Social Issues: CHARITIES
THE GOP'S BLIND FAITH IN CHARITY
The Republican social vision for America leans heavily on charities. As Washington chops away at the welfare state, GOP leaders foresee small, local groups rising up to help fill the gap left by government. "Private charities are more effective, they are less expensive, and they are better for the people they help," Newt Gingrich (R-Ga.) declared in his maiden speech as Speaker of the House.
From the playground of a children's home outside Atlanta, Ken Debbs' vision of the future is much grimmer. GOP plans to cap foster-care spending could sharply cut the government funds that comprise 15% of the $7 million budget of Georgia Baptist Children's Homes, which Dobbs runs. And proposed limits on welfare programs--such as plans to bar cash payments to first-time teen-age mothers--could lead to a new wave of needy children at Georgia Baptist. "The government should not shirk its responsibilities," Dobbs says. "Our funding from private sources is not sufficient to carry the cost of our programs."
Which vision is more likely to prevail? So far, the charities are having a hard time denting the GOP's almost mystical belief in the power of charity to replace government. Republicans argue that an improving economy and strong incentives for the poor to become independent will fix much of the welfare problem. And charities, perhaps aided by new tax incentives for giving, will grow enough to take care of the rest. "Cut back the government's role, give true charities room to operate, and they'll grow," says Marvin Olasky, a historian and Gingrich brain truster.
But as they brace for the second major cutback in social spending in 15 years, charities point to the failure of a similar trickle-down approach under Reagan. Even under the best scenario--unprecedented success in weaning the poor from welfare and a surge in private giving--philanthropy can't begin to offset the proposed cuts. "We cannot begin to do it all," declares a Feb. 7 statement to Congress signed by 115 charities.
DOUBLE HIT. Republicans hope to amass five-year welfare savings of $60 billion to $80 billion. But that's far more than the $23.3 billion social-services agencies raised in 1993. Private contributions to all charities--including churches, museums, symphonies, and colleges--in 1993 totaled $126.22 billion but have lagged behind inflation for the past five years (charts). The annual median amount given by U.S. households, under pressure from recession and flat wages, fell from $335 in 1989 to $270 in 1993.
What's more, health and human services charities fear a double hit. Under Newtonian social policy, they will not only be expected to provide services once performed by the government, but they also will lose existing government funding, which typically represents 30% of their budgets. To begin to cover the proposed cuts in Aid to Families with Dependent Children, food stamps, and Supplemental Security Income and recoup their lost funds, they'd have to boost their fund-raising by double-digit rates. "We can catch people who slip through the safety net," says Gordon A. Raley, director of the National Assembly, an umbrella group for social-welfare charities. "But I doubt this country is ready to replace the whole net with a system of soup kitchens."
Corporate America isn't likely to ride to the rescue. Corporate giving has been flat, at around $6 billion, since 1989, and few executives project a major hike. Enjoying rising profits, 3M Co. this year budgeted its first increase since 1992 in its $45 million--$15 million in cash and the rest in goods--annual giving program. But the hike is only 5%. "It's unrealistic to assume the corporate sector, or the private sector in general, can make up for government grants," says Richard Hanson, 3M's director of community affairs.
Republican leaders offer two responses to charities' warnings. Authors of the GOP welfare-reform bill claim it can save money without cutting services. States, they reason, uould run many programs with less overhead. Benefit cuts would push welfare recipients to get jobs. And barring teen moms from collecting cash--turning them toward institutional care instead--would in theory deter many pregnancies, keeping young women off welfare. "Only a very small fraction of welfare moms would lose income, and that fraction would be shrinking," argues Representative James M. Talent (R-Mo.), co-author of the GOP's main welfare bill.
LEAPS OF FAITH. More radical Republicans don't deny the pain of cuts--they embrace it. Olasky, a senior fellow at the Progress & Freedom Foundation, which enjoys close ties to Gingrich, wants to push the poor toward small social agencies, usually church-based, that minister spiritually and materially. The moral strictures these groups attach to their aid--work hard, live a clean life--lift people out of dependency, Olasky says, while government and nonprofit bureaucracies offer help without demanding change. "We need to phase out the welfare system while upgrading the new approach," he says.
To help the process, Republicans are floating tax incentives for giving. Representative Mark E. Souder (Ind.) would let taxpayers deduct 110% of their charitable gifts, at a cost he puts at $8 billion a year. Representatives Joe Knollenberg (Mich.) and Jim Kolbe (Ariz.) unveiled a plan to let taxpayers give 10% of their federal tax payments, up to $2,500, to a poverty-fighting charity. Grants to the states would be cut by an equal amount. Says Knollenberg: "We'd empower the taxpayer to get directly involved in fighting poverty and welfare."
Would taxpayers rise to that challenge? Nonprofits say they'd be the last to deny the generosity of Americans. But they're afraid to tie immediate, tangible budget cuts to hopes for a future surge in giving. Republican social policy in the 1990s, like Republican tax-cutting policy in the 1980s, requires a leap of faith over a mountain of experience. Charities like Georgia Baptist aren't ready to jump.By Mike McNamee in Washington, with David Greising in Palmetto, Ga., and Manali Shah in Minneapolis