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Compound interest can be an amazing thing - money just sort of grows out of whatever amount a person or company originally deposited.  If, for example, an organization started out with $85 million, it could earn a fresh $4 million in a year’s time.  And that appears to be exactly what the Google Foundation did.

In fact, the Google Foundation seems to be getting money faster than it can spend it.  “In 2006, the foundation had $4.07 million in revenue on its investments, and paid out $2.096 million,” reports Docu-Drama’s Chris O’Brien.  “The foundation started the year with $84.67 million in assets and finished the year with $86.86 million.”

Mind you, this financial weirdness doesn’t wipe out the Google Foundation’s good works; I’m sure Development Marketplace, PlanetRead, and the Greater New Orleans Foundation are all very happy to have received donations.  Still, this non-profit will have to pick up the pace if it wants to stay true to that label.

At the very least, the Google Foundation might want to look into alternative investment strategies.  That $4.07 million gain corresponds to an interest rate of just 4.7 percent (assuming I got my math rate), and pretty much any bank should be able to offer a CD paying more than that.

Oh, well.  As Jacquelline Fuller, Google.org’s communications manager, dropped in after a Valleywag post to explain, “Google.org is the philanthropic arm of Google Inc.  Some, but not all, of its grants and activities are funded by the Google Foundation. In 2006, Google.org gave $4.196M to support efforts across global health, global development and climate change,” and “[i]n addition, the Google Advertising Grants program, our primary vehicle for supporting domestic organizations, donated more than $71M worth of free ads in 2006.”