Why is Interest-Free of so much interest?

Much is made of the fact that Liberty Trust does not charge interest but together with Ark Resources we have lent over 34 million dollars interest-free for the New Zealand community.  For this reason we have been featured on TV3 News, interviewed by Campbell Live and also by Seven Sharp and earlier this month we were interviewed by Radio New Zealand on the same subject. From the beginning of Liberty Trust the verses of Deut 23 v 19 – 20 would be quoted by my wife Kathleen in our brochures:

“Do not charge your brother interest, whether on money or food, or anything else that may earn interest.  You may charge a foreigner interest, but not a brother Israelite, so that the Lord your God may bless you in everything you put your hand to.”

It may surprise you to know that it took me several years before I came to accept that ‘Interest-free’ was both practical and a Bible principle. 

As an experienced practising chartered accountant I was uncomfortable with the concept.  I used to object saying, “Just as a labourer is worthy of his hire (Lk 10:7), so a lender is worthy of interest on the money he has loaned.”

My personal definition of a Bible principle is: “one that is both taught and practised throughout the entire Bible”.  One day Kathleen pointed out to me – “You know, ‘lending interest-free’ is a Bible Principle.”  That stunned me.  I thought I could spot a financial Bible principle a mile away.  She was quite right.  Interest-free lending not only fulfilled that definition, but it continued to be taught and practised right up until the early ages in Europe, when The Church gave in to popular pressure to support borrowing from commercial money lenders.  That decision has led to the world economic mess we have today.

“But ‘interest-free’ isn’t practical,” I countered.  “If those with money lent ‘interest-free’ to those without, you would have a society where some people would always be the givers, and those without – the takers.”

“No it wouldn’t,” she replied.  “Everyone today needs to borrow at some time in their lives.  But imagine a community where no-one has to pay interest.  What a difference that would make.  It’s very practical.”

I became convinced.  Living ‘interest-free’ is very practical.

But Is Liberty Trust Really ‘Interest-free’?  

What about the 20% contribution?  Isn’t that really interest-in-advance?

We often get asked these questions.  We teach that contributions to Liberty Trust are simply the Bible principle: ‘Sowing before Reaping’.  And all ‘sowing’, by definition, must be at some cost. 

There is also an element of faith.  It is this faith requirement that prevents many from joining.  I chuckle at that.  It seems that God in His wisdom has installed a method of sorting out the genuine; those with sufficient faith to put their money where their mouth is.

Jesus likened it to a seed.  Before it can gives birth it first has to die (Jn. 12 v 23-24).  It is a God-given principle which ‘the world’ doesn’t yet understand.

 But doesn’t the fact that there is a ‘cost’ of contributing run counter to the claim of being ‘interest-free’?

To answer that I think we really need to get back to the original instructions that God gave us prophetically in 1986:

“You should pool your resources and pay-off each other’s mortgages”.

What did “pool your resources” mean when people were suffering severely under bank mortgage interest rates of 18-20%? 

Two elderly widows who joined from the start had solicitor mortgages of 25%!  They were in a desperate situation and couldn’t afford to repay any principal.  They both described their positon as “hopeless”.  At our suggestion they each received sponsorship into Liberty Trust from their families and before long we were able to replace their ‘interest-only’ mortgages with ‘interest-free’.  They were over-joyed and without the huge burden of interest it wasn’t long before they became debt free. 

But in reality their situation was better than people who rent a house, as they had an asset to pass on to their families!

Pastor Bruce McDonald suggested back then that most could contribute $20/week if they went without luxuries like ice cream and coffees.  And so we began with around 100 contributors, each giving $20/week.  Collectively they owed $5.5 million in bank mortgages, to which would be added a further $7 million in interest if we didn’t act.  So we did.

What should this cost be called?

The cost should definitely not be called ‘Interest’.  Unlike interest which depends on ever-changing world finance rates and cannot be accurately predicted, the cost of contributing to Liberty Trust is completely unrelated to interest rates and is known and agreed from the outset.   As Jesus said “Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it?” (Lk 14:28).  Over the 26 years Liberty Trust has been operating NZ mortgage interest rates have yo-yo’ed to 15.4% then down to 7.4% then back up to 11.5% and down to 6.4% then up to 10.7% then down to the current low of around 6.5%, causing interest-paying borrowers great concern and hardship and making it quite impossible for them to estimate the cost of buying a house.  However Liberty Trust does not borrow and is completely independent of world interest rates.  Our standard contribution rate of 2% per year for ten years is based on the cashflow necessary for each to be offered an interest free loan within the desired ten years.  So you can estimate the cost before building your home and you need not be anxious of what the future may bring because your contribution is not interest, it is completely independent and unrelated to interest rates and it does not change.

An even more important difference between contributing to Liberty Trust and paying interest to a bank is that Liberty Trust contributions build God’s Kingdom in a great way while interest on a normal mortgage is largely wasted - most being spent to offset the cost of the lender’s interest which they pay when borrowing your funds from others and any profit beyond these costs going to profit the shareholders.  Last year ANZ announced a full year profit of $7.3 billion after costs, to benefit their shareholders!  Liberty Trust is not governed by the pursuit of profit but by God's principles of love and helping each other.  Your funds are not used to pay interest to the world but to advance God’s Kingdom.  Our costs are very low and around 90c of every dollar received is used and re-used over and over again to help others.  You can download a copy of our financial statements at www.libertytrust.nz/finances.  Liberty Trust began with nothing but a mandate from God and has raised over $11 million of resources which are being used for God's purposes! By giving to Liberty Trust you are not wasting your money on interest but promoting God’s principles and assisting hundreds of NZ households and churches to be set free.

We initially called the $20’s per week we received “Contributions” as people are ‘contributing’ to help others.  Romans 26:15 tells of making “a contribution for the poor among the saints at Jerusalem”.  We have also called the contributions “Donations” in order to emphasise that they are voluntary and non-refundable gifts to support a Christian charity.  But perhaps this isn’t the best word, as this implies that they are given by people to a separate organisation from themselves.  Liberty Trust’s members give to a community of which they are already a part.

If you want a Bible word that is closer, why not “Sharing”?  “Moses chose to share ill treatment with the people of God.” (Heb. 11 v 25).  1 Tim  6:18 tells us “to be generous and ready to share” and Hebrews 13:16 “Do not neglect to do good and to share what you have, for such sacrifices are pleasing to God”.  The community in Jerusalem “shared everything they had” (Acts 4 v 32). 

Another great description would be “Pooling your Resources” - that’s what our instructions called it! 


No matter how it is phrased, there is a cost in sowing/ contributing/ giving/ donating/ sharing or pooling.  We know it is a sacrifice to contribute to Liberty Trust and we are so thankful for everyone who is playing a part in the building of our storehouse to help others.  Already we have been able to use every dollar we have been given three times on average!  What will that dollar accomplish by the time Christ returns? 

Yes, “Interest –free” is completely practical when it is a part of a loving, supporting community (Jn. 13 v 34), and it is God’s amazing answer to a sick world.

Best wishes, Kelvin

June 2015