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When Private Hands Do the Public's Work

December 19, 1999|Jonathan G.S. Koppell | Jonathan G.S. Koppell is a scholar-in-residence at the New America Foundation

WASHINGTON — Giving form to his "compassionate conservatism" political slogan, Texas Gov. George W. Bush has proposed $8 billion in tax incentives to promote charitable giving among those who do not itemize their tax returns. The dollars would finance "little armies of compassion," the religious and community organizations critical to Bush's plans for confronting poverty and other social ills. Not to be outdone, Vice President Al Gore has advocated a "partnership" between government and faith-based organizations to solve persistent social problems that plague American communities.

Although Bush and Gore are sure to disagree on programmatic details, their substantial agreement is significant. Government has become so toxic politically that presidential candidates are reluctant to say a government program might be a good thing. Instead, the preferred approach is to delegate public-policy responsibilities to charities, religious organizations and community groups.

But this growing reliance on nonprofits as tools of public policy poses serious problems. First, allocation of scarce resources could ultimately become a sort of popularity contest--particularly when direct funding is replaced by tax relief--as charities vie for publicly underwritten donations. Then organizations doing work that is less appealing, less "crowd-pleasing" would inevitably have less resources. Second, "governmentalization" of private charities may undermine them, changing their focus, bureaucratizing their organizations and driving out volunteers. The potential costs of delegating social policy to charities are too high.

Charitable organizations play an important role in American society. Candidates have praised specific organizations, including Sharing and Caring Hands, which operates a shelter in Minneapolis, and Haven of Rest Ministries, which serves the homeless in Akron, Ohio. Well-known national charities like the Salvation Army and United Way provide a wide range of services across the country.

To presume that philanthropic organizations can take on an even greater share of the responsibility for combating poverty--even with additional financial resources supplied by the government--is foolish. Charities are cost-effective precisely because they rely on a labor force of volunteers and service-minded individuals willing to work for low pay. Even with additional money, it is not certain that nonprofits can dramatically increase their capacity. Volunteers and low-paid staff don't grow on trees. Some social problems will not be addressed.

Thus a form of triage will still be required. This is an everyday reality of social policy. However, this decision is now made by democratically elected public officials. Relying on charitable organizations shifts this critical responsibility into private hands. Consider Bush's proposed $8-billion tax relief for charitable contributions as a substitute for publicly financed activities. Assuming Americans are spurred by the tax benefits to make donations, the recipients of this largess are unknown. One could argue that this is democracy at its finest: individual citizens deciding where their money goes. On the other hand, social policy by plebiscite may leave critical needs unmet while popular charities prosper. For example, will donations go to museums or job training for the homeless? Who knows? All potential recipients are equal in the market for tax-deductible donations. There is no hierarchy of need, no guarantee that society's most important causes will be funded. Indeed, no debate about what the most important causes are.

Distribution of public money by tax credit puts additional pressure on charities to market themselves to potential contributors. This consumes valuable resources and distracts charitable organizations from serving the needy, a problem already evident in charities that spend an inordinate sum on raising additional funds. Moreover, it turns the allocation of resources for social problems into a perverse popularity contest. Only the problems "favored" by a sufficient segment of the population will be addressed. The implications are obvious. Shelters to remove unsightly homeless from the streets may receive support but literacy programs that help people escape the cycle of poverty may suffer. The charity that secures Claudia Schiffer as spokesperson is more likely to succeed than the rival endorsed by Abe Vigoda. Is this any way to make public policy?

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