Jan 11, 2013

Could charity replace welfare?

Here's something you can learn in the line at the welfare office in Clayton County, Ga.: People generally don't ask for help until they really need help. Until the heat is shut off, or the rent is very late, or there's no more food. Until there are no more ketchup packets and saltine crackers in the cupboard. Until their children are very hungry.

And by then it's too late.

As a reporter for several years on the south side of metro Atlanta, I spent some time exploring the area's social services, and the public responses to the problem of poverty. One of the things I found was this specific bureaucratic problem of lag time between the application for and approval of government assistance. The approval process takes time. Time that those who ask for help don't have.

No one applies for help they need in 30 days.

What happens is this: They meet the case worker. They fill out the paperwork. They provide information and sign at the x, and they tell the caseworker what their situation is. Then, at some point, awkwardly, normally, they clear their throat and say, "so ...."

"So ... how soon could this ...?"

And then the government worker says, "When is the last time you ate?" Or, "Do you have food to feed your kids tonight?"

And they don't. They never do: that's why they're asking for help.

Then the case workers lead the people down the hall to what was a break room, but is now a food bank. The get out boxes and bags and they fill them with good things to eat. They send them home with soup and bread, potatoes and canned vegetables and mac & cheese. There is no application process for this. You only have to go and wait in line, meet with the case worker, say that you're hungry and don't know how you'll feed your kids, and you will get food. While you wait for the government to do something, you will be fed. And it's privately funded food.

The food bank in the welfare office in Clayton County, Ga. is actually a private charity. The food isn't paid for by government of any level, but actually is put there by a dozen businesses and services organizations, each of which commit to stocking the food bank for one month a year. It's given away by the social workers who work for the government, but provided by private charity.

This is the kind of charity that many conservatives, particularly Christians, believe is better than welfare programs and should replace welfare programs.

There are very strong teachings in the New Testament about charity and caring for the poor, and those Christians who object to public assistance programs that help the poor don't just ignore those teaching, despite what some critics say. They believe it's very important to assist those who need assistance, but also that how that's done is critical. They argue, on both practical and theoretical grounds, that the state should not be the entity doing this work that needs to be done. Charity in itself is good, but the government ruins that, and makes things worse.

I wonder, though, practically speaking, if charity could replace welfare.

Purely as a pragmatic issue, would it be possible? Could private charities move beyond assistance, beyond helping at the points where the system of government assistance is breaking down, replacing government with benevolent associations as religious conservatives say would be preferable. If given the chance, could and would people of good will take care of the poor voluntarily, giving enough money to private organizations to functionally replace the social safety nets now in place?

I'm not sure they could.

Currently, in Georgia, to take the example I know best, private charities don't seem robust enough to replace welfare programs. They are, for the most part, themselves in perpetual financial crisis, struggling to raise enough funds to do what they currently do, which is is only substitutionary, filling in when government-funded social programs fail to meet immediate needs. Where welfare systems are being dismantled, and assistance has been drastically cut or made dramatically harder to get, charities are not prepared -- not funded or staffed or supported in a way that they could be prepared -- to do more. They're already doing everything they can, and it's an ongoing struggle.

Welfare programs such as TANF, Temporary Assistance for Needy Families, have been gutted in Georgia, in recent years, and the needs of needy families have not just been simply or easily met by charitable organizations.

As Slate recently reported:
Even as unemployment has soared to 9 percent and 300,000 Georgia families now live below the poverty line—50 percent higher than in 2000, for a poverty rate that now ranks sixth in the nation—the number receiving cash benefits has all but evaporated: Only a little over 19,000 families receiving TANF remain, all but 3,400 of which were cases involving children only. That's less than 7 percent, making Georgia one of the toughest places in the nation to get welfare assistance.  
What's Georgia's secret? According to government documents, interviews with poor Georgians, and those who work with them, it's a simple one: Combine an all-Republican state government out to make a name for itself as tough on freeloaders; a state welfare commissioner so zealous about slashing the rolls that workers say she handed out Zero candy bars to emphasize her goal of zero welfare; and federal rules that, regardless of who's in the White House, give states the leeway to use the 1996 law's requirement for "work activities"—the same provision that Republicans have charged President Obama wants to unfairly water down—to slam the door in the face of the state's neediest. 
What this has created is a land that welfare forgot, where a collection of private charities struggle to fill the resulting holes. 
There are plenty of people who would argue that -- though it might be hard at the moment -- this should happen, though. Public welfare ought to be replaced by charity. Fill the safety net with holes and let private organizations take over.

Joel J. Miller recently argued at Patheos, for example, that though there might be practical reasons to commit tax monies to care for the poor, doing so is "to remedy one evil with another." He writes:
compulsion is almost always assumed in the public discussions around the topic of social justice. We jump from the moral imperative to give to the political expediency of a forced transfer, to the legal tactic of a compulsory program. That is not only a stretch, but betrays a misunderstanding of virtue.
This is also the fundamental argument made by the Acton Institute, which promotes religious arguments for the free market and argues that religious organizations, rather than the government, should provide for the poor. As the institute's founder, the Rev. Robert A. Sirico, has argued:
What is [morally] required of us as individuals may or may not translate into a civic policy priority. In the case of the welfare state, it is possible to argue that it does great good (though I would dispute that). Whether it does or does not, however, a government program effects nothing toward fulfilling the Gospel requirement that we give of our own time and income toward assisting the poor.

[....] I cannot see how this method of redistributing wealth has anything to do with the Gospel. Jesus never called on public authority to enact welfare programs. He never demanded that his followers form a political movement to tax and spend. Nor did he say that the property of the rich must always be forcibly expropriated. He called for a change in the human heart, not a change in legislation. There is a massive difference.
Both Miller and Sirico hold that, on principle, government programs to help the poor are wrong, even immoral. But they would not argue that the only moral option is for the poor to remain poor, to be destitute and go hungry. Rather, they advocate that charity replace welfare. They want a program like the privately funded food bank in Clayton County that's currently housed in and administered by the government officials to replace the government systems of assistance, rather than merely serving to supplement the government programs.

Whether or not one agrees with arguments about the morality of public assistance, the practical aspects of private charity seem like they should be matters of fact. Many, I suspect, would be happy to disregard the ideological questions of preferred public policy if it could be demonstrated that the poor would be adequately cared for by private charities. A solution is a solution, after all.

Georgians themselves are quite generous, too. They're good people and willing to give. If charity could work to replace welfare, it should work in Georgia, which ranks eighth in the nation in terms of giving. In 2011, Georgians give about $4.8 billion to charity. This is a combination of private giving, corporate giving, foundations, and bequests. Typical households gave about 6.2 percent of their income, even as the economy was still struggling, unemployment rates remained high and all the rest.

Is that enough, though, to take care of the state's poor?

According to Slate, there are about 300,000 Georgian families living below the poverty line. For a family of four, that means an income of less than $23,000 per year.

For that family of four, groceries would cost about $520 a month, according to the estimates of the USDA. That's the "thrifty plan,"  not an excess of groceries. Keeping to that minimum, the cost of groceries would add up to an annual cost of about $6,240, nearly a quarter of family's income if they were exactly at poverty level.

If the family lives in the Atlanta area, a crowded one bedroom apartment should cost them about $757 per month, according to HUD estimates of fair market rent. If they live in the cheapest place in the state, Jenkins County, where 22 percent of families live below the poverty line and there are fewer jobs, monthly rent on a one bedroom apartment will cost them a little more than $400 per month. If the family of four that lives exactly at the poverty line is in Jenkins County, then rent will eat up a fifth of their income. If the family is in Atlanta, where there are more economic opportunities, housing will take more than half of their annual income.

Georgians -- including these very poor Georgians -- are very generous, though. There's more than $4 billion being given to charity every year. So could it be possible to help those living below the poverty line with private charity?

Some back-of-the-envelope math: To give each of the 300,000 families living at or below the poverty line the money they need for groceries -- just covering the cost of food to help them out -- assuming poor families average out to families of four who need $520 per month for groceries, this would cost about $156 million per month.

That's $1.87 billion per year.

Perhaps it could be done for less than that, but this is not counting administration costs or distribution costs, buildings to house food banks or anything like that. This is imagining a scenario where poor families are just given credit to buy food for themselves, and the process of doing that is completely cost free: $1.87 billion.

Do the math on housing, and it works out pretty much the same. To pay the rent for 300,000 families living at or below the poverty line, or even just offset the cost of housing, would be very expensive. If you figure an average stipend of $500 per month for housing, that's a monthly bill of $150 million. Annually, helping the poor pay their rents in this way would cost about $1.8 billion.

Which is still significantly less than the government currently spends on welfare in a given year.

In 2012, state and local governments spent $5.2 billion on welfare in Georgia, more than all private giving combined. If every existing penny of charity in the state were to go to fund existing programs -- with donors just replacing tax payers as the source of funding -- there'd be a $400 million shortfall.

Disregarding the current welfare programs, though, and just focusing on the possibility of private charity for basic, practical expenses to help the state's poor, covering grocery costs, supplementing rent on cheap apartments, and you're still talking about $1.8, $1.87 billon.

This be a major, major undertaking for those who wanted to fulfill "the Gospel requirement that we give of our own time and income toward assisting the poor," as Siricio put it. Either of these charitable efforts to replace welfare would require about a third of what Georgians currently give.

Assuming that that the money currently being given is going to good things -- a fair assumption, I think -- then private giving would have to increase from $4.8 billion to, say, $6.66 billion.

On the one hand, that's not impossible to imagine. Many churches ask their members to give 10 percent of what they earn to charity, and if Georgians all did that, giving would increase by nearly 4 percent.  If individuals, corporations, foundations, bequests all increased giving by three or four percent, it would be possible to pay for the groceries of all of Georgia's poor, or give them a significant offset in the cost of a one bedroom apartment.

Not both, though. And, seriously, $1.8 billion is a lot of money.

That's roughly the amount the Salvation Army was given in 2010 -- nation wide. The Salvation Army has a massive fund raising operation, established institution and a long history of experience at this sort of thing. It's difficult to imagine how that success on a national scale could be equalled in increased giving in a single state. A state, remember, that already gives more than normal.

This increase in giving is even more difficult to imagine when one factors in the problem of inflation. Nationally, giving actually has gone up by about 4 percent or so a year for the last few years. That meant an increase of nearly $70 billion given away. Once you adjust for inflation, though, this increase basically disappears. When adjust for inflation, giving in 2011 is actually equal to giving in 2000, despite the fact that in the last decade the number of American families with children in poverty increased from 5 million to more than 7 million, and the number with children in deep poverty went from 2 million to more than 3 million, according to the Center on Budget and Policy Priorities.

So where would this money come from? Would it be possible to increase giving by nearly $2 billion, inflation adjusted, in the state of Georgia?

Could the private funds be found -- practically speaking -- to take care of the state's poor?

Those at the Acton Institute will argue that charity will increase if taxes are cut. If government spending goes away, as it is in Georgia, and if people get to take home more of their income, as they do in Georgia right now, then the amount given to charity will correspondingly increase. Because, as one of Acton's research fellows put it, with this withering away of the state,
Capital is ... freed up for private charity. When people keep more of their disposable income, they can be more generous instead of abdicating their responsibilities for their neighbor-in-need to politicians and bureaucrats.
The president of Acton has argued that "Private charity tends to be inversely related to growth of government welfare" and that when "budget cuts go into effect, people will reach deeper into their pockets to help those genuinely in need."

That doesn't seem to be true, though. Giving doesn't correspond to tax rates, but to economic growth. When recessions hit, giving declines, and when the economy improves, giving does too. In recent history, giving increased a good bit during the late '90s, corresponding pretty directly to the boom years of the dot-com bubble. The Bush tax cuts, by comparison, which went into effect in 2001, by comparison, saw no corresponding increase in giving. According to Giving USA, rates of charity pretty consistently correspond to the Gross Domestic Product, more than any other economic indicator, fluctuating between 1.6 and 2.3 percent of the GDP between 1971 and 2011. This means that, generally speaking, charity doesn't increase when there's increased need, in the way that government spending might, but rather seems to be another kind of luxury spending that people, in aggregate, spend when they have.

Given the reality of actual giving, it's hard to see how charity could replace welfare, practically speaking. Even if it the case that charity is morally superior and vastly preferable to welfare programs, it doesn't seem that the money could be raised, even in generous Georgia, to replace government in taking care of the poor and establishing some kind of social safety net.

This is not in anyway a criticism of the existing charities. Those that exist do real and important work, and help the poor in many places where existing government programs fail. Throughout my time as a reporter in metro Atlanta, I was impressed by the commitment and by the successes of private charities. I was moved by their charity when I saw sick people given medical care, the homeless given shoes, and hungry children fed. That doesn't change the fact, though, that all of this was supplementary to the welfare system, and could not have replaced it. 

There are those who would like to see religion radically transform people, and change the way the poor in America are cared for. Tim Keller, for example, recently said that Christianity ought to have a direct impact on cities, giving rise to a really redemptive philanthropic spirit. He said:
Christ changes the way we use wealth and power. Our understanding of work must reflect what Robert Bellah (from his book, Habits of the Heart) describes as a contribution to the common good. Along this line, I'd express a desire to populate the city with people who embody this vision. I'd want to see an explosion of philanthropy, in which we don't spend money on ourselves, but instead cooperate with others who want to make the city a desirable place to live. Much like Wilberforce did in the early part of 19th-century England, we would pursue healing and redemption.
It seems an admirable goal. As it stands, though, Georgia has some of the most generous cities in America, and the private charity there is not even close to replacing welfare.

10 comments:

  1. Twin Mom9:55 PM

    This is eminently sensible. As an engineer and a Christian, I am always bothered by the idea that all good things should be free/cheap to us. "I will not offer to God that which costs me nothing."

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  2. Hi, I'm an economist and I have recently began forming a research thesis on this topic. The results have been surprising, while you are absolutely right since the great depression private charities have been unable to support the poor during times of need, this hasn't always been the case. Every recession dating back from the Panic of 1907 and prior, including the long depression of 1873 (the great depression of the day) were completely manageable by private charities. When income tax was created in 1913 with the Federal Reserve, charitable contributions plummeted (almost 80% tax rate on the rich back then, surprised?). Private donations never regained the percent per GDP it once had and during the onset of the great depression, the government of course then took over the role. Since then the attitude of the "haves" changed about charity (I'm still running statistics on that part of the hypothesis, its more difficult to quantify while keeping out biasing variables). Also the Great Depression was worsened by the irresponsible monetary expansion and easy credit released in the '20s by our newly formed central banking system. Basically I am coming to the conclusion that private charity does work and is much more sustainable. Finally, I pose a question for you and your view point, since our government will be bankrupt by 2030 latest, how will a poor government support it's people?

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    1. Does your "economic research" take note of the fact that were we to return to the social conditions afforded by the levels of charitable giving prior to 1913 a great many people who survive today because of the various social safety nets in civilized countries would be dead or living in abject poverty?

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    2. The comment "almost 80% tax rate on the rich back then, surprised?" is misleading at best.

      In the early part of the 20th century, the top marginal brackets were set at income levels of 1-2 million a year. The only people who would potentially have 80% of their income taken in taxes would have been those earning several million a year - back in the 1920's-40's, i.e., a very small number of extremely wealthy individuals; people who quite obviously still were able to enjoy considerable luxury - a level of luxury that makes a mockery of the notion that their taxation is somehow "punitive".

      A vastly more relevant observation upon which your research thesis should focus, is the alarming low level at which the top bracket is currently set; under 400k/year. Shockingly our top bracket is set 2-4 times lower than it was in the 1920's-40's - the days you cited from your research - IN UN-ADJUSTED DOLLARS! Today's mega-earner retains 60+% of incomes thousands of times higher than the top bracket - tens of thousands of times higher than the national average.

      Due to our current tax code, which is so blatantly more favorable to those at the top, the wealthiest have more available for charitable giving than ever, should they choose to give it. One great motivator for them to do so, would be a return to similar tax code, with generous tax breaks for contributions to qualifying charities.

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  3. I'd love to hear more about your research on this Connor. Care to e-mail me?

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  4. The contracts are subject to full scrutiny and if the Government does not think charities are delivering, they can cancel the contract.
    Joseph Levinson China

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  5. A lot of the "charitable" giving is not for welfare, but for the symphony, public radio, cultural associations, etc. The idea that charity "worked" in the 19th century is absurd; one would have to define "worked" as meaning "well, at least the poor didn't rise up and overthrow the social order."

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  6. This article is concerning for how misleading it is.

    First, it fails to point out that the vast majority of charity goes to orgs that serve advantaged populations like museums, churches and universities. Only 10% goes to programs that benefit the poor. Cite: http://articles.latimes.com/2007/oct/01/opinion/oe-reich1

    Churches or private donations would not give enough to make up for this deficit. According to Ronald Sider in "Fixing the Moral Deficit: A Balanced Way to Balance the Budget", private initiatives provide only 6 percent of all food assistance in the United States. Replacing the federal government’s $485 billion dollar antipoverty programs would require every U.S. congregation to contribute an additional $1.5 million dollars. Sider concludes that “churches should do more, but they cannot begin to replace” the federal government in addressing poverty.

    It has been shown that reducing programs that provide assistance to the poor increases poverty, which in one well-documented example rose by 130% after the 1996 welfare reforms. Cite: http://npc.umich.edu/publications/policy_briefs/brief28/policybrief28.pdf

    And here is how the Catholic religious think about such "immoral" government programs: http://www.usccb.org/news/2012/12-063.cfm

    In summation, I agree with the premise that private contributions are better than government; however, it is untrue that those with low incomes will be better off if safety net programs are ended.

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    1. I don't disagree w/ any of this, but was trying to restrict my inquiry to just the one question of whether or not charity could, practically, pragmatically, etc., replace welfare.

      Thanks for the links and additional information. Looks very useful.

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  7. This Article proves just how brainwashed Americans have become, Welfare is the government establishment of the ACTS of Christian Charity. this is exactly what the colonist left Europe for. remember "Congress shall make no law respecting an establishment of religion?" of course it is not charity anymore now it is government established forced Acts of Charity. Care for the poor is care for the poor, healthcare is healthcare, education is education, they are one in the same government established the Christian ACT of charity in the social security ACT. See-- http:awakelive.wordpress.com

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