If Government Aid Programs Were Charities, Would Anybody Recommend Giving Money to Them?

The government excels in spending money on overhead costs

With the Christmas giving season comes the annual warnings to check out the details of any charity asking for holiday donations. Make sure they aren't frauds. Check out how much money actually is used for programs versus how much money is spent on salaries and overhead. Is the charity making responsible choices? Will a donation actually help needy people?

California Attorney General Kamala Harris' office sent out a release last week with their tips for holiday giving:

Make sure your charitable donations are well spent and serving the activities you support by working with a local charity as a volunteer or by contacting the charity directly to make a donation.

A shame we don't have the same option for our "donations" to the government. The Capitalism Institute — a relatively new, free market, Christian-oriented organization — has been passing around a simple chart showing the difference in where money to a typical charity goes versus where money the federal government spends on public aid programs generally goes:

The chart might have shown up in your Facebook feed if you have a number of libertarian friends or have liked libertarian organization pages. The statistic comes from a report by economics professor James Rolph Edwards from a 2007 Journal of Libertarian Studies (pdf). One wonders what the percentage is these days. Edwards actually drew the numbers from studies in 1989 and 1996.

Comments

[Sevo]

That hypocrite Buffett certainly 'reveals' that his preference is opposite what he states.

[anon]

In other news, water is wet.

[Brandon]

If government aid programs were private charities, a lot of board members would be in prison.

[Jordan]

The difference is that private charities aren't make-work jobs for retards.

[Chris Mallory]

I had several government employees threaten me with arrest when I suggested that the courthouse security program was a jobs program for the mentally disabled. They even threatened to "go get the sheriff". Me: "Go ahead, I don't mind telling him you are mentally disabled.". Government Goon: "We are going to tell the judge" Me: "Cool, maybe he will kick me out of the jury pool." Government employees really dislike it when you mock their made up authority.

[Adam330]

From the study: "70 cents of each dollar budgeted for government assistance goes not to the poor, but to the members of the welfare bureaucracy and others serving the poor. Michael Tanner (1996, p. 136 n. 18) cites regional studies supporting this 70/30 split."

I'm not sure what this means. Most government aid programs are not direct cash transfers, but instead provide some sort of good or service. So if Medicaid pays a doctor to see a poor patient, does this get counted as "going to not to the poor, but to others servicing the poor?"

[robc]

No, that would be program spending.

[robc]

It is a complicated problem, however, as even private charities play games to make their program numbers look better.

But, in general, non-program spending would be executive/administrative pay/expenses plus fundraising expenses.

Most everything else is program spending.

[anon]

One would assume the government has every reason to cook its numbers to look better as well.

Then again, maybe not.

I'm reminded of the "Better off Ted" episode where Veridian raises money for a charity, then spends 95% of the money it raises telling people about how it raised money for a charity.

[Adam330]

I don't see the report using the term "program spending."

[robc]

Its standard terminology in the charity community. I havent read the report, so no idea what terms they use.

But, the graph above, uses the term "programs".

[Adam330]

I would assume that too, except that it says "others serving the poor," which implies it means the salaries or payments to people that are not overhead.

[robc]

I would assume you are reading too literally.

[Hugh Akston]

Most government aid programs are not direct cash transfers, but instead provide some sort of good or service

This is also true of most private charities.

[robc]

Probably MORE true for private charities. Very few just provide cash.

[anon]

Also, a lot of people work for charities with no compensation.

[Cdr Lytton]

Yet often financially rewarding for the guy at the top.

[anon]

Were I a board member of a charity, I'd be willing to pay someone a lot of money if they had the ability to get people to give you lots of money.

[Adam330]

True, but they describe the numbers for private charities in terms of overhead/admin, but differently for the government. It makes me question what the numbers mean.

[robc]

Probably because the government uses different terminology.

[sarcasmic]

I think it means that of every hundred dollars that goes to a government welfare program, seventy pays for the bureaucracy while only thirty goes to the poor and to those who service them.

I can remember one lady I knew who worked in a federal building, and her entire job description involved sending out tasks based upon a report that came out at three in the afternoon. The rest of the day was spent hanging out with the other bored federal employees who had either already done their job for the day or were waiting like her.

Government is the model of waste.

[Adam330]

That's not what it says though. It says that, out of every hundred dollars, seventy pays for bureaucracy and those who service the poor, and the other thirty goes to the poor.

[sarcasmic]

I read "seventy pays for bureaucracy and those who service the poor" as being government employees, not doctors.

[robc]

Answering your initial question, the report refers to "cash or in kind payments".

The medical care provided by the doctor would be an "in kind" payment, and thus the money the doctor receives would be part of the 30%.

[Certified Public Asskicker]

Over the summer, I criticized on FB the Steven King article about his desire for higher taxes.

One leftie friend wrote:

"giving to a charity for one cause does not help another cause. Just because you donate to help the homeless, doesn't mean cancer research is funded well enough. That's where taxing, and having the money collected and spent by the government comes in. Ideally they would take the money and spend it where it's best due...decided by elected (by the people) officials who are held accountable for their actions and decisions."

So there!

[anon]

Your friends are idiots.

[sarcasmic]

Your friend would unfriend me real quick because I would have responded with something along the lines of this.

"I see. So you think people are stupid. That people who are too dang stupid to give money to the charities that you believe to be important are somehow capable of selecting central planners who are? No, my friend, it is not the people who are stupid. It is you and your fallacious reasoning that is stupid."

[Certified Public Asskicker]

Damn, that was a better response than mine. I went with basically the reasoning from this article, in that I didn't understand how funneling money through a bureaucracy was an efficient way of funding charity

[sarcasmic]

I enjoy reading Don's letters on cafehayek.com.

[Certified Public Asskicker]

He's married to my wife's friend actually, so more of an acquaintance.

[anon]

Your wife's friend is an idiot.

[Scarecrow Repair]

This is just fascist lies. Public charities make jobs for the bureaucrats who otherwise would be out on the streets, since they are so unskilled and helpless. Private charities don't have this problem since they have so many volunteers who absorb $0 in salary.

It's comparing apples and oranges.

[Audrey the Liberal]

Scott Shackford wrote some funny reviews of American Idol on Television Without Pity. You should go read them.

[attractions guide]

Do you like money and is there anyone do not like it?

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[awakelive]

This Article proves just how brainwashed Americans have become, Welfare is the government establishment of the ACTS of Christian Charity. this is exactly what the colonist left Europe for. remember "Congress shall make no law respecting an establishment of religion?" of course it is not charity anymore now it is government established forced Acts of Charity. Care for the poor is care for the poor, healthcare is healthcare, education is education, they are one in the same government established the Christian ACT of charity in the social security ACT. See-- http://awakelive.wordpress.com