PRIVATE CHARITY VS. PUBLIC CHARITY

PRIVATE CHARITY VS. PUBLIC CHARITY

By

Dr. Jimmie R. Applegate

Christmas Season 2011 has been marked by multiple pleas for charity to assist the poor, the destitute and the down trodden.  Many of the headlines and articles accompanying the pleas blamed the current local, state and national economic situations for the shortages of monetary, food and other gift donations.  This year has seen an inverse relationship between the advertised need for donations and the total donations received.  As the pleas for donations increased,  the quantity and the value of the donations decreased.  The purpose of this post is to challenge the unequivocal acceptance of the position that the lack of donations is the result of the “Great Recession” and its aftermath,  by looking at a broader picture.

Charity may be categorized  as either private or public.  Typically private charity supports the arts; i.e., music, literature, theater, art, etc.  Public charity on the other hand is directed toward social service welfare programs; i.e., Medicare, Medicaid, unemployment compensation, Aid to Dependent Children and untold other government funded public assistant programs.

Private charity donations generally are given voluntarily by individuals who in all probability receive personal satisfaction for doing so.  Private charity, relative to public charity, is “nickel and dime stuff” except for the few individual foundations well-endowed by very wealthy individuals. 

Public social service charities are funded by a process of involuntary taxation on the general population or, at least, of the 54% who pay the federal individual income tax.  Citizens are forced to contribute to public charities by state and federal tax law.  And if citizens do not pay their taxes they are punished.  Donations to public charities rarely result in warm, fuzzy feelings of personal satisfaction!

When public social welfare charities need more funding, tax rates are adjusted.  As noted elsewhere, it is easy for government officials to spend other people’s money, and by doing so to create a welfare entitlement state based on the socialist principle of redistribution of wealth.  Public charities create liberal, socialistic and progressive welfare agencies that are fraught with fraud and waste to a much greater extent than private charities.  In fact because public charities tend to “crowd out” private charitable donations,  private giving decreases.  As a result,  involuntary tax contributions substitute for voluntary giving.

As involuntary public charitable giving has increased, the numbers of individuals who have come to expect public charitable gifts as entitlements, and thus property rights,  has increased.  The expectation that public charitable gifts are property rights has resulted in conflicts between, for example, the so-called 1% “haves” and the 99% “have nots” fully described on the top half of the front pages of newspapers.  At the same time these conflicts competed with pictures and descriptions of confrontations between customers fighting to buy a pair of $180 tennis shoes. This recent event raises the question, “How much do the decisions people make influence their economic conditions?”

The hypothesis developed in this post is that many citizens are fed up with progressive liberal activities to redistribute wealth via public charities and the corresponding growth of entitlements as property rights in the United States.  Couple this attitude with the “free” expenditure of public charity to nations around the world and you have people saying, “Enough is enough.  This has got to stop somewhere.  And it might as well be here and now!”  Maybe, just maybe, tax paying American citizens are becoming more isolationist  and less desirous in their willingness to subsidize other peoples and nations around the world.  And maybe, just maybe, tax paying American citizens are tired of rampant progressive liberal spending in an effort to redistribute wealth in the face of a $15 trillion dollar national debt.  (Underlines added for emphasis). 

Although private charities face some of the same problems as public charities, the problems are not as imbedded or as severe.  Absent the “crowding out” phenomenon resulting from the competition by public charities, the better managed private charities may meet the need without the fraud, the waste and the development of an entitlement mentality by the recipients of funds from public charities.