Tuesday, March 25, 2014

What is the Proper Balance Between the State and Non-Government Organizations?

It is worthwhile, despite the incessant call for experiential learning, to think theoretically about Civil Society.  Doing so helps us focus our debates on more immediate problems such as the workings of the charitable contribution deduction or the extent to which charity, social welfare, and politics may coexist.  In the absence of deep theoretical thinking, our legislative and judicial statements pertaining to the nonprofit world degenerte into ad hoc tinkering resulting in pronouncements without purpose. 

It just so happens that The Atlantic this week contains a concisely-written essay addressing the proper balance between civil society and the state.  Mike Konczal argues that the idea of extremely limited government in a society where compassion for one another is instead exercised through a vibrant Independent Sector is but a myth.  Shrinking government will not expand Civil Society.  One should not dismiss the essay merely because of its partisan sounding title, The Conservative Myth of a Social Safety Net Built on Charity.  The essay is actually more reasoned than dogmatic, and certainly worth twenty minutes.  Citing Lester Salamon's work, Konczal argues that the State is the only vehicle by which people can provide a reliable safety net.  The State should address "absolute poverty," and presumably health care and education, while Civil Society appropriately fills in more targeted "needs" and preferences.  Limiting government will not result in a more vibrant civil society comprising a reliable safety net, he argues.  This is because Civil Society is too often characterized by patterns that tend to reinforce the status quo (as opposed to efficiently addressing real needs), or if not that, the relatively whimsical or self-serving desires of those who fund civil society:

With this in mind, we can examine why voluntary efforts fail consistently. Despite the general under-theorizing of the voluntary sector, the scholar Lester Salamon in the 1980s did build a theory of “voluntary failures” to contrast with market and government failures. There are three parts to the theory that especially stand out in the wake of the Great Recession.


The first is what Salamon describes as philanthropic insufficiency. This occurs when the voluntary sector can’t generate enough resources to provide social insurance at a sufficient scale, which, as noted, is exactly what happened in 2008. There is also the problem here of geographic coverage. As Hoover discovered, charity will exist in some places more abundantly than in others; the government has the ability to provide a more universal baseline of coverage.


But it isn’t just about the business cycle. A second issue Salamon identified is philanthropic particularism. Private charity has a tendency to focus only on specific groups, particularly groups that are considered either “deserving” or similar in-groups. Indeed, in one telling, this is the entire point of private charity. The largest single category of charitable giving in the United States goes not to caring for the poor but for the sustenance of religious institutions (at 32 percent of donations). Using very generous assumptions, Indiana University’s Center for Philanthropy finds that only one-third of charitable giving actually goes to the poor. Almost by definition, there will be people who need access to social insurance who will be left out of such targeted giving.


The third element of voluntary failure relevant here is philanthropic paternalism. Instead of charity representing a purely spontaneous response by civil society, or a community of equals responding to issues in the commons, there is, in practice, a disproportionate amount of power that rests in the hands of those with the greatest resources. This narrow control of charitable resources, in turn, channels aid toward the interests and needs of those who already hold large amounts of power. Prime examples of this voluntary failure can be seen in the amount of charitable giving that goes to political advocacy, or to elite colleges in order to help secure admission for already privileged children, even as the needs of the truly desperate go unmet.


At a basic level, much of our elite charitable giving is about status signaling, especially in donations to elite cultural and educational institutions. And much of it is also about political mobilization to pursue objectives favorable to rich elites. As the judge Richard Posner once wrote, a charitable foundation “is a completely irresponsible institution, answerable to nobody” that closely resembles a hereditary monarchy. Why would we put our entire society’s ability to manage the deadly risks we face in the hands of such a creature?


The essay reminded me of Miranda Fliescher's point made last week regarding the proper structuring of the charitable contribution deduction (i.e., the law should encourage real relief of poverty rather than rewarding spending that might occur anyway as an expression of personal consumption preferences or status).  In any event, it would be nice if we could more often discern a theoretical belief or assumption -- any assumption -- in our legal jurisprudence regarding nonprofit organizations.





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