Giving, displaced

Editor's note: The following text is a transcript of a podcast story. To listen to the story, click on the arrow beneath the headline above.

MYRNA BROWN, HOST: Today is Thursday, April 2nd. Thank you for turning to WORLD Radio to help start your day.

Good morning. I’m Myrna Brown.

MARY REICHARD, HOST: And I’m Mary Reichard.

Coming next on The World and Everything in It: generosity and the government.

Proverbs 18:16 says: “A gift opens the way and ushers the giver into the presence of the Great.” During the hard economic times of COVID, American donors seemed to live up to that verse. They gave at record levels—even though, on average, disposable income was shrinking.

BROWN: Also during COVID, government programs provided about $4.6 trillion in pandemic aid. A lot of money. 

Enough, some say, to keep private donation from reaching its full potential.

WORLD’s Lauren Smyth has the story.

LAUREN SMYTH: Mark Horton has lived in New York City on and off for the past 30 years. He can’t walk like he once did, so he uses the city’s public transport for the disabled, Access-A-Ride, to get around.

HORTON: It's very helpful, because I can go door to door for the same amount that I would have to pay for a subway or a bus.

But those inexpensive rides might come with a hidden cost that Horton is increasingly reluctant to pay.

HORTON: That shouldn't be a government program—that should be the church. When we have the government doing welfare programs and taking care of the homeless and taking care of the elderly or the disabled, it lets a lot of churches [say] ‘You know, well, the government’s taking care of them. I can go on my vacation now.’

Economists call this “crowding out,” when public welfare spending causes a decrease in private charitable giving. If the government provides, donors may feel their contributions aren’t needed. Welfare programs may also bring higher taxes, leaving less income available for donation.

Since 2000, the government has taken a larger share of the economy. Economists call that gross domestic product, or GDP—the total value of everything produced in a year’s time. Churches, charities, and other nonprofits have grown too, but much more slowly. That could be evidence of crowding out—but if so, it’s not clear how big the effect is. 

One report from the Philanthropy Roundtable suggests that for every dollar of public welfare spending, private giving falls by about fifty cents. 

Here’s Claudia Cummings, vice president of public affairs:

CUMMINGS: One of the things that happens when you take government funding, there are always strings attached. And so the government can, through this financial mechanism, control the activities of the nonprofit that has received those dollars.

Many large charities now expect the government to cover more than half of their operating costs. That makes them less resilient to policy changes like the DOGE cuts last year, which canceled more than $3 billion in grants.

CUMMINGS: Twenty percent is kind of a maximum that you would want to look for from a single source.

But it can be tough for a nonprofit to diversify its donor base, says Kristine Michie, who runs the charity consulting firm Impactfull. And even when diversification is possible, one donor is still a whole lot richer than the rest.

MICHIE: The government just has so much more money than private philanthropy. Just like, I mean, private philanthropy is dwarfed by the role the government can play at all levels, that just will always be so. 

Michie sees the relationship between public spending and private donations as a partnership between a customer and a client. When the government can’t do something well, it uses grants to “hire”—so to speak—a nonprofit to do it better. 

Michie and her clients see public and private philanthropy as complimentary, not opposed.

MICHIE: I never have ever once heard anyone say, ‘Well, don’t they have government money for that?’ or ‘They don’t really need …’ I never have heard that.

Michie says nonprofits rely on the government in the same way businesses rely on customers. Dramatic policy changes might disrupt things for a while, but she believes nonprofits are resilient in the long run.

So does economist Paul Mueller. But he takes it a step further. In his Colorado hometown, Mueller says private charities have already proven they could handle a total break from government funds.

MUELLER: When it looked like food stamps were going to be suspended last fall with the government shutdown, people at my church, we started talking about it: ‘Okay, are there people in our congregation who are on food stamps, are there people we know—what do we do in terms of helping them?’ And we were not alone in that, right? Thousands, tens of thousands of organizations, especially churches but others as well, began thinking through, ‘Okay, what do we do if this SNAP benefit is suspended?’

For Mueller, the real danger of the crowding-out effect isn’t that the government can’t feed the hungry and clothe the naked. Instead, he worries that impersonal government programs ignore the human connection that private charities nurture.

MUELLER: Look, if we were only concerned about people starving, we could send them rice and beans. That’d be very cheap. But we should care about them as flourishing human beings, who are not only desires and needs, but are creative and made in God’s image.

That lines up with Horton’s concerns about Access-A-Ride and the lack of personal responsibility in providing the service.

HORTON: I get conflicted because I'm like, “I don't know how I'm supposed to participate in this.” Am I supposed to say, “Well, you know, the Lord will provide. I don't need the Access-A-Ride, you know. And if I can't get there, if I can't afford to get there, I just won't go?” Or is it something that's: “Well, Lord, it's there. And … it's a way of you providing”? I just don't know how I feel about that.

Still, Michie points out that not everyone wants that personal connection. Some just need the help—and value their autonomy.

MICHIE: I think you have to be careful for that intrusion … Any one of us, on any given day, doesn’t necessarily need to welcome somebody into our problem, our pain, or just our day-to-day moment of caring for our family. 

They may not agree on how exactly to fund nonprofits, but Cummings, Michie, and Mueller do agree that the spirit of generosity is alive and well in the United States. 

In 2024, the most recent data available, Americans donated nearly $600 billion, smashing the previous year’s record by more than 6%.

CUMMINGS: Americans are incredibly generous. It’s baked into who we are. From before we were even a nation it was decided that we would be a nation that relied heavily on a voluntary society. And we rise to the occasion day after day.

For WORLD, I’m Lauren Smyth in New York City.

WORLD Radio transcripts are created on a rush deadline. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of WORLD Radio programming is the audio record.