The role of the state in fulfilling needs is something people talk about (and propose to expand) all the time. Business is also claiming a large and growing place in addressing public issues, through companies ranging from FedEx to SpaceX. What is much less often recognized is that our country has a third sector with potent capacities for solving public problems. We call this third sector civil society, or the independent sector, or philanthropy and voluntary action.
The institutions of the independent sector don’t wield the commanding authority of the state, and they don’t enjoy the profit incentives that give commercial enterprises their power. Yet they can be highly productive. There are many places where neither power nor money are adequate for repairing rips in the national fabric, while charitable acts can provide strong reinforcement.
We worry today about disturbed children, youth suicide up 56% in a decade, soaring drug addiction, squalid street populations, shriveling participation in work, and an actual shortening of the average life span, but those are just symptoms. The roots of those kinds of afflictions are a family breakdown, personal depression, eroding faith, and a deteriorating community. These are our most dangerous problems right now.
We cannot simply reverse troubles of that sort through legislation or government payments or police powers. We cannot buy fixes from market vendors. Those kinds of traumas do, however, respond to personal contact. Emotional connection, neighborly encouragement, sympathy, religious comfort, local knowledge — these techniques that charities specialize in are often able to make a difference where impersonal, institutional interventions achieve nothing.
Public impressions of charity as little more than soup kitchens and children’s clubs need to be corrected by those of us who work in this field. The Almanac of American Philanthropy documents thousands of examples where charitable efforts have succeeded in vital sectors after state authority and commercial inventiveness disappointed. Philanthropy is a mechanism capable of tackling serious, large-scale needs across wide swaths of society.
How many people realize that in our most populous city (New York), a private charity (the New York Public Library) is the largest provider of English classes, citizenship instruction, free legal services, computer training, and pre-K literacy? Or that nearly all of the most successful education reforms in the United States over the last generation were sparked and fueled by philanthropy? That private donors are behind a substantial portion of the medical breakthroughs that occur in America? That voluntary gifts to the arts are five to 10 times the size of government support? That U.S. philanthropy is important in fields one might never expect, such as the recovery of endangered species and even national defense?
Between our financial gifts ($428 billion in 2018) and the value of the volunteer time that we donate to good causes, American philanthropy now cumulates to many hundreds of billions of dollars of annual economic activity. In this, the U.S. has no peer. As a fraction of available income, Canadians (who are our kissing cousins in so many other ways) give at about half the U.S. rate. Australians give at one-sixth our level. The French, Germans, and Asians contribute vastly less.
There is much more to philanthropy’s power than just the dollar volume. The way that philanthropy attacks social problems and the way government approaches them are very different. The writer John Updike once noted that for government administrators, change is an enemy. It disrupts routines and creates work for bureaucracies. Entering uncharted territory is what gets bureaucrats fired. Updike summarizes poetically that “the state — like a young child — wishes that each day be just like the last.” Whereas private actors are, as he puts it, more like teenagers, “hoping that each day will bring something new.” This hints at why philanthropists compete aggressively to find innovations while government problem-solving tends to be so plodding.
Obviously, charity can become bureaucratic and timid, too. But that’s not the norm. In general, philanthropic entrepreneurs tend to be highly inventive, nimble, and faster to adapt to conditions on the ground. They have to be, or they will go bust.
One way to view the contrast between government spending and philanthropic spending is to think of inventive philanthropy as venture capital, whereas government spending is more like working capital. Working capital pays the factory light bill. Venture capital builds a new factory, ideally one that doesn’t require lights. When you invest venture capital, you know you are going to be surprised often and sometimes fail because you are experimenting and trying things no one has attempted before. But when you do hit home, the payoff is large, and all of society enjoys deep benefits.
Charitable actors tend to be less interested than the state in simply salving wounds and more eager to cure the patient so that pain points go away. Don’t just fill the income gaps that result when fathers abandon their children. Go upstream and try to stanch the abandonment itself.
Ben Franklin was one of the early American donors who insisted that it’s far more desirable to help people build sturdy habits than to rescue them after they fall. As Franklin once put it, “The best way of doing good to the poor is not making them easy in poverty but leading or driving them out of it.” That has been a deep undercurrent of private giving in America for centuries. It’s one of the secrets that make charitable action effective against many of the problems that threaten us most.
Karl Zinsmeister is editor-in-chief of Philanthropy magazine, where he has written a longer exploration of these ideas.
