures, [DI]: it invests money with a social-political motive, Democratic Investments, [DD]: it distributes land to people fairly, Democratic Demarcations. The whole system in operation, run, organized and funded by a club of people, who do not have to get in anyone else's way to do what they want to do. No revolution required.


Name: People's Investment Fund - D.A.V.I.D.
Location: Ho Chi Minh, Vietnam
Number of participants: 128.653
Currency: Vietnam
Interest-rate business loans: 10% (binding democratization contract)
Interest-rate consumption credit: 5% (payable as participation dues)
Interest-rate for long time participants: 0% (or inflation correction)

Assets: +- 5.000 acres farmland, 2.320 acres woodland, 2 offices
Staff: 15
Monthly participation due: 1% of income + 1/60th average income
Capital participation due: variable (percentage of income) *)
Power structure: direct, participatory and representative democracy

*) Usually not more then monthly participation, never more then 1/30th median income; very low incomes do not have to pay the capital due.
Date: Approved: Recipient: Sum/Cost: Comments: Risk: +++/--- Member Since
22-Jan-2008 Kim A. Chiang C. (AgriDo) 50.000 / 5.000 + particip. Rice farm [start] {naddi > 90%} +++ 21-jan-2008
22-Jan-2008 Kim A. Doh Y. [loan < contr.] 500 + infl.corr. Cons.Cr. (baby) -- 07-jul-2006