The Positives of Private Philanthropy
Story by Benjamin Koatz
Across the country, private organizations aren’t waiting for big government to tackle the problem of homelessness. United Way, the premier philanthropic organization combating homelessness in the United States, dots the nation with local chapters and funnels 90 percent of its operating budget directly to programs on the ground — instead of administration or advertising. Relying on private sources for the vast majority of its funding, the Skid Row Housing Trust redefined homeless care by creating an impeccably designed permanent housing complex. During Colorado’s frigid winters, the state’s various shelters, including the Denver Rescue Mission, tailor their efforts to house the homeless who are kicked out of public spaces and struggle to survive against the harsh elements. Hyper-local organizations can innovate, identify and tackle the specific problems faced by their communities — trumping the government by far when it comes to efficiency.
This kind of innovation, focus and flexibility thrives when people support essential services through the nonprofit sector rather than the ballot box. When giving to a shelter or food bank, people fund organizations whose sole focus is the issue at hand. In contrast, the government receives its dollars through general taxation, which means politicians — not the public — decide how to allocate the money. With only around 3 percent of voters ranking “Poverty/Hunger/Homelessness” as the most important issue facing the United States, keeping a keen eye on funding for the homeless is not going to be any elected official’s top priority. Instead, decision-making will fall to bureaucrats, who are notoriously difficult to control and even more difficult to fire should something go wrong.
Unaccountable middlemen stand between any progressive concerned about the procurement of vital social services and the people who need them. Overlapping, bloated federal programs put millions of dollars into middle-class pockets. In contrast, nonprofits are significantly more efficient: The majority of the nonprofits rated by Charity Navigator spend less than 25 cents per dollar on fundraising and administrative costs, because their donors expect them to use their money more efficiently. In other words, private philanthropy can tackle the same problems as public welfare — but with greater accountability and fewer dollars.
However, there remain concerns that private individuals will only fund sexy philanthropic endeavors — such as those that include an Ice Bucket Challenge. Yet even if we accept this problematic assumption, there is no reason to believe that people will allocate their votes any better than they do their money. And the notion that the government should perform unpopular functions is counterintuitive for another reason: It simply does not make sense. In a democracy, the state should reflect the will of the electorate — whether one agrees with the electorate’s priorities or not. Even if public administrators can use their distance from constituents for unpopular problems promoting the public good, we should require them to represent the public’s will rather than laud their undemocratic actions.
The way in which religious nonprofits distribute their money is another oft-cited critique. While our government is separate from the church, not all private enterprises are, and private philanthropy is often funneled through faith-based organizations. But this does not delegitimize these philanthropic efforts: Religious doesn’t necessarily mean discriminatory. The Denver Rescue Mission, for example, caters to people regardless of faith, sexual orientation or gender identity. That being said, regressive institutions do often discriminate against transgender and non-straight individuals, limiting their access to charity. In these cases, secular charities could fill in the gaps left by religious ones that do discriminate. But this strategy only works if nonreligious liberals stop choosing the government over private philanthropy as the primary vehicle for their promotion of social justice. The more funding given to equitable and private secular institutions, the fewer injustices marginalized groups will face in accessing services and the more financial pressure regressive institutions will feel to end their problematic policies.
Finally, there’s the countercyclical defense for public welfare. This argument states that when investment and consumer spending nosedive during an economic crisis, government is the better choice for promoting social equity since it can simply run up a deficit to keep operating its social programs. However, recession spending is not incompatible with a nonprofit landscape. When the Obama administration funneled money to stimulate infrastructure projects during the recession, it used private contractors to complete the job. Similarly, the government could donate to private shelters, clinics and food banks in order to aid the indigent during hard economic times. If we don’t require all industries to fall under control of the state because of recessions, why should we shoehorn philanthropy into the public sector for that reason?
Nevertheless, there are many opportunities beyond these disagreements for unity in this debate. We can end the government’s criminalization of homeless behaviors like panhandling, fast-track zoning permits for nonprofits and abolish antipoor policies that limit upward mobility. And if we can successfully decouple our stunted notions of progress from the lethargy of government, maybe we can more capably begin to improve human lives.
The Perks of Public Programs
Story by Mintaka Angell
From rural Oregon to New York City, the United States suffers from structural inequality. With a problem so large, the solution must come on a similarly broad scale. Private philanthropy and nonprofits have much to offer, but neither is the ultimate solution to inequality. Government-based assistance programs and structural attempts to fix inequality are best suited to address the problem in two essential ways: scale and consistency.
Throughout US history, economic recessions have shown that philanthropic giving does not provide stable relief for social issues. When the American economy tumbles into a crisis, charitable spending usually goes the same way. This reality was on display most recently during the 2007-2009 economic recession, when charitable donations fell by up to 20 percent. Because market-based solutions are dependent on stock market vagaries and the benevolence of donors, they are unreliable in the long term.
The scale of many philanthropic efforts also limits their ability to make a significant impact and to use funds efficiently. Most nonprofits are very small, operating on budgets of under $100,000. While many organizations do good work under these constrictions, financial limitations still mean that they cannot provide services to a large community. Financial scarcity puts extreme pressure on nonprofits to streamline operations, cut staff and reduce their programs.
While individual nonprofits are constrained by geographic and budgetary limitations, the government is capable of extending an equitable and broad safety net to the poor and marginalized in the long run. Public assistance programs like Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families and unemployment benefits — as well as initiatives like the 2009 stimulus package — helped fill the gap for vulnerable Americans during the recession and have lifted over 20 million people out of poverty. The programs that we often take for granted as safety nets — free school lunches, food stamps, social security, Medicare and Medicaid — sustain the basic needs of Americans on a scale that the private sector simply cannot match.
Furthermore, lacking oversight, some nonprofits have misused funds, misled donors and operated in discriminatory ways. The Red Cross has recently been rocked by multiple scandals over its misappropriation of millions of dollars. The Salvation Army actively discriminated against LGBTQ+ communities until very recently, and some argue that they have not actually stopped. Large national nonprofits with problematic corporate sponsors, like the Susan G. Komen foundation’s and No More’s questionable partnerships with the NFL, can even reinforce the oppressive systems that well-meaning nonprofits ostensibly battle against. And while Americans donate large amounts of money to philanthropic organizations, nearly 40 percent of that giving is to religious congregations, while 75 percent is to organizations with religious ties. Though these organizations can do good, they can also cause active harm — for example, when American evangelical religious organizations worked to influence Uganda’s antihomosexuality legislation.
It is also wrong to assume that goal-oriented nonprofits are necessarily more efficient or better run than similar government efforts. Much of the disenchantment towards government social programs is based on the image of inefficient bureaucrats and a lack of focused leadership. As a whole, though, this image is misleading: Government programs are actually very efficient. In 2013, for instance, the SNAP program spent less than 6 percent of its budget on administrative costs, and the Earned Income Tax Credit, which lifted 6.5 million people out of poverty in 2014, spends less than 1 percent of its entire cost on administrative expenditures. Overall, in 2010, the Center on Budget and Policy Priorities found that 91 to 99 percent of total federal funding for government assistance programs reached beneficiaries in the form of benefits or services.
Conservative and libertarian ideology often alleges that voting with your dollar instead of your vote is a more efficient way of providing aid. However, that’s easier said than done. Large parts of the public are poorly informed about what makes a nonprofit successful. For example, the public is generally averse to donating to charities and nonprofits that spend a lot on overhead, but newer schools of thought show that skimping on administrative costs cripples the effectiveness of nonprofits.
There is also no guarantee that the personal interests of donors match the needs of different causes. When it comes to private philanthropy, donors’ dollars dominate. Since both options offer the same tax benefits, the rich are more ready to donate to institutions like the Ivy League and operas over homeless shelters. While the poor and middle-class might not be able to afford large donations to philanthropic organizations that could work to their benefit, they at least have the chance to vote for welfare. And voting makes all the difference when it comes to large-scale societal problems: Philanthropy is indeed an invaluable tool for righting the wrongs in society, but it can only ever be a tool in the fight — not the endgame itself.