Why private donations can't completely finance America's poor

by Tom Gallagher

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Charles Kenny at Businessweek has written an important essay that debunks Wisconsin Rep. Paul Ryan's and his fellow Republicans' notion that private charity, especially churches, need to bear the brunt of financing the care of the poor. Like Ryan's budget, the math doesn't add up. Private charity cannot supplant federal and state programs that create the safety net for the poor. It's that simple. Now Kenny's essay lays out the math and the reasons such Republican proposals are nonsense.

Here are the opening graphs:

Of late, the comparatively good news on the U.S. economy suggests the worst of the recession is behind us. Nonetheless, millions remain out of work; federal food and nutrition assistance outlays -- one measure of the number of people struggling to get by -- were at an all time high in 2013.

On the political right, it's a refrain that this is a problem for private charities to deal with, because the government is spending too much on safety net programs. Yet charitable donations fell during the recession, as rich people became less generous. What's more, financing to charities that are actually trying to help the poor are tiny compared to undersized official safety net programs. All of which demonstrates why we can't leave social protection to charitable donations.

The Great Recession has been worse for the poor than the rich in America. According to the Federal Reserve, the wealth share of the top three percent climbed from 45 percent of all wealth in the country in 1989 to 52 percent in 2007 and then kept on rising through the recession, to 54 percent in 2013. Top incomes didn't do quite as well –the income share of the top 3 percent of Americans was 31.4 percent in 2007, fell during the recession and is only back to 30.5 percent in 2013 (that still means the top three percent have more than ten times the share of income than they have of population). At the other end of the scale, about 37 million people were in poverty at the start of the recession. compared to 45 million in 2013 according to the Census Bureau.

Read the whole essay here.

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