“The government is doing its own thing,” said Brett Scudder, a community advocate from Far Rockaway who has been walking up and down the boardwalk, helping coordinate the relief effort. “They must get things approved. We don’t have time for that now.”
Roy Niederhoffer, a hedge fund manager who lives on the Upper West Side and who has been delivering aid across the area, suggests that private citizens have a big role to play. “We can’t rely on the government for all of this.”
Ten days after the big storm hit New York, donations to aid the relief effort exceeded $116 million.
The outpouring of support highlights how central a role charity plays in our social contract — we Americans view ourselves as generous, yet we mistrust the government to help those in need. Our trust in charity is uniquely American. We pay less tax as a share of our income than citizens of virtually every other rich economy in the world. But we contribute more to charity than citizens of any other country.
When Democrats attacked the Republican presidential candidate Mitt Romney for paying only 13 percent of his income in taxes last year, his allies pointed out that the Romneys had given nearly 30 percent of their income to charity.
Support for charity has a partisan bias. Republicans much prefer charity to taxes. Democrats are more tolerant of bigger government. Still, 95 percent of all Americans say they donate to a church or other charitable institution.
Earlier this year, Bank of America and the Institute on Philanthropy of Indiana University published their annual survey about charitable giving among high-net-worth households and found that faith in the government to help society was rather limited. Of the respondents, 91 percent said they trusted nonprofits’ ability to solve societal problems. Only 56 percent trusted the federal government to do so.
Our confidence in the power of philanthropy may soon be tested. If a set of spending cuts and tax increases kick in on Jan. 1 in the absence of a budget deal between Democrats and Republicans, the size of government will shrink considerably.
Those actions would cut nearly $900 million from the Federal Emergency Management Agency. The budget to teach English to immigrants would lose more than $700 million. Special education and rehabilitation would lose $1.3 billion. There would be $140 million less for financial aid for poor students.
Even if Democrats and Republicans agree on a more gradual way to reduce the deficit over time, it seems that many important programs will be reduced.
Philanthropy, then, seems more important than ever. Looming cuts to federal programs and shrinking state budgets mean that charity will have a bigger void to fill. But one of the things that induces people to give to these causes is a break on their taxes. It is legitimate to ask whether a government pressed for money should be forgoing $40 billion a year in tax breaks mostly pocketed by the rich for their charitable donations.
Should the government raise more money by cutting the charitable tax deduction for the wealthiest Americans, as President Obama has proposed, even if philanthropy itself took a hit from reduced contributions? Or should we stand by the Republican Party platform, which says that because of charities’ vital role “fostering benevolence and patriotism,” their tax preferences should not be touched?
Whatever its merits, charity is small relative to the potential need. Total charitable contributions in the United States were under $300 billion last year — less than 2 percent of the nation’s economic output. Doubling that amount wouldn’t fill the hole left by deficit reduction — which experts estimate at about $500 billion a year in the long term.
For all the trust we put in big philanthropists like Bill Gates and Eli Broad deploying vast resources for the public good, private charitable contributions have been stuck around 2 percent of personal income for years, according to the Center on Philanthropy. Corporate donations have never increased much above 1 percent of pretax profits.
Indeed, the vast growth of the nonprofit sector since the 1980s has been fueled not by donations but by fees and payments from the government. In 2008, philanthropic contributions provided only 12 percent of nonprofits’ revenue. Fees and grants from government accounted for about a third.
There is another, perhaps more fundamental argument against turning to charity to provide the kind of social assistance that a shrinking government cannot. Most philanthropists, generous as they may be, don’t usually see replacing government services as their job.
The nation’s philanthropists tend to prefer charity to taxes because they get to decide which cause is worthy. The flip side is that philanthropy is pretty much unaccountable to society. Unfettered by democratic controls and dictated by the preferences of donors, it doesn’t have a great track record of devoting itself to our most pressing social needs.
E-mail: eporter@nytimes.com; Twitter: @portereduardo
This article has been revised to reflect the following correction:
Correction: November 15, 2012
The Economic Scene column on Wednesday, about the role of philanthropy in America, misstated the position at Stanford University of Rob Reich, who studied how charity redistributes income. He is an associate professor of political science, not a professor of sociology. And a chart with the column omitted two categories of recipients of charitable giving. They are “Foundations,” which received 8.7 percent of total giving, and “Unallocated,” which received 3 percent. A corrected chart can be found at nytimes.com/businessday.
Article source: http://www.nytimes.com/2012/11/14/business/charitys-role-in-america-and-its-limits.html?partner=rss&emc=rss