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Can private charity replace the social safety net?

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After Black Friday, Small Business Saturday, and Cyber Monday comes Giving Tuesday. The Tuesday following Thanksgiving has become the unofficial launch of the charitable season, when many people around the globe focus on their holiday and end-of-year giving.

The outpouring of generosity during the giving season raises the question of why all charity can’t be funded privately. Do we even need a government social safety net anymore?

Before we can answer that question we must first determine the replacement cost of the safety net. What percent of federal budget goes to programs that provide aid (other than health insurance or Social Security benefits) to individuals and families facing hardship? Forty percent? Thirty percent? Twenty percent?

The actual answer is 9 percent, or $366 billion.

Could the amount of money donated to private charities cover the substitution cost for the social safety net? The short answer is: it’s not even close. As Arthur C. Brooks explains,

It would be wonderful if America could solve all problems of poverty and need through private charity. We can and should give even more, and conservatives must continue to lead by example. But even in this remarkably charitable country—where voluntary giving alone exceeds the total GDP of nations such as Israel and Chile—private donations cannot guarantee anywhere near the level of assistance that vast majorities of Americans across the political spectrum believe is our moral duty.

Consider the present total that Americans give annually to human-service organizations that assist the vulnerable. It comes to about $40 billion, according to Giving USA. Now suppose that we could spread that sum across the 48 million Americans receiving food assistance, with zero overhead and complete effectiveness. It would come to just $847 per person per year.

Or take the incredible donation levels that followed Hurricane Katrina in 2011. The outpouring of contributions exceeded $3 billion, a record-setting figure that topped even the response to the attacks of September 11, 2001. But even this historic episode raised enough to offset only 3 percent of the costs the storm imposed on the devastated areas of Louisiana and Mississippi. Voluntary charity simply cannot get the job done on its own.

In 2017, an estimated $274 million was raised online in the U.S. during the sixth annual Giving Tuesday. To cover just the cost of the safety net provided by the federal government ($366 billion) we’d need to raise 3.5 times more than was donated on Giving Tuesday every single day throughout the entire year.

The unfortunate reality is that Americans donate to private charity less than 10 percent of the amount provided by the government’s social safety net. But let’s assume that state-based welfare is rife with fraud and abuse and that after reforms we could cut the amount spent in half. Even then private charity would only cover 20 percent of the original amount needed.

Some people might argue that charity would be funded if the government wasn’t already taking the money from citizens. But last year Americans were given a tax cut equal to about $550 billion a year. That’s more than enough to pay for the safety net ($366 billion) and still have half a billion dollars in leftover tax cuts for every man, woman, and child in America. Yet we are not expected to see $366 billion in directed charitable giving to alleviating poverty.

There are a lot of conservatives (including me) who think our neighbors in need would be better off if most or all of the safety net was funded by charity. But the sobering reality is that we have a long, long way to go before that is even in the realm of possibility. Americans only currently give a combined total of $390 billion a year—and that’s for every form of charity (churches, education, non-profits, animal shelters, arts programs, etc.).

If we are going to convince our fellow Americans that government should get out of the welfare business, we need to figure out a way to close the charity gap and show the private sector truly can take care of the poor and needy.

Image source: Flickr

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