Charity is Wasteful

Charity* is wasteful,  and possibly counterproductive.  I specifically looked at research oriented charities last post, but the main points apply generally.  Let's go over what's wrong with charity, and what to do about it.

It's Wasteful
Charitable donations are tax deductible - this means that the government is paying the donor to donate.  For every x dollars someone donates to charity, the government writes of some portion of x, call it y, dollars.  This has the same effect as the government giving x dollars to the charity directly, and then giving you y dollars.  Why not just have the government give x, or better yet x + y, directly?

And governments are far more efficient at "fundraising."  In fiscal year 2012, the IRS spent about $12.5 billion and collected about $2.5 trillion, a 200 to 1 return.  I challenge you to find me a large charity that's more efficient than that.

And if you look at what some charities spend fundraising, you could do quite a bit of lobbying: according to the Center for Responsible Politics, so far this year the top 20 lobbies combined have spent about the same as the American Cancer Society spends yearly on fundraising.

What To Do
Be more efficient.  By that, I mean let the government run it.  It turns out they are remarkably cost efficient, at least when mandated by law.  The Social Security Administration will pay out over $900 billion this upcoming fiscal year with an administrative cost of about $12 billion, or 1.33%.  This is tiny.  Again, I challenge you to find me a large charity** with similar administrative costs.

Final Thoughts
I think much of the appeal of charities stems from the idea that they're non-governmental.  I think this way of thinking, conscious or unconscious, is dangerous.  Which would you rather: (a) pay, say, $1.5 trillion to charities to cure all cancer forever; or (b) fund a government program that does the same thing for $1 trillion?  If you choose (a), I suggest that you're not actually committed to the purported goal of the charity.  I would suggest this is a knee-jerk anti-government reaction.

And if your response to the second and third paragraphs was to say that it's unfair to charities to compare their fundraising abilities to that of the government, I feel you're making my case for me.

Also
As the blog title implies, this is just part of a conversation.  I'm happy to hear other parts of it, regardless of whether I agree with it or not.


* - In this case, I'm talking about charities that raise money and then distribute it or buy stuff with it and distribute that stuff - most but certainly not all charities.
** - I must add that I found a couple.  Small sample size, and all that, but the only ones with similar ratios of administrative costs to total distribution are food banks.  Do with this what you will.