Philanthropy in America Has Its Limits

Philanthropy in America Has Its Limits

Charitable acts in communities devastated by Superstorm Sandy reveal just how important a role charity and philanthropic giving play during times of crisis, the New York Times reports. Yet, charitable giving as a whole remains small relative to potential need and significantly less than what government provides annually.

In the week and a half after Sandy hit, individual volunteers and nonprofits reached out to those most affected by the storm with food, clothing, and other forms of assistance, while more than $115 million was donated for disaster relief efforts. But as policy makers grapple with how best to avoid the "fiscal cliff" and do something to get the nation's debt under control, questions about whether the federal government can afford to subsidize $40 billion a year in charitable deductions, mostly for the wealthy, continue to be raised. Indeed, decades of Giving USA studies reveal that charitable contributions in the U.S. remain stuck at about 2 percent of personal income, while corporate donations have never risen much above 1 percent of pretax profits. Meanwhile, a Stanford University study finds that only a small share of giving for charitable causes ends up redistributing income from the wealthy to the poor.

For its part, the philanthropic sector recognizes its limitations but remains committed to filling a gap growing ever wider thanks to funding cuts at the federal and state levels. The Open Society Foundations, for example, has been working to address the dropout crisis in Baltimore. "One harmful consequence of the 'No Child Left Behind' program is that principals are trying to meet the requirements by putting troublemakers directly into jail," said Open Society founder George Soros. "The state is doing something which is harmful. We are trying to correct it."

Eduardo Porter. "Charity's Role in America, and Its Limits." New York Times 11/13/2012.