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Making Charity Truly Charitable

If we took the more than $350 billion the federal government spends on welfare and divided it among people below …

If we took the more than $350 billion the federal government spends on welfare and divided it among people below the poverty line, we could give each of them $8,939 a year. That’s nearly $36,000 for a family of four.

If we’re spending that much to fight poverty, why is the poverty rate higher today than when the War on Poverty began in the ’60s? One reason is that most of the money does  not go to poor people, but to those who work in the welfare-poverty industry, Another is that even though there are 79 federal welfare programs, they treat all “poor” people the same, ignoring the fact that every family has different needs and priorities.

Unfortunately, rules written in Washington don’t take those differences into account. For the most part, federal programs encourage dependency and antisocial behavior and do little to encourage self-reliance and desirable behavior. For example, although most poor people are only temporarily poor-45 percent for less than a year, 70 percent three years or fewer, 12 percent 10 years or more-more than half the people in the Aid for Families with Dependent Children program remain in poverty 10 years or more. Does AFDC lock people into poverty? There certainly is evidence to that effect.

There’s also proof that the private sector does a better job getting aid to the neediest first, using resources efficiently, encouraging self-sufficiency, and reinforcing the family unit. In 1991, private charities provided more than $176 billion for health, education, and welfare-more than $100 billion in cash, the remainder in volunteered time.

The best private charities operate on the philosophy that most people can, and should, support themselves and their families, and they tailor aid accordingly. They get aid to those who need it most and provide relief without encouraging dependency. They encourage or require aid recipients to contribute labor to the agency itself. It might be said private charities take the opposite approach from government welfare. Whereas it often takes a long time to get on government welfare rolls but is easy to stay on, it’s easy to get aid from a private charity but difficult to stay on its roster of recipients. Perhaps it’s time to allow citizens to decide how their welfare tax dollars should be spent. Instead of sending money to Washington, why not let taxpayers give their share of tax money to a charity of their choice or to state or local government for charitable work? We could create a dollar-for-dollar tax credit for individual contributions to health, education, and welfare programs operated by state or local governments or private-sector charities. That is, for every dollar individuals give to such programs, up to, say, $3,000 (approximately what the median household pays in federal income taxes), they could take a dollar off their tax bills.

This would increase dramatically the resources available to non-federal public assistance programs, In 1990, the last year for which complete data are available from the Internal Revenue Service, 89 million households paid at least some income tax. Allowing for the fact that many households paid less than $3,000-and assuming everyone would rather send money to the Salvation Army than to Uncle Sam-an estimated $240 billion would be taken from the federal government and added to the coffers of state and local governments and private-sector charities. That balances almost exactly the budgeted federal health, education, and welfare spending for fiscal 1995-all of which could be eliminated with the removal of the federal government from such programs.

My proposal would extend to all Americans the favorable tax treatment of charitable contributions now available only to those who itemize their returns. Of the 113 million tax returns filed in 1990, only about 30 million had temized deductions, but virtually all of them claimed charitable deductions, Since nearly three out of four households made charitable contributions that year, this means tens of millions of Americans received no tax benefit in return. These are precisely the people-those who make the least-who, surveys show, give the highest percentage of their incomes to charity.

For decades, Americans have been saying the federal government “is too big and spends too much.” But they also say more should be spent on social services such as health care, public assistance, and education. The apparent paradox is, of course, not a paradox at all. People want value for the money they spend to help the poor, and they want to see the impact of their work. My proposal would meet those needs.

Pete du Pont is former governor of Delaware and policy chairman of the National Center for Policy Analysis in Dallas.

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