Private Safety Net Relies on Government, Too : Charity: Not-for-profit agencies can’t provide for the poor without public funds.
There is a recurrent fantasy in American life that private charities will provide for the poor if government does not. This is not true.
Not-for-profit agencies exist because they are paid for by government. When government cuts spending on the poor, it also cuts the assistance that private charities can give to the poor.
On average, more than 60% of the budgets of not-for-profit social agencies comes from government revenue in the form of grants, contracts and fees for services. Of the 30% to 40% spent by private social agencies that does not come from government, a large share comes indirectly in the form of tax expenditures, that is, the loss of government revenues resulting from the tax deductibility of private contributions. In 1992, that loss of federal revenue (not including any loss by the states) was just under $18 billion.
Our safety net for the poor includes government programs, some of which, like Aid to Families with Dependent Children and Supplemental Security Income, are administered by government agencies and others, like shelters and feeding programs, are administered by not-for-profit agencies. All of them, public and private, are essentially paid for by government.
When we hear proposals to “privatize” government programs, what is actually being suggested is placing the delivery of benefits under non-governmental auspices, not the funding of those benefits. We need to be absolutely clear that private social agencies are not alternatives to government; they are agents of government. Unless we understand this, we will be misled by a fantasized private charity alternative to government aid to the poor.
The reasons that government uses private agents are solid. Such agencies have a record of innovation in program development, and they have great flexibility in responding to the needs of a diverse society. Supporting them also supports the best sentiments of the nation: voluntarism, grass-roots community organization, altruism, social justice and a sense of civility and social concern.
Too often, private social agencies fail to acknowledge their dependence on government out of fear that such acknowledgment will weaken their fund-raising appeals. And too often, they foster a belief that they are inherently more efficient than government. Such claims rest primarily on the fact that not-for-profits usually pay their workers less than the Civil Service, offer fewer fringe benefits and little employment security. Weakening the labor force engaged in human services is not a positive contribution to quality service or to the prestige of a life devoted to service to the poor.
Private charities have an important role to play as agents of government in a public-private partnership. But our private social agencies must make it clear that they can’t be an alternative source of assistance to the poor.