Definition
Compound Interest as Legacy Strategy is a multi-generational financial and social experiment that uses the “snowball effect” of interest to fund long-term civic influence. The Franklin Trust (1790) was the prototype: a 200-year bequest designed to support vocational education while demonstrating the mathematical power of “money making money.”
Why It Matters
It demonstrates how the long-term application of mathematical laws can create massive, enduring civic influence from modest beginnings.
Core Concepts
- The 200-Year Timeline: Dividing the legacy into two 100-year phases. Phase 1 focused on small loans to “artificers”; Phase 2 focused on massive public works after the capital had compounded.
- Snowball Mechanics: Starting with a modest sum (£2,000) and calculating a specific terminal value (millions) through a 5% reinvestment mandate.
- Utility over sound: The fund was not for a monument but for “forming and advancing young men” to be “serviceable to their country.”
- The “Match” Component: Designing the trust to invite future matches (e.g., Andrew Carnegie’s matching bequest) to further scale the impact.