November 27, 2012; Source: New York Times

As part of its “Room for Debate” series, the New York Times has invited four worthy thinkers to weigh in on the question, “Are charities more effective than government?”

Chrystia Freeland, an editor at Thomson Reuters and the author of Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else, focused on the perspectives of Foster Friess, the Wyoming conservative political funder of Rick Santorum’s presidential quest who we profiled in the NPQ Newswire. Friess pitched the idea that the low income tax percentage paid by the super wealthy isn’t really that low when you add in charitable giving, the concept of the “self-tax.” Freeland observes that the self-tax is dangerous, both because “someone needs to pay for a lot of unglamorous but essential services, like roads and bank regulation, which are rarely paid for by private charity” and because of its conflict “with a fundamental democratic principle – the idea that we raise money collectively and then, as a society, collectively choose how we will spend it.”

“Vital needs don’t always attract donations,” agrees John Briscoe, a former World Bank official who is now a professor at Harvard University. Without questioning the wisdom of Bill Gates’ philanthropic priorities, he notes the ability of a donor like Gates to lobby governments and multilateral organizations to spend money on the priorities established by his foundation. In some cases, the priorities of philanthropists might be good, but he notes, “Governments, on the other hand, typically and necessarily see things like jobs as overwhelming priorities and sectors like infrastructure as critical for creating jobs and reducing poverty. I know of not a single nongovernmental organization that focuses on job creation, the provision of electricity at scale, or transport.” But he says the influence of philanthropists like Gates distorts priorities, and he points to the World Bank, where the original priority of the institution (infrastructure lending) has fallen to less than 10 percent of its total lending.

Likewise, Les Lenkowsky, a professor of public affairs and philanthropic studies at Indiana University, points out that charitable giving often “goes for purposes that would be low on any government’s priority list” while adding that philanthropic giving “is especially important for people with ideas that may be unpopular, innovative, or directed at a minority of the population.” He suggests that philanthropy can test ideas for delivering products and services to the public (and if it can do better than government, those programs and services might be picked up and replicated by government) and can support things that government can’t and won’t but are valuable anyhow, such as religion. Lenkowsky comments, “Philanthropy, in short, is an expression of pluralism…Because we know that our political decisions can be wrong, short-sighted, or incomplete, we have come to value – and encourage – philanthropy, both in its own right and as an essential safeguard for the manifold interests of the public.”

Howard Husock, the vice president for policy research at the Manhattan Institute, adds a perspective about the local adaptability of philanthropy. Acknowledging that charity cannot replace government funding on a dollar-for-dollar basis, he nonetheless suggests that privately supported organizations can in some cases “achieve the purposes of the government programs which are cut back.” As opposed to national, one-size-fits-all governmental programs, which he argues, backed by some evaluation results, have been less successful than many people think, he says that “private philanthropy, even through smaller expenditures, can adapt to local conditions and be led by local champions who must show donors results.” He contends, “Private efforts can, what’s more, be effective even when based on a volunteer model,” citing the difference between state offices of drug and alcohol abuse and the nongovernmental Alcoholics Anonymous; Husock thinks AA does a much better job with no government money.

The issues debated here are clearly at play in the “fiscal cliff” debates. Should government raise money to maintain funding for social programs by raising taxes or should those programs be truncated in the process of sequestration? Should government get wealthy people to pay more by capping and reducing their itemizable deductions, such as the charitable deduction, or should charitable deductions remain protected from changes in order to incentivize donors to support charities? NPQ Newswire readers should feel free to weigh in with their own answers to the New York Times debate question.—Rick Cohen