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.

That time of year again

 It's getting to be that time of year again.  Cancer season.  In the NFL it's breast cancer awareness.  In baseball you see their Stand Up To Cancer ads.  Every fraternity and sorority on campus wants to raise more money than the others.  For charity.  And it's all wrong.  Here's why.

 Cancer is a terrible thing, and lots of money should be spent on the research and development of effective treatments, cures, and prevention.  And it turns out, lots is: every year, the National Institutes of Health - i.e. The Government - gives out some.  More accurately, around $5,700,000,000.00.  Each year.  And people try to supplement this by asking me if I'd like to donate a dollar for some other charity to research a cure for cancer.

 And the answer is no.  You want to know the most effective way you as a citizen or as a charity can fight cancer?  Talk to Congress.  Tell them that more needs to be done.  Convince them to raise funding for cancer research.  How much do you think would need to be spent lobbying Congress to get a permanent 1% - just 1% - increase in research grants?  Because that's the same thing as fundraising $57 million every year.

 Let's look at the big boys in the game: The American Cancer Society raised about $900 million last year.  This cost them about $200 million in fundraising expenses.  How much do you think that $200 million worth of lobbying would convince Congress to raise funding by?  10%?  Then you've just raised $570 million every year.  Charities have to come back each year and ask people to give again.

 So that's my central complaint: giving money to charities to support research has no multiplier effect; convincing Congress does.  Because Congress gets to write into the bill how long the increase in funding lasts.

UPDATE: This was on my shopping cart today:

They're everywhere.  And I realize I left out another important reason to avoid using charity: it's tax deductible.  That's added waste; essentially we're paying them money to invest in research, instead of doing it ourselves.  When, say, a dollar is donated to charity for research, if it all goes into research (it doesn't), the government gives say 10 cents away to subsidize it.  Do that for all $900 million that the ACS raised and that's $90 million sent to the donors that could otherwise have been given in research grants.