Jonathan Shugart thinks most people are fundamentally charitable, but as a former tax attorney he knows the difference between an ordinary person who slips a dollar to a homeless person and a very rich person who sets up a charitable foundation. Without getting too lost in the weeds, the only major difference is that the very rich will see a big tax advantage. Shugart’s solution is B Charity, a convenient fintech platform that is recognized by the IRS as a tax-exempt public charity.
Shugart, like many people who are idealistically drawn to law school, became disenchanted with the actual practice of law, but he became quite good at creating charitable legacies. He saw the need for technology that would allow people to make small and large donations when the most tax-efficient for the donor, grow those donations tax-free, and be distributed to operating charities. when the donation would be most beneficial. In short, Shugart wanted to make it easy for anyone to create a charitable legacy and get the same tax benefits that the rich receive when they create, say, the Gates Foundation.
Donating to help someone with medical bills certainly has karma benefits, but when done through existing crowdfunding platforms, it doesn’t save any taxes. B Charitable is a tax exempt entity whose sole purpose is to host charitable donation funds for individuals which can only be given to public charities. This eliminates any risk that the donation will be spent by the fundraiser for purposes other than those intended. We emailed Shugart a few questions about what motivated him to found B Charitable and how the charity business works.
You describe yourself, I think only partly as a joke, as a tax attorney. Do you still practice law?
Ha. I left the law firm about a year and a half ago. I keep my license, but I do very few legal projects outside of my business and philanthropic work.
From your perspective as a tax lawyer, what is the difference, in terms of taxes and results, between an ordinary person giving to charity and giving to the very rich?
Generally speaking, therefore, this does not constitute tax or legal advice, strictly from an income tax perspective, the charitable contribution deduction is much more valuable for taxpayers who itemize their deductions. Beyond that, wealthier people generally have more freedom to plan their charitable giving in such a way as to best offset their income, but the rules for deduction are consistent.
As far as the giver is concerned, if the result that we are talking about is joy, I see that the joy of giving is greatest in the individual who has to sacrifice the most in order to give the gift. This sacrifice takes many forms, but I find that the person who sacrifices himself to be more generous is more intentional with this generosity and receives more joy in seeing how this gift is used for the benefit of others.
What are the main differences between setting up a donation fund on B Charitable and simply writing a check to someone’s favorite charity?
The first key difference between setting up a donation fund on B Charitable and simply writing a check to someone’s favorite charity is the ease of making a charitable contribution through B Charitable. With just a few clicks, the donor can configure and name their charitable fund, contribute to the fund and apply for a grant for the public charity of their choice; no check, no envelope and no stamps involved. Additionally, the donor can easily use their social influence to encourage friends and family to donate to the same charity, often doubling or even more of the final donation to the charity. Finally, while a check to a charity shouldn’t be difficult to find, if the donor makes multiple contributions to multiple charities through multiple payment sources, it is much more difficult to find and record these transactions only if the donor makes all charitable contributions to the same charities, through a single platform, such as B Charitable.