America Responds! or, Joe's Comment About Charitable Giving Got Too Long, So Now It's Its Own Post

Hmm. I'm afraid I'm going to have to vehemently disagree with my right honourable friend.

In the first instance, my friend is operating under the misapprehension that "real" charities don't squirrel away their money and live off the interest. Au contraire, my good man. Take a glance at Forbes' list of the top 200 charities in the U.S. Last year, there were 21 charities with net assets over one billion dollars. That’s the stuff they’ve kept over the years, squirrel-like. They regularly (when the stock market doesn't crash, of course) earn tens, if not hundreds of millions of dollars in investment income each year, which they use to help fund their operations, while the principal sits in Scrooge McDuck’s swimming pool.

And speaking of ducks (or geese, actually)…. An argument could be made that neither these charities nor colleges should be encouraged to become financial geese - building up a huge nest egg and just sitting on it, while goslings of investment income emerge every year to do the work of the gander. My honourable friend would have you slaughter that goose each year, and feast upon its donated flesh. But what, I ask, is more valuable: the present value of today's single goose, which must be replaced in its entirety every year, or tomorrow's limitless flock of goslings, born of one cared-for, always-growing, and well-endowed goose? I leave that to the economists to debate.

(Note to the reader: ignore the foregoing paragraph, if you want; I’m afraid it’s rather strained and doesn’t make sense. But I still like it, so I left it in. If you want to read a thoughtful analysis of encouraging nonprofits to reduce their surpluses by taxing them, take a gander at http://www.cbo.gov/ftpdocs/65xx/doc6567/07-21-UntaxedBus.pdf.)

And non-profits abound that ask for donations beyond an initial fee. I like the zoo. They charge me twenty dollars to see the hippopotamuses. Then they ask me to spend fifty dollars to join the Zoological Society. What for? I already gave them my money. If I want to see another hippo, fine - I'll go back and hand over another appleduster (new slang for a twenty dollar bill). Why should I keep paying for something I already got the benefit from?

Well, donations don’t have to be seen as retroactively increased payments for something you already bought. You can give money to the zoo or a college because you have warm, fuzzy feelings today about the good times you had there. Or you can give to them because you want the zoo or your college to be around for the next generation – and hopefully in better shape than when you went there.

The fact is, fees (and tuitions) usually only cover a smallish percent of institutional costs. Most established charities depend on some balance of fees, grants by foundations and governments, and investment income (which would be replaced by gooseflesh in Ed’s endowment-less scheme). And of course, donations by people like you. If people didn't donate to the zoo by joining the Zoological Society, they might have to start killing endangered animals because they ran out of money to buy Okapi Chow.

Of course, no one forces anyone to donate extra money to a fee-charging charity. (Except of course for the Mobsters' Fund for We Won't Break Your Elbows If You Give Us A Lot of Money Right Now.) You give to the ones you like, according to how much you have and want to give. If you hate okapis, don’t join the zoo. If you think the zoo has started to spend too much money on muskrat enclosures, stop giving them money. If you don’t think your college should be spending money on stairmasters, don’t give them anything.

And not to nitpick, but people can donate to the government, too. Not usually as a “here’s double my tax bill, made out to The Government”, but go to any National Parks website, and you can donate your money directly to that government-run entity.

As for need-blindness, there are few colleges who remain totally need-blind these days. But my understanding is that most places are still something like 80-90% need-blind, meaning that they take financial ability into account only for borderline admittees and wait-list kids. And they meet the full need of anyone that they do admit. So money for scholarships is still useful.

Bottom line is, colleges are worthy recipients of charitable giving. And each dollar you give saves the life of an okapi. So please, give today.

Things I Hate: Giving Money to My Alma Mater

I loved college. It was a wonderful experience. I made some lifelong friends, learned a ton, and generally, it was top-notch, top-drawer, top-shelf, top-flight, top-hat, Topper-Returns, Top-of-the-Pops ... tops.

And I paid handsomely for it. Well, I didn't pay for it -- my dead great aunt did. Either way, I don't see much point in continuing to pay for it.

I know, there are plenty of kids who couldn't afford to pay for college without some assistance. Thing is, my school isn't very interested in them any more. My school gave up on need-blind admissions when I was a sophomore. To me, that's discrimination in favor of the rich. That's one reason I don't give.

Another is that that my school, like most, is actually loaded with dough. They're so rich that they have big wads of cash just sitting in the bank, and they operate by skimming off the top of it. The call it an "endowment," which makes it sound nice, but it's really just a big hoard of money that they should be using to run the school. That money could go towards scholarships. Or maybe reduce tuition so that normal people can actually afford to go. Do other charitable organizations have the luxury of just squirreling money away and living off of interest rather than using it to fund their operations? Do even the richest for-profit businesses get to do that? (I actually don't know, but I would imagine they wouldn't.)

But yet my college keeps coming to us alumni, hat in hand, saying how they need more money. Yeah, sure, and next I'll make out a check to Microsoft. In 2001, my school lost its shirt in the dot-com crash. This left it only a quarter-billion in its endowment. Only a quarter-billion! Mercy me! How do they put gas in their cars?

And despite losing their shirt, relatively speaking, they still had plenty of money to bring about a lot of unecessary improvements. They redid dorm interiors that were already perfectly fine. They added another cafeteria, despite the fact that I don't remember ever feeling I couldn't find a seat in any of the old ones. They added a huge exercise facility even though they already had two, and the school was full of nerds who shouldn't be exercising anyway.

So this is what my charity dollar is supposed to go towards? Giving rich kids fancier places to work out? I could feed a kid in Africa, combat global warming, contribute to AIDS research ... or give a dorm room a new chair. Somehow, I kinda think I'd do more good giving to the kid in Africa. Maybe that's just me.

In fact, comparing a wealthy and successful college to real charities is unfair to the real charities. Real charities don't get to charge exorbitant tuitions -- they make almost all of their money from donations. Colleges are really more like sports teams. They're tons of fun, you love them, they're part of who you are ... and you pay what they charge, and that should be it. As much as I love the Minnesota Twins, I don't think I'll be donating money to them any time soon.

I'll grant that colleges have a higher purpose than sports teams do. But hey, so do governments. We love our alma mater, so we voluntarily pay even more than we're charged, long after we stopping being a member. We also love our towns, our states, our countries -- yet we take every possible angle we can to avoid paying even the regular amount that they ask of us in taxes. And that's while we are still a member of those places, still benefitting from their work. And forget about giving them something extra.

In short, it will be a great day when our governments get all the money they need and our private colleges have to have a bake sale to buy a building.