HOW BIG GOVERNMENT CO-OPTED CHARITIES
Friday, July 19th, 2013
How Big Government Co-Opted Charities
Much of the not-for-profit sector has become a junior partner in administering the welfare state.
Debate continues in Washington over limiting the charitable deduction for the wealthy to help balance the budget. Billionaires Warren Buffett and Bill Gates, in addition to influential advocacy groups like Independent Sector, an umbrella organization of 600 charities, insist that the charitable deduction is vital to preserve America’s vibrant voluntary tradition.
Yet the nonprofit sector has problems beyond the charitable deduction. For much of U.S. history, nonprofits have operated as a check on government by providing private avenues to serve the public interest. Unfortunately, American charities—and more broadly, the entire nonprofit sector—have become a creature of big government.
For decades, the U.S. government has administered research, welfare, housing and educational programs through a system of grants to state and local governments, colleges and universities, hospitals, research organizations, consulting firms and not-for-profit advocacy groups. In the past 50 years, federal spending has exploded 36-fold, to about $3.6 trillion in 2012 from $100 billion in 1962. Meantime, the number of federal civilian employees has expanded modestly in comparison—to 2.8 million in 2011 from 2.5 million in 1962. The reason the federal government can increase its spending without adding many employees is because it subcontracts so many of its functions to ostensibly private institutions. This system has gradually turned much of the not-for-profit sector into a junior partner in administering the welfare state.
The publication Giving USA, which tracks charitable spending, reports that the government now supplies one-third of all funds raised by not-for-profit organizations. Major research universities, hospitals and health centers could not survive without large allocations from the federal government, and are among the largest recipients of federal grants and contracts. They include the Dana Farber Cancer Institute ($136 million in federal grants in 2012), St. Jude’s Children’s Research Hospital ($56 million), the American Red Cross ($27 million) and National Jewish Health ($26 million).
According to a study by the National Science Foundation, nearly 900 research universities received federal grants and contracts totaling $40 billion in 2011. Johns Hopkins led the pack with $1.9 billion, followed by the University of Washington ($949 million), the University of Michigan ($820 million) and the University of Pennsylvania ($707 million). (more…)
