Election day is in a week, and oh what a crazy election it has been. It seems the standard with government now is inefficiency and partisan gridlock. Our Federal government, it seems, has lost its way; nothing promised is ever delivered upon and the ideas of hope and change appear as realistic as leprechauns and unicorns. When all seems lost you may think to yourself that we, as a nation, will never get solutions to the very real problems our society faces every day. However, there is a very simple solution, and it is within the grasp of every one reading this. The solution is you: it’s time to step up.
The government plays an important role in our lives, however there are many functions the government performs that we, as private citizens, not only can accomplish, but actually accomplish in a more efficient manner than the government. We are simply lacking a private sector mechanism that taps into this growing potential.
The present day entitlement program of our government can be thought of as a public means of redistributing resources to the sections of our society that are most in need. However, there is a private component of this same redistribution, we just call it charity. It has long been a staple of the Republican Party that we rely too greatly on the government for redistribution and that before programs such as the New Deal and Great Society were enacted, the private sector did a greater job of filling the “charity gap” because there were no social safety nets of individuals to rely on: it was the benevolence of your fellow man, or nothing. Conservatives often argue that instead of supplementing private charity, public entitlement programs instead “crowd out” private giving. The logic here is that a typical tax payer feels that if the government is providing charitable services to the poor, they no longer need to contribute personally – that’s what their taxes are for right?
This vision has always been implicit in the conservative ascendancy. It existed in the 1980s, when President Reagan announced,
“The size of the federal budget is not an appropriate barometer of social conscience or charitable concern,”
and called for voluntarism to fill in the yawning gaps in the social safety net. It was made explicit in the 1990s, notably through Marvin Olasky’s The Tragedy of American Compassion, a treatise hailed by the likes of Newt Gingrich and William Bennett, arguing that a purely private nineteenth-century system of charitable and voluntary organizations did a better job providing for the common good than the twentieth-century welfare state.
This idea is also the basis of Paul Ryan’s view of the federal budget, which seeks to devolve and shrink the federal government at a rapid pace, lest the safety net turn
“into a hammock that lulls able-bodied people into lives of dependency and complacency, that drains them of their will and their incentive to make the most of their lives.”
Utah Senator Mike Lee echoes this sentiment when he asserts that the
“alternative to big government is not small government” but instead “a voluntary civil society.”
The question becomes: does the current social welfare system that the Federal government has in place supplement existing charitable giving, or crowd it out to the point where we would be better off without it?
To answer this question, we must examine the motivations of voluntary giving, and why those efforts consistently fail. The key issue with market solutions to voluntary giving can be best described in the economic term “free-riding,” which encompasses the problems associated with any public good, namely, that if everyone has access to the benefits of some action (i.e. if I feed a homeless person on the street no one else has to and that homeless person is no longer a beggar) there is no incentive to be the single person to bear the cost and the problem goes unsolved. However, since it can be agreed that it is in the social interest not to have such a beggar on the street, we decide everyone should be equally responsible for feeding this individual and thus we will impose a tax on everyone, and devote the proceeds toward feeding this homeless man solving the problem in an efficient manner. The scholar, Lester Salamon, developed a theory in the 1908s to explain these “voluntary failures” to contrast with market and government failures. There are three key components to Salamon’s theory:
1. Philanthropic insufficiency
Philanthropic insufficiency, exists when the voluntary (i.e. private) sector cannot generate enough resources required to maintain the social infrastructure at a sufficient scale. In fact, this issue is the crux of the free-riding problem, and let to the entrance of the government into the business of redistribution in the first place. It is important to remember that prior to the Great Depression, when economic downturns hit the nation, the question was not: “What is the government going to do to help up?” It was: “Is the government going to do anything to help us?” Prior to 1932, the answer was emphatically “No.”
2. Philanthropic Particularism
Private charity has a tendency to focus only on specific subset of society. These subsets are typically described as “deserving” or similar in-groups. In fact, this is actually the greatest asset of private charity, an individual can choose specifically how their charitable contribution is spent. This eliminates the issues taxpayers face when they feel their tax dollars are not spent on people who deserve help.
The largest single category of charitable giving in the United States is through donations to religious institutions (32 percent of donations). One of the largest functions of religious institutions is community service, however a large portion of those donations go to the general overhead of running the organization. Using very generous assumptions, Indiana University’s Center for Philanthropy finds that only one-third of charitable giving actually goes to the poor. While this form of giving is very efficient at the helping the small subset of the population it targets, there will be a large portion of society that will remain wanting in their access to this social insurance.
3. Philanthropic Paternalism
The first requirement of charitable giving is actually having the financial capacity to devote you own scarce resources to help to provide to others. In practice, a disproportionate amount of the charitable resources of our society is concentrated in a small percentage of individuals.
This narrow control of charitable resources, in turn, channels aid toward the interests and needs of those who already hold large amounts of power. The typical examples of this voluntary failure is illustrated by the amount of charitable giving on political advocacy, or exclusive colleges and universities, in order to help secure additional power and opportunities to the most privileged class, even as the needs of the truly desperate go unmet.
So what can you do?
We do not need to rely on an inefficient government bureaucracy or a select few of wealthy individuals to solve the societal problems we care about on a local level. I have committed my life to generating the resources necessary to create a mechanism that put the power to give into local hands.
That mechanism is www.Gets2Give.com.
However this resource is only valuable if the will of the people is there (small business owners, local consumers, and nonprofit directors included), and I truly believe it is. I need your help, and your involvement to start a new beginning of charitable giving in our local communities. I need you to join our cause, and create charitable giving that will lessen the need of government assistance and place the power back in the hands of local communities, instead of the political elite!
While we aren’t solving all of the problems deemed by Salamon as “voluntary failures”, we can slowly close the gap between charitable need and charitable capacity. We are improving the efficiency in which funds are allocated to areas of social need in the community via a private sector mechanism. By supporting local businesses, and local social initiatives, we’re not just taking money, but also power, from the top and putting it in our local community – it’s the first great step in an incredible journey, don’t you want to join me?