[Hpn] MYTH: WELFARE Can Be Replaced By CHARITY - from Steven Kangas's "Myths about welfare" (fwd) "Myths about welfare" (fwd)

Tom Boland wgcp@earthlink.net
Mon, 12 Feb 2001 22:16:02 -0800 (PST)


http://resurgent.virtualave.net/LiberalFAQ.htm
FWD  "Myths about welfare' by Steven Kangas

     Excerpt:

MYTH: WELFARE CAN BE REPLACED BY CHARITY.

Fact: Charity is too under-funded, too localized, too mismatched and too
ill-suited to replace welfare.

Summary

Americans would have to make at least 10 times the donations they currently
give to charity to fully replace government social spending. And there is no
reason to believe that people who so bitterly hate paying taxes would gladly
surrender an equal amount to charity. Arguments that charities can do the
job better than government are naive - most charities are small, highly
localized and ill-suited to responding to national disasters or shifting
economic trends. About 90 percent of charity funds are both collected and
spent locally, which means that rich communities tend to have well-funded
charities, and poor communities tend to have poorly funded ones. For this
reason, only 10 percent of all charitable donations are directed to the
poor. Re-allocating charity donations to the communities that need them most
will incur intense political opposition from the communities that fund them.


Argument

Many conservatives argue that if government welfare were eliminated, charity
would take up the slack in helping the nation's poor and needy.

In his book, The Tragedy of American Compassion, Marvin Olasky detailed many
of the conservative arguments against government welfare and its damaging
effects on charitable giving. He argued that what the poor needed were not
anonymous welfare checks that seduced and trapped them into dependency. What
they really needed was human contact: face-to-face consultations with
charity workers who would take a personal interest in their plight and help
them work through their problems. Olasky argued that these charity workers
would not always see an automatic cash handout as the best solution to the
needy person's problems. Rather, "tough love" might be needed instead:
getting over a drug addiction, finding motivation to work, getting a
deadbeat dad to pay child support, etc. Continuing this train of logic to
its end, Olasky argued that churches were superior to government officials
in dispensing moral advice; indeed, he called conversion to Christianity
"the key to poverty fighting."

Olasky also articulated a second objection against welfare: that it drives
away potential charitable donors who do not agree with the government's
value-free giving. For example, many potential donors would like to give to
the arts, but are already paying taxes that go to support objectionable art
like the Mapplethorpe exhibit. Or they would like their donations handled by
charities they can trust to teach traditional family values and a proper
work ethic. Many conservatives would feel more inclined to give if they
agreed with the philosophy of the charitable organization.

Before addressing these arguments, let's briefly review several basic facts
about charitable giving in the U.S.

Charity in the United States

In 1993, Americans contributed $126 billion dollars to charity. This
averages out to $880 per contributing household, or 2.1 percent of
contributing household income. For all households, that works out to $646
per household, or about 1.7 percent of household income. (1) In general, the
poor give a greater percentage of their income to charity than the rich.
Consider:

Household income and percent given to charity (1993) (2)

                      Percent of income
Income level          given to charity
--------------------------------------
Under $10,000         2.7%
$10,000 - 19,999      2.3
$20,000 - 29,999      2.7
$30,000 - 39,999      2.0
$40,000 - 49,999      1.3
$50,000 - 59,999      1.1
$60,000 - 74,999      2.3
$75,000 - 99,999      2.0
Over $100,000           ?
There are statistical difficulties in determining the percentage of charity
donated by those in the richest group, because this group includes
billionaires as well as those making "merely" $100,000 a year. However, even
if better research clarifies this question, we should remember that
different income groups make different types of charitable contributions
anyhow. The rich tend to donate to "rich" charities; the poor tend to donate
to "poor" charities.

Charity experts have long known that donors give to charities with whom they
identify and from whom they might reasonably expect something in return.
(Indeed, the Olasky argument above strongly suggests this.) While the very
poor tend to donate more to the Salvation Army, the very rich tend to donate
more to the arts, humanities and sciences. Because the rich still donate
more in absolute dollars, this has caused a serious mismatch between
donations and allocations. Only about 10 percent of charitable contributions
are specifically directed to the poor. (3)

Furthermore, charities are highly localized. Most are small neighborhood
organizations that are tied to their immediate community by their charters,
service missions, support bases, and relationships with trustees. They
reflect their neighborhood's values, religious preferences, interests,
problems and, above all, income. As charity expert Julian Wolpert writes:
"Most of the donations that charities raise go to support community churches
and synagogues, Y's, museums, public radio and television, universities, and
parochial schools -- the services that donors themselves use -- and these
funds are largely unavailable for helping the neediest." (4) For these
reasons, almost 90 percent of all charity funds are both raised and spent
locally. (5) But what this means is that communities with high incomes tend
to enjoy well-funded charity programs; those with low incomes tend to suffer
poorly-funded ones. This is exactly backwards from the way it should be. It
would be more logical to see well-funded organizations transfer their help
to the communities that need it most, but their ties to the local community
prevent them. Even re-allocating funds within a community is difficult. For
example, if an epidemic breaks out in a local community, an educational
charity cannot re-allocate its funds or resources to help out a health
charity. The situation is akin to a fire department being unable to help out
the police department during a crime wave.

The following chart shows how the $126 billion in charitable donations was
allocated in 1993:

Allocation of charitable donations (1993) (6)

Type of                  Percent of
organization             total collections
------------------------------------------
Church or religion       45.3%
Education                12.0
Human Service            10.0
Health                    8.6
Unclassified              8.5
Arts, culture and
humanities                7.6
Public/societal benefit   4.3
Environmental/wildlife    2.5
International             1.5
Most donations go to churches, but churches are an excellent example of the
localized nature of charities. And churches with even national charity
campaigns hardly spend a substantial amount of their money on helping the
poor. Until recently, the Seventh-day Adventist church had one of the most
enviable records of charity collections of any U.S. religious denomination.
Yet its department devoted to helping out the poor and needy -- the Dorcas
Society -- received only a tiny fraction of the church's donations. Instead,
the vast majority went to church administration, religious and educational
facilities, and a remarkable world-wide missionary effort to convert other
nationalities to their faith. (7)

In a thorough review of charities in the United States, Wolpert summed up
the problems of replacing welfare with charity this way:

There is a serious mismatch between the location of charitable resources and
needs.
There is a mismatch between the kind of programs that attract charitable
donations and the kind that benefit needy people.
Charities are severely limited in their freedom to shift their efforts to
the places and programs that are in the most trouble.
The voluntary hand of charity as a substitute for government entitlements
might involve objectionable religious, political, and social intrusion into
the lives of many people. (8)
The Liberal Response

In 1992, Hurricane Andrew devastated Southern Florida, leaving 137,000 homes
destroyed or damaged and 250,000 people homeless. Imagine, for a moment,
that there was no federal emergency response, and that charities and private
organizations were responsible for the cleanup and recovery. Of course, most
of the charities in Southern Florida were destroyed along with everything
else, so local charities would be of little help. By definition, the charity
response would have to come from other communities -- but, as we have seen,
most charities are small and tied to their local communities, and not
designed to export their help. Clearly, a disaster the size of Hurricane
Andrew calls for a national response -- but how is a neighborhood charity in
Seattle, Washington going to ship its few volunteers and resources all the
way to Florida?

If thousands of independent, local charities from all across the nation
tried to help out the victims of Hurricane Andrew, the resulting confusion,
duplication of effort and the lack of a clear, overall strategy would waste
much of their time and effort. In this respect, the federal government has a
huge advantage over thousands of isolated, disparate charities; it can draw
on deep strategic reserves and allocate them according to an organized plan.
Furthermore, the operations required to fight a national disaster are far
different from the ones required to fight local neighborhood problems. Small
charities are not even suited for these different mission requirements.

Many conservatives -- Olasky among them -- concede that the federal
government is more efficient at handling national disasters like the Great
Depression. However, they argue that in a normally functioning economy,
charities are sufficient to handle the everyday poverty they find.

But this is not true either. Our economy is dynamic, and hard times may hit
one region one year, another region the next. Many will recall the film
Roger and Me, which detailed the horrific unemployment and economic
devastation that visited Flint, Michigan when General Motors closed down its
auto plants and moved them to Mexico. This single business decision resulted
in years of hardship -- but the city is recovering today. California is
another example; it did not recover with the rest of the nation after the
1991 recession, and its poverty rate remained high. Yet, within a few years,
the state returned to a booming economy.

Economic twists and turns like this are almost impossible to predict. When
they do hit a region, the very charity organizations that would help it --
the local ones -- are the least able to help, since they suffer too. So a
national charity organization would have to set up offices in these
temporarily stricken regions, only to uproot them when good times returned
and move them to the next stricken region. That is expensive, and a waste of
resources. Compare that to the current federal system, which already has
offices everywhere (doing more than just welfare); this makes it much
simpler to divert the required funds to the appropriate regions. And as we
have seen, charitable donors tend to donate only to their own communities;
we should expect to find little support for national charities that spend
most of the donor's money elsewhere. Indeed, the current federal system is
unpopular for exactly that reason.

Furthermore, charity is a drop in the bucket compared to all the social
spending conducted by the government. The total assets (as opposed to merely
the income from endowments) of America's 34,000 foundations add up to only
about 10 percent of current government expenditures for social welfare and
related domestic programs. (9) As Senator Daniel Patrick Moynihan says,
"There are... not enough social workers, not enough nuns, not enough
Salvation Army workers" to care for the millions of people who would be
dropped from the welfare rolls.

To replace welfare with charity, our society would have to boost its
charitable giving tenfold. Which raises an interesting point: conservatives
bitterly assail the federal government for making them pay taxes to help the
poor. Why, then, would they turn around and happily surrender an equal
amount to charity? The answer, of course, is that they would not. Once
conservatives are freed from their obligation to help the needy, charitable
donations will continue to languish as they always have.

Here conservatives might return to Olasky's argument: that they would feel
more inclined to give to charities that espoused traditional family values
and conservative morals. But, as we have seen, Olasky's idea of charity is
to dispense advice, not funds. There is no question that a charity that
simply tells the needy, "Get a job," is less expensive to run. But it should
be pointed out that Olasky's entire argument is really a disingenuous change
of subject. The original argument was that charity could replace welfare. In
Olasky's world of privatized philanthropy, this is not the case; welfare
would be eliminated but charity donations would not rise to replace it. This
is a different argument, one about the benefits of eliminating most
financial aid to the poor, not replacing it.

Finally, there is a matter of accountability. Private charities are
notorious for spending 90 percent of their revenues on administrative costs.
Many will certainly remember the fund-raising efforts of Jim and Tammy Faye
Bakker, who raised millions ostensibly to spread the word of God -- but
actually spent it on themselves. In such cases, a donor's only recourse is
to stop giving once the scandal breaks. These scandals are often belated,
because the media does not actively search out scandals in the private
sector; they need to be tipped off to them. The scandal may put this
fraudulent charity out of business, but there always seems to be another to
take its place.

By contrast, the federal government is held much more strictly accountable
for its actions. The media conducts an intense and proactive search for
scandals in government, and their discovery becomes front page news. This
results in enormous political pressure to correct deficiencies. Just one
example is FEMA -- the Federal Emergency Management Agency. This is the
agency commissioned with helping Americans recover from natural disasters.
Under President Reagan, the nature of these disasters was assumed to be
nuclear, and the agency poured millions into the creation of nuclear-proof
command and control structures that would survive and "win" a nuclear war.
Needless to say, it was completely unprepared to deal with the many natural
disasters that were actually occurring. It took FEMA three days just to show
up after Hurricane Andrew, and they snarled its victims with an unforgivable
amount of red tape. Media reports sparked such public outrage that Senate
hearings were held. Senator Fritz Hollings called FEMA "the sorriest bunch
of bureaucratic jackasses I've ever known." (10) Under the intense glare of
the national media, reforms occurred. James Lee Witt took over the ailing
organization and completely turned it around. Today, it is one of the best
functioning agencies in government, and is winning praise even from its
former critics.

In sum, the claim that charity can replace federal social spending -- and do
it better -- is a hopelessly unfounded one.


Endnotes:

1. Total contributions: AAFRC Trust for Philanthropy, New York, NY, Giving
USA, 1993. Household contributions: Giving and Volunteering in the United
States, 1994 ed. (Washington, D.C.: Independent Sector, 1994).

2. Giving and Volunteering in the United States, 1994 ed.

3. Julian Wolpert, "What Charity Can and Cannot Do" (New York: Twentieth
Century Fund Press, 1996).

4. Ibid.

5. Ibid.

6. Giving USA, 1993.

7. Early personal experiences of author.

8. Wolpert.

9. Ibid.

10. Daniel Franklin, "The FEMA Phoenix," Washington Monthly, July 1995.


CHAPTER SOURCE:
http://resurgent.virtualave.net/LiberalFAQ.htm
"Myths about welfare' by Steven Kangas

There are Welfare Queens driving Welfare Cadillacs.
The poor receive the most welfare.
Welfare is to blame for runaway government spending.
People on welfare are lazy and stupid bums.
People on welfare are usually black, teenage mothers who stay on ten years
at a time.
People on welfare should just find jobs.
Welfare gives people an economic incentive to avoid work.
Welfare gives mothers an economic incentive to have more children.
Welfare gives women an incentive to have children out of wedlock or break up
marriages.
Welfare can be replaced by charity.
Welfare increases poverty.
Welfare traps people in poverty.
The U.S. has wasted over $5 trillion on the war on poverty.

END FORWARD

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