Thursday, 26 April 2012

Finance can fund a revolution in giving

There is a well marketed myth that charity can out-do government in terms of efficient spending, or finding noble causes.  Bill Gates decided not only to spend his money on doing good, but managing them.  He recognized that charities have no idea on how to spend money.  Remember Haiti?  Money wasn't the issue, management was.

Genuine charities are motivated by the desire to help, but desire is not enough in being successful to do it properly.

The shrewd goal of "Big Society" is to push social/common good investment away from Government, so that the budgets to be shrunk so that the rich pay less taxes.  Unfortunately it is a zero sum game.  If we accept cancer research needs to be boosted by, say, £1trn, it doesn't matter whether it comes from Gov (via redistributive taxation) or Mr. Bob Diamond's personal charity, or Barclays giving away 10% on each mortgage you take.

It is extremely dangerous to push common good projects be funded via charity to the level of "addiction for donations".   Let's not forget that every £1 you put into a charity box at the Tube entrance is actually some £1.3 from your salary.  An aggressive charity drive would cause in effect a tax on the median income.  Big Society in effect commits future generations to giving away, is an off-balance sheet commitment to household debt (already at 100% of the GDP).  On what basis?  Who has the right to devise this?

If pushed too hard, the magic of voluntary donations could go away and people would be forced to get engaged in charity or see their lives crumble.  It will soon become unpaid work for the rich, under the justification "the government cannot afford any spending".  Moreover, uncertainty over funding would make management of huge swathes of public life a nightmare.  Who assumes responsibility over the future of hundreds of thousands of people that a ballooned NGOs sector would need to attract?

Charity should be incremental to state investment in solving social issues.  Funding for that should come via redistributive taxes collected primarily from the richest individuals and the most profitable companies.


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