The Wall Street Journal recently ran an opinion piece, How Big Government Co-Opted Charities, (note: subscription required) that explores the increasing role that federal government spending plays in carrying out charitable programs. The charitable sector is traditionally viewed as picking up where government and business leave off—yet more and more charities rely on the government for funding. The author, James Piereson, has this to say:
In the past 50 years, federal spending has exploded 36-fold, to about $3.6 trillion in 2012 from $100 billion in 1962. Meantime, the number of federal civilian employees has expanded modestly in comparison—to 2.8 million in 2011 from 2.5 million in 1962. The reason the federal government can increase its spending without adding many employees is because it subcontracts so many of its functions to ostensibly private institutions. This system has gradually turned much of the not-for-profit sector into a junior partner in administering the welfare state.
Piereson points out that the largest recipients of federal grants and contracts are universities and hospitals, which generally are funded for research. The President of Johns Hopkins University responded in a Letter to the Editor and took issue with the article’s implication in that these grant recipients are selected based on lobbying efforts. He points out the R&D funding is awarded based on merit, and depends on submitting experiments and grant applications to scientific review panels. While the numbers can seem astounding (Johns Hopkins received $1.9 billion in federal money in 2011), it is worth examining the key role these research institutions play, and whether there are other viable sources of funding that would allow them to perform in the same way.
It is also important to keep in mind a key issue with government funding that isn’t really addressed in the article—it often comes with burdensome recordkeeping requirements, and can be inefficient. This was the focus of another responding Letter to the Editor, submitted by individuals from two religious charities that rely mostly on private donations. Their letter includes a poignant quote from a Congressman:
“We can’t do what you do—and we shouldn’t try. We would totally mess it up. In no time it would be twice as expensive and half as effective.”
All in all, government funding is an important part of helping many charities conduct their work. However, those organizations that can and do rely primarily on private donations or foundation grants play an important role too, by meeting needs that the government doesn’t or shouldn’t address—and freeing up money for organizations that wouldn’t be able to operate otherwise.