2023-01-23

Milton Friedman used to say “No good was ever done by spending other people’s money.” Most people don’t agree with him, at least when it comes to charity giving: we hand over our money to Oxfam or Amnesty International hoping that they’ll spend it wisely.

The problem is, we’re not entirely convinced that we’re doing the right thing, so we give money to lots of different charities, hoping that at least one of them will spend wisely and that their spending will make an impact on something we care about. It’s very unlikely that anyone will tell us when that doesn’t happen. (Maybe if we gave money to Kid’s Company, we’d have found out from the press, eventually.)

Giving money away always carries a deadweight cost. We don’t really know whether or not the recipient would have preferred the money be spent on something else. GiveDirectly attempts to correct this fault, but I suspect that most of the desperately poor people who receive the money would prefer it be spent on getting rid of the kleptocrats who run the countries they live in. Sadly, there is no charity that I am aware of whose mission is to assassinate autocrats, even though that would make more of a difference than bed nets, probably.

We tend to give money to causes we are emotionally attached to. A lot of money goes to cancer research charities. That’s lovely, but the net benefits are, I suspect, rather marginal. Cancer deaths are ever-rising, as a proportion of the whole, because treatment is very difficult, or extremely expensive, or both. We would, almost certainly, be better off spending money on research into leprosy, or TB. We don’t because we don’t know anyone who has died of these diseases.

There is almost nothing more humiliating than to be the recipient of charity. To accept charity is to become a supplicant, to acknowledge the fact that in some way one is inferior to the giver. Believe me, being poor doesn’t mean that one loses one’s desire for independence.

All these negative attributes of charity would surely be recognized by lawmakers, and would result in tax laws and other regulations designed to discourage the creation of charitable enterprises. Surely, you jest! In fact, charities are showered with extravagant tax breaks, from freedom from taxes on income and capital gains, to 100% tax breaks for donors. Unsurprisingly, charities have sprung up like mushrooms after rain: 168 thousand in the UK currently. Also unsurprisingly, because charity work is looked on as an unalloyed good, those with reputations to launder are attracted to it like iron filings to a neodymium magnet. People like Jimmy Savile, Jeffrey Epstein, Giselle Maxwell and Sam Bankman-Fried all played up their links to charities to burnish their reputations.

I know that many people sincerely and generously donate their time and money to good causes, and in many cases a great deal of good is done. I simply want to draw attention to the fact that just because something is done in the name of charity that it is automatically better than something done in the name of business or (taxpayer-funded) public service. The ‘third sector’ isn’t a magic bullet that can fix what’s wrong with the public sector and the private sector.