On American Giving

A very interesting column by John Stossel on American charitable giving and foreign aid. He first notes the well-reported facts that America gives less than many other Western countries in foreign aid as a percentage of GDP. However, he then correctly notes that this is equating "American giving" with only government giving -- i.e., only the giving that is forced giving. It doesn't include the much larger voluntary giving done by individuals. When you factor in charitable giving from the private sector, you get a very different picture.

For example, he notes that "After the Asian Tsunami two years ago, the U.S. government pledged $900 million to tsunami relief. American individuals donated $2 billion -- three times what government gave -- in food, clothing, and cash. Private charities could barely keep up with the donations."

Aside from the fact that I don't understand the "three times" remark (isn't it barely over two times based on the numbers he cites?), the important fact is clear: Americans as individuals give a lot to charity. And that charity helps the poor and in this country and the poor around the world.

Stossel gives a few examples to argue that voluntary, charitable giving is usually more effective too. This is important. Because presumably if you want to help the poor you want to actually help them, not just spend money with the intention of helping them. So to compare apples with apples, and do so on the relevant dimension, we should try to quantify the actual improvement in the lives of the poor as a result of charity and foreign aid. Money spent that is squandered by corrupt governments or money given that is absorbed through "administrative costs" of a charity or bureaucracy should be discounted relative to the money that is given and is less wasteful -- that is, that does more to actually help the recipient.

Consider this other interesting tidbit from the Stossel column: "Syracuse University professor Arthur Brooks's new book, Who Really Cares, points out that Americans give more than the citizens of any other country. Individually, Americans give seven times more money than people in Germany and 14 times more than Italians give. We also volunteer more."

Wow... impressive numbers indeed. So keep those numbers and issues in mind the next time someone bemoans the relatively low foreign aid from the USA as a percentage of GDP. Ask them what the total giving by American individuals is, including both their forced giving and their voluntary giving. And then ask them to please provide the data not in terms of total money given, but to factor in the amounts wasted by administrative or bureaucratic costs, or that is lost through corrupt governments int he receiving country, thereby arriving at comparisons of the actual good that is done for the intended recipients of the charity/aid.