This seems great and I’m glad you are actually making progress on work, this is an important project!
Question 1:
Although the US accountant and the UK lawyers were quite optimistic, I ended up taking the Dutch route.
I’m confused why an approach involving a US and UK entity isn’t being focused on, if it’s at all promising. It seems like tax efficiency is a huge consideration. Will this be tax deductible to an American or UK EA?
I’m unsure, but it seems like tax was talked about here, do I understand that the update in this post we are reading, supercedes these ideas in that past comment?
Thanks for all your work on this! I agree with Charles that it would be worthwhile to check whether this would be a legitimate charity in the US and UK.
Personally, I think the old, “refund” version (where one can easily recoup 50% of one’s donations) is likely to be much more impactful than the new “bread fund” version.
To me, the bread fund version feels like a last resort on the order of asking relatives for help, while the refund version feels like something you can rely on. Most people are risk averse with respect to their personal finances, and I think the (perceived) uncertainty of going through individual funders would feel significant to most people.
I’m thinking about a case like an emergency fund that there’s a 10% chance you need to use at some point during the year. Personally, I wouldn’t want a 10% chance of needing to rely on the bread fund. However, I would be happy with a 10% chance that I need to reverse some of my donations.
In some sense, the refund version allows one to donate aggressively and then “undo” some of the donations later if necessary. This seems like it more directly encourages/enables donations.
Have you run a poll to see how people feel about the two versions?
To me, the bread fund version feels like a last resort on the order of asking relatives for help, while the 50% version feels like something you can rely on. Most people are risk averse with respect to their personal finances, and I think the (perceived) uncertainty of going through individual funders would feel significant to most people.
I definitely could see the optics being a problem.
We will cap at 50%, and I have edited the post to reflect that. Does that change anything for you? Does the number of available funders matter to you?
Donors will not contact individual funders. They’ll come to us. We’ll maintain a ledger where we keep track how much money each person has earmarked for the emergency fund. Based on that, we will ask funders to donate. What part are you uncomfortable with? The fact that funders can misuse the earmarked funds?
Have you run a poll to see how people feel about the two versions?
I think there’s just something that feels less reliable about individual, perhaps anonymous funders rather than an official, professional organization.
For example, one could worry about applications taking a long time to process because it takes time to coordinate with the individual funders who are volunteer and not employees. Or people might have concerns about giving bank info to the funders (or transferring large amounts of money some other way.)
But if Basefund handles everything and the funders just feel like a detail that’s happening behind the scenes, this would be less of a concern.
Also, I was unclear, but I meant to say that the “refund version feels like something you can rely on.” Sorry about that, I’ve edited to clarify. But I understood that in both cases it’s capped at 50%.
I’m confused why an approach involving a US and UK entity isn’t being focused on, if it’s at all promising.
Besides constraints on time and budget, the structure inspired by bread funds has a few large advantages detailed in the post.
Will this be tax deductible to an American or UK EA?
The original plan was to register the charity in the Netherlands and get initial funding from Dutch citizens. Then, if it appeared more funding was needed, we would apply for charity status in the US or the UK.
In the new plan, donations will not be taxed in the UK or US, or in any of the countries I looked at.
I’m unsure, but it seems like tax was talked about here, do I understand that the update in this post we are reading, supercedes these ideas in that past comment?
That’s right.
The design of this seems really different than the original design mentioned, which allows a person to take back their original funds. This has major structural differences, as mentioned here. Is this correct and do you have any comments?
Not entirely. The design is different, but we still cap recoupments at 50% of total donations. I forgot to mention that in the post, and I’ll correct it.
This seems great and I’m glad you are actually making progress on work, this is an important project!
Question 1:
I’m confused why an approach involving a US and UK entity isn’t being focused on, if it’s at all promising. It seems like tax efficiency is a huge consideration. Will this be tax deductible to an American or UK EA?
I’m unsure, but it seems like tax was talked about here, do I understand that the update in this post we are reading, supercedes these ideas in that past comment?
Question 2:
The design of this seems really different than the original design mentioned, which allows a person to take back their original funds. This has major structural differences, as mentioned here. Is this correct and do you have any comments?
Thanks for all your work on this! I agree with Charles that it would be worthwhile to check whether this would be a legitimate charity in the US and UK.
Personally, I think the old, “refund” version (where one can easily recoup 50% of one’s donations) is likely to be much more impactful than the new “bread fund” version.
To me, the bread fund version feels like a last resort on the order of asking relatives for help, while the refund version feels like something you can rely on. Most people are risk averse with respect to their personal finances, and I think the (perceived) uncertainty of going through individual funders would feel significant to most people.
I’m thinking about a case like an emergency fund that there’s a 10% chance you need to use at some point during the year. Personally, I wouldn’t want a 10% chance of needing to rely on the bread fund. However, I would be happy with a 10% chance that I need to reverse some of my donations.
In some sense, the refund version allows one to donate aggressively and then “undo” some of the donations later if necessary. This seems like it more directly encourages/enables donations.
Have you run a poll to see how people feel about the two versions?
I definitely could see the optics being a problem.
We will cap at 50%, and I have edited the post to reflect that. Does that change anything for you? Does the number of available funders matter to you?
Donors will not contact individual funders. They’ll come to us. We’ll maintain a ledger where we keep track how much money each person has earmarked for the emergency fund. Based on that, we will ask funders to donate. What part are you uncomfortable with? The fact that funders can misuse the earmarked funds?
Will do!
I think there’s just something that feels less reliable about individual, perhaps anonymous funders rather than an official, professional organization.
For example, one could worry about applications taking a long time to process because it takes time to coordinate with the individual funders who are volunteer and not employees. Or people might have concerns about giving bank info to the funders (or transferring large amounts of money some other way.)
But if Basefund handles everything and the funders just feel like a detail that’s happening behind the scenes, this would be less of a concern.
Also, I was unclear, but I meant to say that the “refund version feels like something you can rely on.” Sorry about that, I’ve edited to clarify. But I understood that in both cases it’s capped at 50%.
This will indeed be the case!
Besides constraints on time and budget, the structure inspired by bread funds has a few large advantages detailed in the post.
The original plan was to register the charity in the Netherlands and get initial funding from Dutch citizens. Then, if it appeared more funding was needed, we would apply for charity status in the US or the UK.
In the new plan, donations will not be taxed in the UK or US, or in any of the countries I looked at.
That’s right.
Not entirely. The design is different, but we still cap recoupments at 50% of total donations. I forgot to mention that in the post, and I’ll correct it.