Permanent Endowment Research Project Explanation

The hypothesis for the Permanent Endowment Program Research Project was that a guaranteed outcome that created perpetually multiplying, intergenerational endowment funding that was a multiple of gifts received would mitigate the endowment funding deficits of 501 (c) 3 non-profit organizations.  Financial institutions capable of guaranteeing the intergenerational leveraged outcome had to be identified.  Obtaining intergenerational multiplication of endowment funding through risk investing had been demonstrated to be ineffective through findings of research into the philanthropy of Stephen Girard.

Stephen Girard was America’s greatest patriot-philanthropist.  If it were not for Stephen Girard America may not have prevailed in the War of 1812 and retained its independence from England.  Stephen Girard was a merchant, a mariner, a banker, a philanthropist, a humanitarian and a patriot. He deported himself heroically on many occasions on behalf of the United States, the adopted country that he loved. Ironically, few Americans are aware of this French immigrant who saved our new nation from reverting to British colonial status and was the wealthiest American citizen when he died.

The Stephen Girard Research Project

Image by JR Lambdin

The Life of Stephen Girard

“My deeds must be my life. When I am dead, my actions must speak for me.” -Stephen Girard-

1750 – Stephen Girard was born on May 20 in Bordeaux, the largest seaport in southwestern France. He was born with a blind, deformed right eye.

1762 – Girard suffered the loss of his mother who died one month before his twelfth birthday.

1764 – Girard set sail for the West Indies, in training to become a  captain.

1773 – Girard received his captain’s license at the young age of twenty-three.

1774 – Girard sailed from Bordeaux to the West Indies, intending to return home.  He did not realize at the time that he would never see Bordeaux or his father again.

1774 – Girard sailed from the West Indies to New York with a cargo of sugar and coffee. 1776- The Revolutionary War began and due to a British blockade, Girard was forced to sail into Delaware Bay, rather than his New York destination.

1777 – Girard became a merchant in Philadelphia. He made voyages to the West Indies, eluding British warships, to get supplies.

1777 – Girard and Mary Lum were married. Fearing that the British would capture Philadelphia, the couple moved to New Jersey and opened a store in their home.

1778 – The couple moved back to Philadelphia after the British evacuated. Girard continued to be a merchant and began investing in ships. He also became a U.S. citizen.

1781 – The Revolutionary War ended with the surrender of Cornwallis in New York.

1785 – Girard’s wife Mary began to go insane. They had been married eight years.

1790 – Upon the recommendation of a medical team, Girard had Mary committed to a hospital as a result of her insanity.

1791 – George Washington was President and the First American Bank opened with a twenty-year charter. Girard was a strong advocate for the bank.

1793 –  A deadly epidemic of yellow fever struck Philadelphia, causing fear and panic. The epidemic killed about sixteen percent of the city’s population.  People fled the city by the thousands, often abandoning their own spouses and children. Girard stayed and volunteered to care for the victims at a make-shift hospital he created in his north Philadelphia mansion.

1794 – American ships were being harassed on the seas. Girard began to aggressively defend America’s right to freedom of navigation. He organized a rally of six thousand people to protest Washington’s foreign policy.

1797 – Girard purchased a farm and visited it daily, doing much of the manual labor.

1811 – The First Bank of the United States closed, because its charter was not renewed. Girard was the bank’s largest shareholder and had supported renewing the Charter.

1812 – Girard bought the bank and opened it for business nine days later. He was now a mariner, a merchant, a farmer and a banker.

1812 – Girard was notified in June that the U.S. Treasury Department was suing him. In an attempt to comply with a U. S. ban on British imports, Girard had sent one of his ships, Good Friends, to the Spanish port of Amelia Island off the coast of Florida.

During the time Good Friends was anchored there, a group of patriots took control of the island and raised the American flag. The American general in charge wrote a letter giving the ship’s captain permission to sail into Philadelphia.

Nonetheless, the ship was seized when it was sailing up the Delaware River. Girard had sent the ship to Amelia Island attempting to obey the law, not evade it.  The government was suing him for penalties two to three times the value of the cargo.

1812 – President Madison signed a declaration of war against Great Britain.

1813 – On April 1, the federal government literally ran out of money. The government had no money to continue the war or even to fund day-to-day operations.

1813 – The same man who had instigated the lawsuit against Girard, the U. S. Treasury Department Secretary, asked Girard to make a loan to the federal government.

1813 – Despite the pending lawsuit, Girard made a loan the Treasury Department $8,105,800. In today’s dollars, that would be a loan of $90 billion.

1815 – Girard’s wife, who had been insane for thirty years, died in a Pennsylvania Hospital.

1816 – The Second Bank of the United States opened. Even though Girard still had his own bank, he was the largest shareholder in the Second Bank and was appointed to sit on the board.

1817 – Girard resigned from the Second Bank of the United States board because of liberal loan policies. He still remained a strong advocate for the bank and was its largest shareholder.

1829 – The Pennsylvania state government ran out of money and Girard loaned Pennsylvania  $100,000. The loan was not authorized, and Girard had no guarantee that the loan would ever be repaid.

1830 – Girard was run over by horses and a wagon as he was crossing a street. He got up and walked home, but his injuries caused him to be confined for two months.

1831 – Girard died on December 26 due to complications from the flu.  He still had his bank, his shipping business, his farm, and extensive real estate holdings. He was still writing business letters on December 23.

1831 – Three thousand people marched in Girard’s funeral procession. Another twenty thousand people lined the streets to show their respect.

Stephen Girard’s Will: The Most Litigated Will in History

1830 – Girard hired attorney William J. Duane to modify and expand an earlier written will. He wrote most of the 10,000 word, 32-page will himself.

1831 – Girard was a benefactor to multitudes. He gave to relatives, employees, to the city and to institutions. Upon his death, Girard gave ninety-eight percent of his $7,670,000 estate to philanthropic purposes.

1831 – The majority of Girard’s estate, about $5,000,000, was devoted to the construction and maintenance of a school, the Girard College, for poor male white orphans, initially coal miners’ orphaned children. The school rescued orphan boys from orphanages, foster homes, and from the streets and provided them with housing, food, clothing, and a quality education from grades 1 – 12. The money he left to create the school was, at that time, the largest private charitable donation in American history. Girard designated the City of Philadelphia, as trustee, to administer his estate.  This decision became a significant factor that led to litigation, mismanagement, and destruction of estate assets.

1833 – The first contest of the will came after Girard’s relatives in France received their disbursements. The relatives, despite what they had been given, began to focus on their loss, which was the money allocated to Girard College for the orphans. Girard’s relatives contended that the provisions of the will preventing real estate sales did not apply to the properties Girard had purchased after the will was written. The court ruled for the family and divided nine properties among them.

1836 – The family objected to the will on a number of other issues. This case ultimately went to the U.S. Supreme Court. The final arguments were heard in 1844, with Daniel Webster representing the family members. Among other issues, Webster contested a restriction in the will banning clergy from the school. Ultimately, the Supreme Court rejected Webster’s arguments and ruled in favor of the Girard Estate.

1863 – The family contested Stephen Girard’s right to restrict the sale of his possessions. The court ruled against the family.

1869 – The family argued that the Consolidation Act of 1854 caused the municipality of Philadelphia to lose the right to administer the Girard Estate. Their claim was denied.

The family brought two more lawsuits, one in 1870 and one in 1889. The court ruled against the family in both cases. To date, Stephen Girard’s will has been litigated in the United States Supreme Court twice, before the Supreme Court of Pennsylvania ten times, and before lower courts numerous times.

Girard College

The 2016 annual report of Girard College states that its mission is “to prepare scholarship students for advanced education and life as informed, ethical and productive citizens through a rigorous educational program that promotes intellectual, social and emotional growth.” The core values that are emphasized are integrity, respect, self-discipline, compassion and responsibility. Since opening in 1848, there have been over 21,000 students pass through grades 1-12.

1833 – In order to implement the provision of Girard’s will regarding Girard College, the Philadelphia City Council selected an eighteen-member Board of Directors.

1847 – Construction of the college was completed after many delays. The construction was often interrupted by litigation initiated by Girard’s relatives and public critics. The critics claimed that the delays were intentional because so many directors, governmental agencies, and bureaucrats involved in the construction were diverting large portions of the building fund for their own agendas.

It is interesting to note that Girard, who had a great knowledge of construction, thought that his school could be built in two years a cost of approximately $350,000.  Even so, he allowed for a $2,000,000 maximum for its construction.  It took fifteen years to build the school, at a cost of $1,933,821.78, conveniently close to the maximum amount allowed.

1848 – Seventeen years after Girard’s death, the College opened with 100 students.

1863 – In order to insulate the Girard College from politics and politicians, a consultant recommended that some of the responsibilities of the Board be transferred to the President of the College.

1869 – A Board of Directors of City Trusts was created. The City Council refused to acknowledge the new Board, but the courts affirmed its validity.  During the first twenty-two years, the Girard Estate was administered by ninety-five different directors. The constant membership changes slowed the economic growth of the estate’s assets.

1894 – The Girard estate was valued at $14.5 million, but revenues decreased because of a country wide depression.

1930 – The Girard estate was valued at $85.4 million, an increase of $3 million since 1929.

1937 – The Girard estate’s value declined three years in a row because of tax reassessments associated with the Great Depression.

1940 – The Girard estate was valued at $83.7 million, which included $40.7 million in real estate.

1950 – The Board sold nearly five hundred homes, disregarding Girard’s will which explicitly prohibited the sale of real estate.  The will specified that rentals and leases of his real estate were to be used to perpetuate the College.

1954 – In Brown v. Board of Education; the U.S. Supreme court ruled that educating black and white children separately was an unconstitutional violation of the Fourteenth Amendment. However, the Fourteenth Amendment applied only to public schools. The issue then became whether Girard College was a public or private school. The litigation over this issue lasted fourteen years.

1954 – Six black students filed a lawsuit seeking admission to Girard College.

1954 – The Supreme Court of Pennsylvania ruled that “a man’s prejudices are part of his Liberty”. Girard College remained segregated.

1968 – A United States District Judge ruled that Girard College was a public institution and therefore excluding blacks was illegal racial discrimination.

1968 – Four black and two Asian boys were admitted to the College without incident.

1977 – The admission of “functional” orphans was authorized. These are children who receive inadequate care because of separation, divorce, desertion, disability, or any other reason.

1984 – Thirty girls were admitted to Girard College.

2006 – The Girard College annual report stated that the September 2005 enrollment of 720 students represented the largest enrollment in forty years. According to the report, the cost is $34,000 per student per year for education and housing.

2017 – The Girard College annual report stated that more than 22,000 economically disadvantaged children had received full scholarships and graduated from Girard College.  September 2016 enrollment was 622 students.  The current annual cost per student is $67,000 for education and housing.

Stephen Girard’s Legacy

When Stephen Girard died in 1831, his estate was valued at about $7 million.  This is the equivalent of $90 billion in today’s dollars.  Currently, the Girard Estate has $275 million of remaining endowment assets.  Litigation costs, periodic losses of asset values to risk of principal investments, and unwise asset sales by trustees, combine to demonstrate the failure of the stewardship of the value of the Girard Estate.  The economic tragedy of the destruction of the assets accumulated during Stephen Girard’s lifetime of entrepreneurship and prodigious personal financial success demonstrates the need for access to a new, state regulated, perpetually multiplying, guaranteed-outcome endowment management strategy.  The Permanent Endowment Program that was developed from findings of the Permanent Endowment Research Program provides that strategy.

The heart of Stephen Girard’s legacy is the school he created for orphans.  Stephen Girard’s financial success, knowledge, experience, attention to detail, and wisdom all contributed to the survival of the Girard College during the one-hundred and eighty-eight years since his death.  Girard’s vision for the successful management of Girard Estate assets which led him to his decision to name the City of Philadelphia as Trustee has not been fulfilled.  Members of the City of Philadelphia Board of Directors of City Trusts bears the primary responsibility for this failure.  Girard’s will had been defended successfully so often, and for so many years, that it was considered sound and unbreakable.  With the passage of time, however, political events, legal decisions and changes in economic and social conditions have all conspired to set aside nearly all the provisions contained in his will.  Stephen Girard was a visionary leader.  However, he was born more than 250 years ago, and even he could not anticipate future variables, including the greed and avarice of his family members and other individuals and the power of the demographic and social changes that have occurred in America and affected his will since it was written.

Findings of the Permanent Endowment Research Project indicate that at its best, philanthropy can create needed positive change in society and demonstrate and support positive fundamental values that are integral to America’s history and future. It is certainly difficult to imagine the will of a private individual more dedicated to philanthropy and public welfare than Stephen Girard’s. He was one of those rare individuals who advanced human welfare during his lifetime and for more than 250 years after his death. He genuinely cared about the welfare of others, particularly those most often forgotten.

The ways that America, its citizens and their societal roles have changed over time would have been difficult for Stephen Girard to imagine.  An anticipation of a female justice of the Supreme Court, an African-American justice of the Supreme Court, or an African-American U. S. president would have affected many provisions in his will. Girard College today reflects changes in American society that, in many ways, reinforce Stephen Girard’s faith in the democratic process he loved, worked tirelessly to support, and defended with his fortune.

The progeny of Stephen Girard’s “kids” number more than a medium size American city. Hopefully, the Permanent Endowment Research Project findings can contribute to the use of un-monetized human economic value to provide new and more effective ways to fund the continuation of his original mission to educate children to become productive citizens without the constraints of human frailty, politics, and unsuccessful risk management.

Illustrated below is a cash flow summary of a Permanent Endowment Program developed from findings of the Permanent Endowment Research Project that is initially funded with a gift of $11.6 million.  The Permanent Endowment Program process allocates a portion of affluent individuals’ surplus assets to create perpetually multiplying, inter-generational endowment funding for family members and/or for selected 501 (c) 3 non-profit organizations that support value systems that are important to the donor, to the donor’s family, and to society.  The Permanent Endowment Program implementation process utilizes legal reserve life insurance company financial instruments and independent, third-party administration of inter-generational mortality gains to create perpetually multiplying endowment funding for participating 501 (c) 3 non-profit organizations.


Generations 1 2 3 4 5
Mortality Gain Funding (000’s) $116,000 $170,000 $249,000 $365,000 $535,000
Number of Benefactor-Insured’s 851 1,247 1,826 2,677 3,923
Mortality Gain (000’s) $851,000 $1,247,000 $1,826,000 $2,677,000 $3,923,000
Next Generation Mortality Gain Multiplication Funding (000’s) $170,000 $249,000 $365,000 $535,000 $785,000
Spendable Cash to 501 (c) 3 Organizations (000’s) $553,000 $811,000 $1,193,000 $1,740,000 $2,550,000

The participating 501 (C) 3 non-profit organization receives spendable funds of $6,847,000,000 over five generations, and the Permanent Endowment Program continues to generate perpetually multiplying funding for future generations.