Senator Bernie Sanders, the self-proclaimed democratic socialist, years ago, while he was mayor of Burlington, Vermont, said, “I don’t believe in charities.” He went on to question the “fundamental concepts on which charities are based” and contended that government, rather than charity organizations, should take over responsibility for social programs. I would argue that he’s dead wrong on this issue. Why? Let me give you my argument, if you’ll hear me out.
I want you to think about something with me. Let’s say, for the sake of this argument (and hopefully this is true in real life) that you care about the well-being of the people around you, especially those right within your own community. You have compassion and love in your heart for those around you. Your heart aches for those people who have been hurt by one injustice or another, and who have real needs in their own lives that they just cannot meet themselves.
You’ve made some good financial choices in your life, and you’ve been working really hard, and now, because of that hard work and the good financial decisions you’ve made, you’re doing really well financially. Now you want to take some of that blessing, some of that abundance, and pay it back to your community – you want to “pay it forward.” You have, in this example, ten thousand dollars to spend for compassionate purposes to help your community, and you want to spend your money in a way that makes the most difference. You want to maximize the amount of compassion and help that comes from that limited amount of money that you can spend.
With this idea in mind, I want you to look at the drawing in Figure 1 – there is a large circle, Circle A, and a small circle, Circle B. These two circles represent two different ways your money could be spent to help people in need.
If your money is spent in a way that represents Circle B, the smaller circle, your money is helping those who need help, but your money is being used in an grossly inefficient and ineffective way that greatly reduces how much benefit comes from your money. The amount of people helped with that money is quite small, and the help those people get isn’t very good at all.
On the other hand, if your money is spent in a way that represents Circle A, the bigger circle, then you are maximizing how much benefit comes from your money. Because your money is being used in ways that maximize its effectiveness, it means that the number of people who get helped with that money is a lot more than the number of people helped in Circle B.
Now here’s a question for you: if you have a certain amount of money that can be used for compassionate purposes and reasons, that is, to help those who need help, do you want that money to be spent in a way that maximizes how much benefit comes from that money? Or would you prefer that money to be spent in a way that is wasteful, and greatly reduces how much benefit comes from that money, and reduces how many people are helped by that money? Do you want to be effective and efficient and impactful with helping people, or grossly ineffective and inefficient?
Hopefully, your answer is that you want your money to be used in ways that maximizes its benefit and helps the greatest number of people. You don’t want your money to be used and spent in ways that are wasteful and inefficient, right? I mean, why would you? Where’s the compassion in helping the least amount of people you can, and letting that help be not very effective and impactful at all? Your compassion, in that sense, is wasted and lost on that wastefulness and ineffectiveness. If you really cared about helping people, you would want the most good, not the least good, to come from your money, right?
That is the difference between Circle A and Circle B. Circle A represents using your money in ways that maximizes its effectiveness and usefulness in helping people. Circle B represents using your money in wasteful, inefficient, and ineffective ways that really doesn’t do very much good at all, if you compare it to Circle A.
If you have ten thousand dollars, and you wanted to use it for compassionate purposes, it’s really a “no brainer” that you would want to use it in a way that “maximizes compassion.” You would want your money to make an impact. That is, you would use your money in a way that represented Circle A and not Circle B.
Now, I want you to think about this: Circle A represents putting your money in a private charity, and Circle B represents your money being spent through government social welfare programs.
Money Used for Administrative Purposes
Why do I say this? Think about this: if you look at the good private charities (not the bad ones), they often brag about how only 5 percent or 10 percent of the money that comes in gets used for “administrative purposes,” and the rest gets used to actually help those in need. In fact, there are charities out there that have administrative costs that are less than 1 percent! Think about that! Compare that to government social welfare programs, where, although the “claim” is that they spend 10 percent or less of the money allocated to them for administrative purposes, if you consider the cost of operating the IRS, the federal budget office, and other agencies that are part of the hierarchical system that is our government, and which our tax monies gets funneled through on their way to our social welfare agencies, upwards of 30 to 50 percent of the money allocated to them actually gets used for “administrative purposes,” that is, gets used to fund the vast bureaucracies that they claim are needed to determine how the remaining money gets spent within their agencies. From that standpoint, choosing between private charities and government social welfare programs is really a choice between having 90 to 99 percent of the money being used to help people versus only 50 to 70 percent being used to help people. The same amount of money being used by a private charity instead of being used by a state social welfare agency helps out a heck of a lot more people. So there’s that comparative aspect.
Let’s talk about another comparative aspect between private charities and government social welfare agencies.
Efficiency vs. Wastefulness
Private charities need to be as effective and efficient with their money as possible. They need to make sure that the money brought to them makes the biggest impact. Why? If they weren’t effective and impactful at working to solve whatever social problem they were created to solve, then people would not want to give any money to them. Think about it – you have money to give to some charities, and you’d really like your money to make a difference, to have an impact. Would you want to give your money to a charity that didn’t appear to be effective and impactful with your money?
The motivation by private charities to get more charitable donations from people is a strong incentive to be as efficient, effective and impactful as they can possibly be with your money.
Compare that to how government agencies work, including government agencies that are about social welfare. They, too, like private charities, want to get more money. They have a motivation to increase their budgets just like private charities do. But the process that government agencies use to get more money is very, very different than the process that private charities use. While private charities need to prove that they are being effective and impactful with the money they receive, state agencies need to prove that they aren’t effective and impactful with the money they receive from the budget office in order to convince us that they need more money to effectively do their job. They say, “We don’t have the resources or funding that we need to properly do our job. If you really care about effectively helping people using our agency, then you’ll encourage your lawmakers to give us more money.“
In other words, they need to become artificially inefficient to prove to us, the taxpayers, and the lawmakers in charge of the budget office, that they need to have more money allocated to them.
From this standpoint, many government agencies, including ones that are devoted to some social welfare cause, are quite successful at increasing their budgets by proving how incapable they are of doing the job they’re supposed to be doing with their limited budgets – all by becoming artificially inefficient.
Because of this, I would argue that a private charity can do more with one thousand dollars than a government social welfare agency can do with ten thousand dollars. And, if this is the case, why would we want government social welfare programs to help those who need help? Why would we want to be super-wasteful with our money? Wouldn’t we be more impactful and effective at helping those who need help by using private charitable organizations rather than government agencies? Wouldn’t our money go farther, do more, help more people, and be more effective at helping people?
Besides, our government is especially bad at helping the poor out of poverty, and our social welfare programs have done more to exacerbate, make worse, expand, and deepen the very disparities in the black community that are placed under the label of “systemic racism,” rather than alleviate those disparities. The state has a poor track record of actually effectively helping those in need.
There’s also the fact that, when it comes to private charities, you get to “vote with your dollar.” You get to choose where your money goes, not some elitist in our nation’s capital. You get to choose what issues and problems need to be worked on, and help fund those things, not someone in a powerful city far away. If you don’t like how a charitable organization is doing things, then you can choose not to send them any money anymore, and instead send your money somewhere else – it’s the charitable equivalent of voting for a different political candidate because you think the one in power isn’t doing a good job. So, there’s that.
Taxation and Prosperity
Now let’s add to this discussion a couple other elements.
We raise taxes in order to pay for government social welfare programs that take the place of, and crowd out, private charities that could do the job more effectively, efficiently, and impactfully than government agencies. Why would charitable givers want to give money to a private charity when there’s already a government agency doing the same job?
By raising taxes, we put more burden on the productive sectors of society, and put an undue burden on the economy, slowing it down and making it sluggish, all to support a massive social welfare state that is wasteful, inefficient, and ineffective at solving the problems they’re supposed to be solving – especially when those same problems can be more effectively and efficiently solved through private charitable organizations with only a fraction of the money. And in many cases, like I’ve previously stated, our social welfare programs make worse the very problems they’re claiming to try to solve.
On the other hand, let’s say we discontinued our government social welfare programs in order to let private charities take their place in helping people. What would happen? Answer: because we didn’t need all the tax revenues to pay for those wasteful state programs that don’t work very well, it would allow tax rates to go down. The lower taxation rates would reduce the burden on the productive elements of the economy, thus helping to allow for a more vibrant, growing and thriving economy.
The thriving economy would lead to more widespread prosperity, and would result in two things happening: first, the more people who are prosperous means the less people that need help; second, because there are more prosperous people, this means more people with abundance who are willing to give some of that abundance to charitable organizations that help people. You would see the need for help decrease, all while seeing charitable donations reaching an all-time high. Now think about what all this means.
You would see a lot more problems in the world go away because more money is now available to fund charitable organizations that work to solve those problems. And because they’re private charities and not government agencies, they would be much more impactful and effective at their stated goals. You would see less people in want and need, and more medical cures and more solutions to our environmental problems, among other things, because there’s funding there that didn’t exist in our present wasteful setup.
But, apparently we’re not supposed to go that route. We’re supposed to have wasteful government agencies that don’t solve problems very well at all, or make things worse. We’re supposed to have a setup where we don’t get to vote with our dollars what organizations or agencies get our money, but let some elitists in Washington tell us what they think is best for us. We’re supposed to have a taxation scheme that limits and reduces prosperity and increases the number of people who need some type of help. And because of that, we lack the funding we need to solve some of our other world problems. And doing things this sordid way is supposed to prove we have compassion?
Give me a break!
