There is something entertaining about watching celebrities argue. Often, their squabbles are of no consequence, but every once in a while, the well-known take up something serious.
In a recent Twitter back-and-forth, entrepreneurial business magnate Mark Cuban and singer John Legend treated us to a brief but important debate about private giving. The central question: Are our philanthropic dollars better spent supporting charity to feed the hungry or on political campaigns to change policy?
Cuban implored people to give to food banks rather than pour their money into the two Georgia Senate runoff races currently underway. Legend countered that charity is not up to the task of feeding hungry people. Instead, government spending is needed to meet people’s most basic needs.
It is fundamentally a conflict of visions: public spending versus private charity. In this matchup, I am on Team Private Charity. Here’s why: Philanthropy, or private charity, has a track record of addressing root causes of social problems using targeted, innovative approaches, while government writes massive checks to treat symptoms while often leaving underlying issues untouched.
Visit any major metropolitan area, and you will see homeless people sleeping on the street and on park benches. Over half a million people were homeless on a single night in America in 2019, according to the Council of Economic Advisers, and another 350,000 depended on emergency shelter and transitional housing. Yet, we spent more than $40 billion funding the federal housing department with more than $2.8 billion proposed to fight homelessness. It is reasonable to question the effectiveness of that funding.
Philadelphia has one of the highest levels of poverty (23.3%) among top U.S. cities by size but one of the lowest levels of homelessness. That is due in great part to organizations such as Project HOME, which has moved thousands of people off the street and empowered them to be self-sufficient by offering shelter in neighborhood-based affordable housing, employment opportunities, healthcare, and education.
Project HOME was started when the Connelly Foundation provided a “feisty” nun and an MBA graduate an unexpected $100,000 check to advance its work serving Philadelphia’s homeless men and women. That donation has since produced exponential results and is just one of many examples of private charity and philanthropy tackling the root cause of a chronic social problem.
Central to the success of private philanthropy is that it is decentralized and individualized. Charitable organizations possess deep knowledge of communities and have valuable relationships within the communities they serve because they are often rooted there. They can customize programs and respond in real time to the changing needs of populations.
Central to the failure of welfare programs is the assumption that central planning can end poverty and deliver a more equitable society. Technocrats tasked with solving homelessness, for example, are far removed from everyday realities. They do not know, nor can they respond to, every community’s unique needs. Instead, they engineer one-size-fits-all solutions that fit none. This is the fallacy of assuming that if we just spend enough public money, we can solve the problem.
Something else to keep in mind is that philanthropy is not weighed down by changing political agendas or the inertia of political gridlock. Leaving poverty alleviation solely to the political realm would subject the nonprofit sector to partisanship and paralysis.
When government leadership changes hands, different political leaders prioritize different issues, which can leave some issues unaddressed or underfunded year after year, while others gain the lion’s share of support. This becomes a fairness issue. Large organizations have an advantage over startups and small local organizations in navigating the bureaucracy and red tape to secure public funding.
Further, private charity can fund innovative startups such as Project HOME, as well as unpopular and controversial causes that do not or would not gain public support, depending on which party is in charge.
Social media has done us a service to move this philosophical argument to a public square for all of us to observe. Charity is not a perfect replacement for government spending, but it can be far more effective.