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Why Don’t We Prioritize Charity? April 4, 2007

Posted by federalist in Economic Policy.

Sheryl Sandberg makes an excellent point in her WSJ essay, “The Charity Gap.”  We generally think of charity as altruistic aid rendered to our needy fellow man.  The IRS thinks of charity as spending that cannot provide a direct financial benefit to the giver or related parties.  In either case, why is so little tax-deductible charity spent on the most compelling and urgent cases?

[A]nalysis, carried out by the Center on Philanthropy at Indiana University, concluded that only 8% of donations provide food, shelter or other basic necessities. At most, an additional 23% is directed to the poor — either providing other direct benefits (such as medical treatment and scholarships) or through initiatives creating opportunity and empowerment (such as literacy and job training programs). It’s just not true, in other words, that the major beneficiaries of charity and philanthropy are the disadvantaged.

The most generous estimate shows that only 8% of U.S. individual donations supports international causes of any kind. Though … small amounts of money can make an enormous difference in the lives of individuals and communities in poor countries, the world’s poorest are virtually ignored by the philanthropic giving of citizens of the world’s wealthiest nation.

Frankly, I am baffled by donors who give millions to universities, museums, and other establishments that could potentially survive as for-profit enterprises serving well-endowed consumers — especially when the same money judiciously spent in the neediest locales could have an enormously positive impact on many human lives that would otherwise be wasted.

[2011 Update: Just added to my blogroll two organizations that evaluate charities for effectiveness: Poverty-Action and GiveWell.]



1. federalist - May 22, 2008

WSJ has a profile on a billionaire with no heirs who has an interesting perspective on the use of wealth:

After amassing billions and buying all the usual trophies of success — a Florida mansion on a private island, a luxury condo in New York — Mr. Berggruen is paring down his material life. He has sold his properties and now lives in hotels. He is about to sell his only car. Because he doesn’t have children and is unmarried, he is planning to leave his fortune to a personal foundation and an art museum.

“Living in a grand environment to show myself and others that I have wealth has zero appeal,” he says in an interview, standing in a hotel room in New York’s Upper East Side. “Whatever I own is temporary, since we’re only here for a short period of time. It’s what we do and produce, it’s our actions, that will last forever. That’s real value.”

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