• In 1992, total charitable contributions reached $124 billion, with contributions by individuals accounting for 82 percent ($101.83 billion) of that total. ⁸⁹
• More than 85 percent of adult Americans make some charitable contribution each year. ⁹⁰
• About half the adult population did volunteer work in 1991, contributing more than 20 billion hours of labor. ⁹¹
• The dollar value of these contributions of time is at least $176 billion. ⁹²
• If the value of volunteer labor is included, private sector contributions to charitable causes are approximately the same as the poverty budgets of federal, state and local governments combined. ⁹³

In this section we contrast some of the best private charities with federal welfare programs in terms of the characteristics of an ideal welfare system.

The Nature Of Charity: Entitlements vs. Gifts. Entitlement programs for welfare are structured so that benefits are granted solely on the basis of personal circumstances. Applicants do not have to give the reasons for their circumstances or explain how they plan to change them in the future. They don't even have to show a willingness to change. In the AFDC program, for example, the requirements for eligibility essentially amount to: (1) low income, (2) very few assets, (3) dependent children and (4) no man in the household. Anyone satisfying these requirements is entitled to benefits. And the word entitlement means "right" -- benefits cannot be withdrawn simply because recipients refuse to modify their behavior.

The philosophy of the private sector is quite different. The best private charities do not view the giving of assistance as a "duty" or the receipt of assistance as a "right." Instead, they view charitable assistance as a tool recipients can use intelligently, not only to gain relief but also to change behavior. For example, at many private charities the level of assistance varies considerably from individual to individual. Private agencies usually reserve the right to reduce assistance or withdraw it altogether if recipients do not make behavioral changes.

Many private charities require that a caseworker and an aid recipient develop a plan to move the recipient into self-sufficiency. For example:

• At Jessie's House, a transitional home for the homeless in Hampton, Mass., shelter beyond one week is contingent upon positive evidence of individual improvement. ⁹⁴
• At the Dallas Salvation Army, aid varies according to the caseworker's evaluation of the recipient's condition and record of behavioral improvement. ⁹⁵

Under entitlement programs, recipients and potential recipients of aid have full freedom to exercise their preferences. In many cases, they choose poverty and, in effect, present the rest of us with a welfare bill we are obligated to pay. Thus, the preferences of public welfare recipients determine the behavior of those who pay the bills.

The philosophy of the private sector is quite different. In general, private agencies allow those who pay the bills to set the standards and expect recipients to change their behavior accordingly. In other words, recipients of private sector welfare must adjust their behavior to the preferences of the rest of society, not the other way around.

If we accept the view that individuals should take responsibility for supporting themselves and their families and that welfare assistance should be administered in a way that encourages this behavior, it follows that the approach of our best private charities is far superior to that of entitlement programs. Because individuals and individual circumstances differ, it is only through hands-on management that we can give relief without encouraging antisocial behavior.

Hands-on management includes the tailoring of aid to individual needs and individual circumstances. Such support, counseling and follow-up is virtually unheard of in federal welfare programs. Indeed, when public welfare recipients request counseling, they frequently are referred to private sector agencies.

Getting Aid to Those Who Need It Most. A basic premise of the American system is that government is the last resort. In other words, the role of government is to do those socially desirable things that the private sector either will not or cannot do.

Ironically, in the field of social welfare this premise has been turned on its head. In the early years of the War on Poverty, federal welfare programs were a social safety net -- to provide services the private sector, for one reason or another, did not. Now, it is obvious that just the opposite is true -- increasingly, the private sector is reaching people whom government does not reach and offering essential services that government welfare programs do not provide.

If a humane welfare system means anything at all, it means getting aid first to people who need it most. One of the most astonishing and least-known facts about the welfare state is how miserably it fails to achieve this goal. Consider that: ⁹⁶

• Only 41 percent of all poverty families receive food stamps; yet 28 percent of food-stamp families have incomes above the poverty level.
• Only 23 percent of all poverty families live in public housing or receive housing subsidies; yet almost half of the families receiving housing benefits are not poor.
• Only 40 percent of all poverty families are covered by Medicaid; yet 40 percent of all Medicaid beneficiaries are not poor.
• Amazingly, 41 percent of all poverty families receive no means-tested benefit of any kind from government; yet more than half of all families who do receive at least one means-tested benefit are not poor.

Where do people in need turn for help when they aren't getting government assistance? They turn to private charities.

• Ninety-four percent of all shelters for the homeless in the U.S. are operated by churches, synagogues, secular groups and other voluntary organizations. ⁹⁷
• A study in Detroit found that 80 percent of low-income people, when faced with a crisis, turned to neighborhood individuals and agencies rather than to government agencies for help. ⁹⁸
• Similar findings were reported in a study conducted by the University of Southern California. ⁹⁹

Providing Relief Without Encouraging Dependency. A major issue in the welfare-poverty industry is whether the recipient of aid should have to "do anything" in order to continue receiving welfare benefits. Nowhere is the controversy more evident than with respect to workfare.

Throughout the 1970s, there was a continuous political battle at the national level over whether welfare should be tied to work. A fascinating account of the politics of the battle was written by Lawrence M. Mead, who documented the lengths to which the welfare bureaucracy lobbied against any workfare requirements. ¹⁰⁰ It appeared the welfare bureaucracy lost the battle when Congress passed the Work Incentive (WIN) program and the Community Work Experience Program (CWEP). However, because it administers these two programs, the bureaucracy that lost the battle won the war by finding few AFDC recipients suitable for workfare and channeling those who were into training or school rather than jobs. ¹⁰¹ As noted above, the 1988 Federal Family Support Act mandated that all states create work-for-welfare programs. But like WIN and CWEP, this program did not reduce the welfare rolls significantly.

Our best private charities see independence and self-sufficiency as a primary goal for their "clients." Often this goal is accomplished by either encouraging or requiring aid recipients to contribute their labor to the agency itself. ¹⁰²

Encouraging the Family Unit Rather Than Encouraging Its Dissolution. The attitude toward family on the part of private sector charities usually stands in stark contrast to the incentives built into federal programs.

• AFDC eligibility rules in nearly half of the states have not allowed families with a employed father to receive assistance, regardless of how low the family income is; also, in about half of the states, the family has been ineligible if the father is present at all, regardless of employment. ¹⁰³
• By contrast, at the Dallas Salvation Army shelter for battered and abused women, the mothers of young children are required to either work with professionals to repair their relationships with their husbands or to find employment in order to continue receiving assistance. ¹⁰⁴

Temporary vs. Long-Term Relief. A prevalent philosophy in the private sector is that most people are fully capable of taking responsibility for their lives in the long term, but that emergencies and crises occur for which help is both necessary and desirable. As a consequence, private sector agencies make it surprisingly easy for recipients to obtain emergency relief. It really is true that, in America, almost anybody can get a free lunch.

The near-universal characteristic of private sector charity is that it's easy to get, but hard to keep. Most government programs, by contrast, have the opposite characteristic: it's hard to get on welfare, but easy to stay there. In the public sector, there are often long waiting times between applying for assistance and receiving aid. One study reported that: ¹⁰⁵

• In Texas, the waiting period is typically two to three weeks for food stamps.
• For AFDC, the waiting period is typically a month after an applicant completes the complicated and cumbersome application forms.
• The Dallas Salvation Army has had to hire a special staff to decipher public welfare regulations and forms so they can refer people who come to them to the proper public agencies.

Once accepted into the public welfare system, however, people find it relatively easy to stay there for a long time: ¹⁰⁶

• Of all women who receive welfare in any given year, about 60 percent receive welfare the next year.
• Among women receiving welfare for two consecutive years, about 70 percent receive it a third year.
• Among women receiving welfare for four consecutive years, about 80 percent receive it a fifth year.

Minimizing the Cost of Giving. There is considerable evidence that private sector charity makes far more efficient use of resources than do public welfare programs. Although temporary relief in the form of food or shelter is fairly easy to obtain from private agencies, long-term assistance or assistance in the form of cash is far more difficult. For example: ¹⁰⁷

• Before the Dallas Salvation Army will provide cash to help people defray the cost of rent, recipients must present a court-ordered eviction notice showing failure to pay rent.
• Similarly, before that charity will give financial aid to defray the costs of utilities, the recipient must present a notice of termination of service for failure to pay utility bills.

Even when there is evidence of need, good private charities often seek to determine whether the potential recipient has access to other, untapped sources of assistance. For example: ¹⁰⁸

• Before the Dallas Salvation Army will provide continuing assistance to an individual, a caseworker informs the family -- including in-laws -- and requests assistance from them first.
• The caseworker also makes sure the individual applies for all other public and private aid for which he or she is eligible.

Private sector agencies appear to be much more adept at avoiding unnecessary spending that does not benefit the truly needy and at keeping program costs down by utilizing volunteer labor and donated goods. ¹⁰⁹

Other Evidence of Efficiency. Private sector charitable activities are diverse and widespread in cities and counties throughout the country. Our knowledge of these activities is skimpy. However, as more research is done the evidence mounts that in area after area the private sector outperforms government:

• Private foster care agencies have shown they can outperform government agencies. ¹¹⁰
• Private agencies engaged in job training for teenagers¹¹¹ and for the mentally and physically handicapped¹¹² have shown they can outperform government agencies.
• Public housing placed in the hands of tenants costs less and is of higher quality than that owned and maintained by government. ¹¹³
• Private sector crime prevention programs, ¹¹⁴ alcohol and drug abuse programs¹¹⁵ and neighborhood preservation programs¹¹⁶ also have proved to be superior to public sector programs.

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