A company of top-tier traders for a cause: would you be interested?

T

TraderGreg

My dream is to start a company for traders a few years down the road.

My main goal is to bring top-tier traders together (while also hiring and training others with elite talent) and trade for a purpose. Profits would be split between personal income (percentage based + wage), reinvested into accounts and the company, and a solid percentage would go to a good cause.

The causes would be determined by a small team of researchers and popular demand of employees, ranging from charities, various aid and development programs, sustainability and environmental concerns, and loosely trying to find people and organizations that would put our money into the most beneficial uses.

My personal target is to contribute $1 billion USD before I retire.

I would also like to implement flexible work schedules (around 30 hours a week), and other benefits like large vacation time. Basically, I want to make it a voluntary effort to people who want to make a difference, and I value my free time.

I'd like to have traders an a wide variety of instruments, and a global macro team as assets grow.

Is this something you would be interested in?

Please note that this is a few years down the road, and I am not sure of the location - this is purely opinion and I would like to know what other traders are thinking.

Thanks

Edit: please note that any individual traders, other off-location traders, or even outside contributions would always be accepted. I'm not sure if this would be accompanied by employment status (not sure about this), but all contributors would be associate members, have voting rights, and would receive annual reports,etc. about where there money is going and why.
 
I think this is just an endowment that manages its assets for itself, no? You contribute $X to the foundation. The traders trade $X, get paid a salary + bonus, and then you have to spend some percentage of $X every year on some charitable cause. If everything fits certain criteria, the investment income is tax free.

In that case, why not just start an endowment. Start an asset management company. Have the endowment be managed by the asset management company... which is exactly how this space works...

So effectively, you just want a bunch of wealth individuals to build a general purpose endowment - did I get this right?

Quote from TraderGreg:

My dream is to start a company for traders a few years down the road.

My main goal is to bring top-tier traders together (while also hiring and training others with elite talent) and trade for a purpose. Profits would be split between personal income (percentage based + wage), reinvested into accounts and the company, and a solid percentage would go to a good cause.

The causes would be determined by a small team of researchers and popular demand of employees, ranging from charities, various aid and development programs, sustainability and environmental concerns, and loosely trying to find people and organizations that would put our money into the most beneficial uses.

My personal target is to contribute $1 billion USD before I retire.

I would also like to implement flexible work schedules (around 30 hours a week), and other benefits like large vacation time. Basically, I want to make it a voluntary effort to people who want to make a difference, and I value my free time.

I'd like to have traders an a wide variety of instruments, and a global macro team as assets grow.

Is this something you would be interested in?

Please note that this is a few years down the road, and I am not sure of the location - this is purely opinion and I would like to know what other traders are thinking.

Thanks

Edit: please note that any individual traders, other off-location traders, or even outside contributions would always be accepted. I'm not sure if this would be accompanied by employment status (not sure about this), but all contributors would be associate members, have voting rights, and would receive annual reports,etc. about where there money is going and why.
More...
 
Quote from sjfan:

I think this is just an endowment that manages its assets for itself, no? You contribute $X to the foundation. The traders trade $X, get paid a salary + bonus, and then you have to spend some percentage of $X every year on some charitable cause. If everything fits certain criteria, the investment income is tax free.

In that case, why not just start an endowment. Start an asset management company. Have the endowment be managed by the asset management company... which is exactly how this space works...

So effectively, you just want a bunch of wealth individuals to build a general purpose endowment - did I get this right?
More...

Well I don't know that much about endowments and the focus would be more on trading than wealth, but yes I think you have the idea.

I imagine it being an asset management firm with the goal of distributing a high percentage of earnings (only kept so that the company can contribute more over time). I would be promoting something more like a "trading community" for this purpose but I imagine it would be too loosely organized to be effective, and I think certain structure and incentives must be there.

Does that help?
 
Again, this is just an endowment that manages its own assets, isn't it? There are plenty of asset managers who trade capital belonging to endowments and foundations. Why wouldn't you just either (1) fund an endowment if you are rich, and/or (2) run/management/work for an asset manager if you are good at portfolio management or trading?

I guess I'm just not seeing why a self managed endowment has any benefit beyond being an endowment.

Keep in mind, an endowment can only get its tax benefits if it spends more than 5% of its assets (roughly). You'll need a fairly large asset base in order to (1) pay your traders, (2) meet your spending requirement, and (3) not draw down your capital so fast that your endowment will run out of assets in a few years.

So, it seems to me that if you are a trader and is socially conscious, why not just go on working as you do now, and then simply contribute to your charity of choice?

Quote from TraderGreg:

I imagine it being an asset management firm with the goal of distributing a high percentage of earnings (only kept so that the company can contribute more over time). I would be promoting something more like a "trading community" for this purpose but I imagine it would be too loosely organized to be effective, and I think certain structure and incentives must be there.

Does that help?
More...
 
And just to give you an idea of how much capital contribution you'll need, let's consider your "endowment" firm with 1 trader, and he should get paid at least 100k a year. Let's also be really optimistic and say he can make 30% a year. The inflation rate is 3% and you will spend 5% of endowment's asset per year on charitable causes. In order for your endowment to stay at constant asset level (and therefore can continue to operate without drawing down), the trader needs to contribute $455,000 into the endowment.

So, why would anyone want to do this? Would a world class trader who can make a steady 30% a year contribute half a million of his net worth, earning a modest 100k a year, and work for an endowment that only contributes about 22k a year to a cause?

The economics simply don't work.
 
OP,

I'll attach a few pertinent documents. You may wish to ignore the posts by sjfan they seem to be at odds with how it works.

The IRS Form 1023 is where it begins and there is an IRS/state conflict as well. Chose the state where you reside as a path that will help. Multi state is how everything turns out and the IRS is not able to deal with this as you will find out.

Not for profit guidance is found in document 557 and it is not in synch with the Application Form 1023. I attached page 1 read the right column carefully and get an updated version from the attachment.

There are instructions for Form 1023 and they fail to sufficiently "breakout" the details rquired in Part IV. I included the 8 items that you have to deal with (numbered in red by hand) and they are not even close to what is on the mind of the IRS. Second attachment.

The one thing they dislike is combining charitable purposes and anything in the financial industry. Unwritten and unspoken of on all levels of the IRS is the scamming they let people get away with today as a consequence of the IRS's past behavior.

Attachments 3 and 4 are the "check list". For you this can be used as a scope and bounds device. Here you see "years" of work ahead of you. And years of delays by the IRS.
when you fail to complete the Form 1023 as required, you get to begin laps of AIR's (Additional Information Requests). you will wait up to a year for the first resonse from the IRS and then the AIR response from you is limited to two weeks or you fail in the process and must start over. But you now have the right to appeal under Code section 7428.

The application is 12 pages of check offs and spaces for attachments. It comes to about 100 pages. I am attaching pages 2, 10, 11, and 12. In the first AIR you get, the IRS will likely change your category of charitable organisation. agreeing to the change is sort of mantitory, although it will be wrong. But is does define your amnnual filings.

All AIR's are public information and will be made public to requestors. There are many lurkers in this area.

In the process, the IRS will not respond to you in writing about any questions you have. you fax the phone synopsis and they still will not acknowledge that is what happened. Occationally they will send you an AIR and the evalauator's version of what happened and you are expected to "sign off" officially. It is a CYA procedure of the IRS when they make a mistake.

Skip working with Congressmen and work with Senators. Give the Liason a script after a face to face, then IRS management steps in and you are on an expidited supervisory level.

After the last AIR, a plan will emerge to get things covered that when wrong at the IRS. You will accept the idea that the IRS does not understand making money and how traders do what they do. Accepting donations is what you do and you put the money to work on the mission statement specific applications of capital.

You just have two initial problems: you are not doing a donation thing and you do not have specific applications described for the donations. This is a tough thing to handle.
 

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