Give Your Charitable Dollars to Government?

Recently, the Toronto Star ran a news item on Deputy Ontario Premier Deb Matthews' appeal to Ontario citizens to make contributions to help the province pay off its debt.

Deputy premier Deb Matthews encourages any Ontarian who wants to make a contribution to help the province pay off its massive debt "to feel free to do so."
http://m.thestar.com/#/article/news/canada/2015/12/20/ontarians-urged-to-help-province-pay-off-its-debt.htm

I saw this through a Facebook post and my first reaction was the same as many of the commenters, "They have to be frigg'n kidding!", "That's what my already too high taxes are for!"  "What do the think they are, a charity?".

Around the same time, I read another Facebook post (I definitely spend too much time on Facebook) decrying the outrageous salaries of the CEO's of many major Charities and high overhead costs that lead to only pennies on the dollar actually going to people in need.  Checking on the accuracy of the post, I found that much of the information was out of date and inaccurate, but it did start me thinking about the inefficiency of our society using charities as a supplement to our existing governmental social assistance and foreign aide programs.

http://www.snopes.com/politics/business/charities.asp

This set me thinking about the roles of Government and of Charities. 

One of the things I pondered about the comments to Deputy Ontario Deb Matthews' appeal is that many of us seem to think of government as something separate from ourselves in opposition to the common man and continually trying to tie-up and limit our affairs.  We don't seem to buy into this as "our" government. Many of us don't take ownership of the system we control and elect representatives for, the system we have set up to regulate public actions for the equitable benefit of all citizens and the "common good" as defined by ourselves.  In Canada, we founded our Confederation on the principles of, "peace, order and good government" and, for all its faults, it's a pretty good system.  And even better, if the majority of us don't like it, we have the mechanisms to improve or replace it.

One of the responsibilities we have given our government is that of Social Welfare.  We redistribute the profits that we as citizens make using the resources and infrastructure of our society so that they are applied more equitably. Some of the ways we do this is through public health care, social assistance payments, and other social programs. The way we pay for this is through variable rate income  taxes where those who make the most financial gains using our joint resources are expected to contribute the most to the common good.  This is something that we as citizens decide and a lot of effort is put into tax regulations for credits and exemptions in order to make it as equitable as possible.  Every election, political parties work hard on platforms that provide their proposed balance between tax rates and social services.  But, of course, there are always needs that fall between the cracks, that the legislated minimum contribution that we agree on as being required for all to pay, fail to cover.

The system we have in Canada, and by extension in Ontario, when a social need is identified, is a democratic process.  For example, if people hold the opinion that the general community should look after the lodging for families of children receiving medical treatment available only in select locations, they make it known to their elected representative.  The same is true if people identify a need for a community housing initiative, or more addictions programing, or sexual assault crisis support.  Whether that need is presented to a City Council Member, an MPP, or an MP, depends on the scope of the need and the scope of the proposed solution.  In many cases these needs and causes are not officially presented by individuals and groups, but are gleaned by our elected officials through general listening to the concerns of the people they represent.

What that elected representative does with the need or proposal brought to their attention depends on a number of factors.  Is it something that they feel that the majority of the people they represent would support putting public funds towards?  How does it compare in priority to other needs that the public purse currently supports when there is a limited pot to draw from?  Is it in line with the philosophies and policies of the political party they were elected to represent?  If the elected representative is convinced that the issue meets these criteria, they may propose a motion, a bill, or guideline, or work to include the concern in existing government mandates, initiatives, or budgets.

However, public funds are limited and "charitable" initiatives have to be balanced with the other roles of government that provide the infrastructure that allows for the commerce, business, and industry that generate the wealth that public funds are drawn from; transportation, communication and waste management infrastructures, fair and consistent legal and regulatory systems, and public education.  As a result, there will always be needs that don't garner enough public support to receive public funds, or if they do, are underfunded. 

That's where Charities come in.  They target the needs or causes that either public support, or the public purse, is not wide enough to meet.  Many of these causes would get the funding, or the increased funding, they need if only public funds were greater.  While some, for whatever reason, would never gain the public support required.

 
So, the benefits of Charities are twofold.  They allow individuals to contribute to individual causes that the general public either does not deem worthy of public financial support, or do so to a level less than the individual making the donation would like.  And, they also allow the person making the donation to do so for a specific cause out of their discretionary income in an amount of their own choosing.  For causes that already receive some measure of governmental support, this function could easily be absorbed by existing government by putting in place mechanisms that allows individuals to make donations above their existing taxes to specified services and programs.

So, what are the disadvantages of this system?  The first is that it is economically inefficient.  It produces parallel administrative systems alongside existing government ones and are wasteful due to a lack of economy of scale.  Each of these Charities require their own administration, staff, offices and other infrastructure.  Even if the CEO salaries for these charities and administrative costs are not nearly as high as some suggest, they still in many cases duplicate existing government positions and infrastructure we already pay for with our base tax dollars.

Some Charitable Organizations like the United Way have tried to address this problem to a degree by being a clearinghouse for a number of causes and community partners.  However, this negates the main benefit of non-governmental charitable services, individual choice.  The contributor does not get to choose which of the causes that the United Way supports that their money will go to.  I remember a couple of years ago where a number of people were refusing to back the United Way because one of their community partners was the John Howard Society who provide support to inmates and their families.  I can't say I agree with them, but a vocal segment didn't want their money going to support some of their programs and refused to take part in workplace and community fundraisers.

The second disadvantage centers on accountability.  Now, in Canada, we have a number of regulations to ensure that Registered Charities, ones that we as the general public support through tax exempt status, have a measure of public accountability.  They have to have an elected board of directors and issue financial statements.  These regulations, however, give a lot of leeway in what can be considered legitimate overhead in terms of CEO and staff salaries, business expenses, and advertising.  The post I referred to above comes from a general public feeling that some Charities (some of which have been called out in the news of late) reward themselves to a degree that is inappropriate and not in keeping with the fiscal responsibility expected when handling money for the benefit of the needy.  In some cases the difference between the benefits of corporations for profit and Charities not-for-profit seem pretty slim.

There is also a lower level of accountability on the human rights and dignities practices of Registered Charities, particularly Religious Charities.  Some Charities refuse their services to groups they discriminate against such as homosexuals, or have preferential hiring practices towards members of their own faith or a particular gender, practices that are not tolerated in government agencies and which we have put much effort into stamping out. 

Religious Charities may also use their activities as an opportunity or means to canvas for their faith with staff and volunteers expected to deliver, "salvation and a cup of tea" as part of their service.  Like financial accountability, unless the donor is a member of the board, the only way they can affect these practices is by withholding their donation.  However, this requires the donor to be aware and research the practices of the Charity.  This demands some effort and is a secondary concern for people who are moved by the need and the cause itself and is not usually the subject of the glitzy advertising that awakens their awareness to the cause in the first place.

So, maybe contributing some of the dollars you have earmarked for charitable giving to the Province to help clear the debt is not such a crazy idea after all.  By doing so, one would increase the funds available for our government to provide for needs that charities currently address in a more democratic, economically efficient, and accountable fashion. Or, would provide increased funds for our government to improve the infrastructure that commerce and business relies on, stimulate the economy, and help offset some of the needs and issues exacerbated by unemployment and poverty. 

Paying as little in the way of taxes as possible is big business.  Corporations, business, and individuals put a lot of time, energy, and money into reducing their tax contribution while at the same time making somewhat of a show of charitable giving to less efficient organizations.  Is this something we should rethink?