Welfare and Private Charity

A new policy paper from my colleague Michael Tanner analyzes the growth in the American welfare state and concludes that “throwing money at the problem has neither reduced poverty nor made the poor self-sufficient.” Michael makes an important point that—in my experience—most journalists don’t seem to appreciate:

In addition, whatever the intention behind government programs, they are soon captured by special interests. The nature of government is such that programs are almost always implemented in a way to benefit those with a vested interest in them rather than to actually achieve the programs’ stated goals… Among the nonpoor with a vital interest in antipoverty programs are social workers and government employees who administer the programs and business people, such as landlords and physicians, who are paid to provide services to the poor. Thus, anti-poverty programs are usually more concerned with protecting the prerogatives of the bureaucracy than with actually fighting poverty.

That’s one reason why you have federal officials actually celebrating the fact that more and more Americans are signing up for food stamps. Sure, adding millions of people to the food stamps roll is good for the Department of Agriculture’s budget, but is it good for the country? Perhaps if one thinks that government bureaucracies are ideally suited to provide for the less fortunate. However, that’s a tough claim to make given the fraud, abuse, and wasteful bureaucratic overhead costs associated with the government model. And let’s not forget that the government is not a charity; rather, it must resort to compulsion and force in order to carry out its politically-inspired objectives.

Instead of celebrating government dependency, we ought to be celebrating those private charities that are effectively meeting the needs of the less fortunate through voluntary donations. For example, Congressman Ron Paul (R-TX) recently went to the House floor to laud a private charity called Convoy of Hope. From Paul’s speech:

Unlike government bureaucracies and many top-heavy private charities, Convoy of Hope applies a uniquely results-oriented approach to serving people. You won’t find bloated salaries or patronage jobs at Convoy of Hope, nor will you find tony offices in New York or Los Angeles like so many nonprofits. In fact, the organization regularly spends only about 10% of its budget on overhead (a very low ratio in the nonprofit world), while employing a small staff of approximately 85. Watchdog group Charity Navigator consistently gives Convoy of Hope high marks for both its financial acumen and transparency.

Convoy of Hope also stretches its resources by developing strategic partnerships with private sector corporations, many of which provide in-kind donations of goods or services. This allows Convoy of Hope to offer a win-win proposition to prospective corporate donors: companies benefit from donating needed goods or services already in their inventory or area of expertise, while Convoy of Hope benefits from receiving the supplies and services it needs without paying retail prices. Its corporate donors—including Coca Cola; Nestle; Proctor & Gamble; Nestle; Georgia Pacific; Cargill; Del Monte; and FedEx—donate everything from building supplies to bottled water to toiletries. These partnerships with successful private companies demonstrate an entrepreneurial mindset that enables Convoy of Hope to help more people with less overhead.

Its massive distribution center and headquarters are located strategically in Missouri, where its fleet of trucks can dispatch quickly anywhere in America. It also operates six international distribution centers for logistical efficiency. By contrast, many government agencies purposely locate offices and facilities in different states at the clear expense of efficiency, solely to curry funding support from as many members of Congress and Senators as possible.

A small charity that I’m involved with, The Purple Feet Foundation, is about to celebrate its third year of helping inner-city six-graders think big about their futures in order to avoid succumbing to the social pathologies that are prevalent in their communities. We do not seek—nor do we accept—money from government, which sets a good example for children who have been raised in an environment where government programs are omnipresent. Our overhead is kept to a minimum because, unlike government programs, we must compete for donations (donors obviously don’t want their voluntary contributions blown on excess). Sure, there are wasteful charities out there. But the market for charitable donations has a built-in disciplining mechanism. In contrast, when a government program is exposed for wasting money, the consequence is usually nothing more than a congressional hearing in which pontificating politicians make empty promises to “protect the taxpayers.”