Although Americans are generous in charitable giving, the money
does not always go where it is needed most.
Anyone doubting Americans' charity should visit the Rockaway
communities in Queens. Volunteers from all over the city and beyond
have descended upon the devastated communities, providing cash,
supplies and assistance to locals marooned in waterlogged homes
without food or power. They are helping to fill a void in the
government's sometimes plodding response to the disaster wrought by
"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 to 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 in New York 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 the city , donations to aid the
relief effort exceeded $116 million.
The outpouring of support highlights how central a role charity
plays in the U.S. social contract -- Americans view themselves as
generous, yet they do not trust the government to help those in
need. This trust in charity is uniquely American. Americans pay less
tax as a share of their income than citizens of virtually every
other rich economy in the world. But they 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 churches or
other charitable institutions.
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 in the
United States and found that faith in the government to help society
was rather limited. Of the respondents, 91 percent said they trusted
nonprofits to solve societal problems. Only 56 percent trusted the
U.S. government to do so.
This confidence in the power of philanthropy may soon be tested.
If a set of spending cuts and tax increases kick in 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 for teaching 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 U.S. 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 Barack
Obama has proposed, even if philanthropy itself would take a hit
from reduced contributions? Or should Americans 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? …