Thursday, March 1, 2012

If only the government would get out of the way...

Conservatives (and closet Ricardians) hold to the idea that government spending on social services displaces a substantial amount of charitable spending on the same services. They argue--if only the government would get out of the way, private non-profits would step in and perform "true charity."

It's an interesting theory, but it doesn't work. For instance, a study that Mark Wilhelm and I conducted about a decade ago showed that each dollar of government spending on overseas relief and development only displaced about 8 to 23 cents of private spending. The results indicated that there was a little substitution of private generosity but not nearly enough to make up for the loss of public spending. Put another way, if the government cuts spending for this purpose and puts the money back into private pockets, 77 to 92 cents of that money will stay in those private pockets.

Here in North Carolina, we're seeing similar results, with the News Observer reporting that the Raleigh YWCA will soon be ceasing operations.
The YWCA of the Greater Triangle ceased operations Wednesday in the face of mounting financial problems, an abrupt end to a social services organization that has been working on behalf of women in the Raleigh area for 110 years.

The move put all of the YWCA's employees out of work and leaves in a lurch the parents of about 50 elementary school-aged children who relied on the Y's after-school care, as well as about 60 older adults whose main meal of the day came from a Meals on Wheels program based at the East Hargett Street facility.

In all, the YWCA served about 12,000 people throughout the Triangle in its mission to "eliminate racism and empower women." Much of the work the YWCA did was designed to help financially strapped single mothers.
According to conservative dogma, cuts in publicly-funded social services in North Carolina should have unleashed a tidal wave of private support; instead, the tide seems not only to be out but to still be receding.

The situation in Raleigh is not unique. Nationally, charitable giving has not responded to cuts in public spending. The Center for Philanthropy at the Indiana University-Purdue University Indianapolis reported last fall that charities across the country were continuing to struggle.
As the fourth quarter of 2011 begins—typically the most important time of year for fundraising—fewer than half of surveyed nonprofits reported fundraising increases during the first half of 2011 compared with the same period in 2010.

According to a report released today by the Nonprofit Research Collaborative (NRC), of 813 responding nonprofits surveyed in July:

• 44 percent reported increases in charitable contributions received through June, compared with the same period in 2010;
• 25 percent reported giving remained level; and
• 30 percent reported charitable contributions have declined so far this year.
• 1 percent did not know.

These numbers are barely changed from the NRC 2010 year-end survey, when 43 percent of respondents indicated they raised more money in 2010 than they did in 2009. At that time, almost a quarter (24 percent) saw giving remaining level, and 33 percent raised less.

These results indicate that nonprofit organizations still face a difficult fundraising climate. In AFP’s 2007 State of Fundraising Survey, which asked the same questions as the 2011 NRC study, 65 percent of respondents raised more money that year, before the recession, than in 2006. Eleven percent raised about the same, and 24 percent raised less.
For many critical social services, if the government gets out of the way, the services simply don't get performed.

Maybe that's what conservatives really want.