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.