It is no secret that the USA is the most charitable country in the world. Why? Well, we can be, but Dan Palotta of the WSJ points to tradition through our Puritan heritage and says charity was their response to the tensions within their doctrine, “they could do penance for their profit-making tendencies, at five cents on the dollar.” I would put that at ten cents or better on the dollar because tithing is not cheap, nor is it any cap on scriptural giving, but only the basis of it. That’s Christianity. But look what we do as a nation,
Today, Americans are the world’s most generous contributors to philanthropic causes. Each year, we give about 2% of our GDP to nonprofit organizations, nearly twice as much as the U.K., the next closest nation, according to the Chronicle of Philanthropy. Some 65% of all American households with an income of less than $100,000 donate to some type of charity, according to the Center on Philanthropy at Indiana University, as does nearly every household with an income greater than $100,000. These contributions average out to about $732 a year for every man, woman and child in America.
However, that is not what the essay is about. Palotta asks, “Why Can’t We Sell Charity Like We Sell Perfume? What if we let philanthropies operate like businesses? Let them pay for talent, advertise aggressively to build market share—even build a stock market for charity. Maybe then capitalism could finally save the world.” That’s the title and the argument. He says, “we cling to a puritan approach to how those donations are spent: Self-deprivation is our strategy for social change. The dysfunction at the heart of our approach is neatly captured by our narrow, negative label for the charitable sector: ‘not-for-profit.’”
Of course, people who run non-profits are often very well paid. He notes that, too, and argues that this should be held as laudable. However, many people run charities as a volunteer effort and as a result those cannot be given full attention and do not do as much good as they could. Believe me, the essay strikes home. My husband runs a couple of non-profit organizations for which he not only does not get paid, but to which we contribute. He has always struggled with managing his time and energy so that those organizations keep doing what they are doing, benefiting the recipients of the charity, and yet we can still live. Here is Dan Palotta suggesting we should live off the charity, because then we could afford to live indoors, eat food and be clothed while giving attention to those charities, more fully and effectively. His argument is either appealing to my avarice or to my love of the charities. Here I am, trying to sort that out, “we have a visceral reaction to the idea of anyone making very much money helping other people. Want to pay someone $5 million to develop a blockbuster videogame filled with violence? Go for it. Want to pay someone a half-million dollars to try to find a cure for pediatric leukemia? You’re considered a parasite.”
Businesses are involved in charitable works. Our attitude toward that is it is about expiation of the sin of profit. Even devout secularists think that way. Therefore, tax deductions apply and the charitable acts are part of good public relations. However, the money the corporations spend come from their customers. It is a process by which even people who do not pay much in taxes or who are the beneficiaries of government entitlement programs can be indirectly contributing to charity, just like anyone else. Corporate charity does not really cost a public corporation anything, though it might cost the shareholders something. It cannot be charity from the heart by its nature.
I see Palotta’s argument is also appealing because the old model of charity is often squeezed by government. Soup kitchens have been closed down in some cities because unhygienic. People are no longer allowed to take in children from off the streets without an army of social workers descending on them and possible police prosecution. Charity that begins at home must have government sanction and that costs you something. Ask anyone who has a 501(c)(3), it is complicated. Private and unsupervised initiatives are suspect, with an assumption of guilt these days.
If Palotta is correct, capitalism would empower charities as a counterweight to government entitlement programs. His idea appeals to small government instincts, which is probably why the essay is featured at the Journal. Here are some numbers,
Today, Americans give about $300 billion to nonprofit organizations annually, according to Giving USA. Only about 16% of that—$48 billion—goes to health and human services. A large part of the remainder goes to religious and educational institutions. If we could increase charitable giving in the U.S. to 2.5% of GDP from 2% of GDP, that would amount to an additional $75 billion in annual giving. If that money went disproportionately to health and human services, it could as much as triple the funding available for those causes. Now that’s scale.
Applying capitalism’s efficiencies to charitable organizations and the way we deal with poverty might prevent the life-long dependence and sense of entitlement that government programs seem to engender. The product of charity includes self-sufficiency as a goal. Of course, if it became profitable for a charity to maintain dependents, as once happened with workhouses, we could find ourselves just as badly off in terms of numbers. Palotta says, “How would we assess charities if not by how little they spend on overhead? With three simple questions: What are their goals? What progress are they making toward them? And how do they know?” The competition of capitalism could keep the charitable organizations honest.
It is an interesting idea, worthy of consideration.