Thursday, November 23, 2006

Trying to make charities more effective

This Thanksgiving many well-intentioned Americans will spend part of Turkey Day working in soup kitchens and bringing items to charity food drives. But the latter is especially riddled with inefficiencies. Consequently, an inordinate amount of money given ends up in the hands of the fundraisers rather than those to be served (the NCIB and AIP set 60% to the actual charitable cause as a minimum threshold but many charities don't do that well).

Think about a can of green beans ultimately destined for a Catholic Charities food pantry. You go to the store and buy the can for a couple of bucks. A member of the nearby high school pep club puts a flier on your door advertising an upcoming food drive at the school. You take it their a few days later and give it to the volunteer manning the cardboard box filling up with other cans of green beans. He takes the donations to CC's distribution center where employees hand the food out to needy patrons.

What was the cost of actually getting those green beans to the distribution office? You bought them for a couple of bucks, with travel expenses. The pep club member also incurred time and travel expenses, as did the volunteer. Additionally, the center incurs utility/storage expenses and the costs of employees or volunteers distributing the food. A family member who works in the charity business estimates it costs around five dollars for a half-pound can to fulfill it's teleological purpose, and considerably more if the opportunity costs of those involved is taken into account.

Why not cut out all of this and simply use food vouchers? If you instead sent the charity a couple of bucks, all of the middleman time and energy would be cut out, and your donation would be hemorraged only by the charity's cost to distribute the vouchers.

Get retailers to compete to drive costs down further to approach a perfect transfer. Most retailers wisely don't allow cashback on gift cards. These might be used if they were designated as only applicable toward the purchase of food and basic necessity items (to avoid tobacco, alcohol, lottery tickets, and other items disproportionately purchased by low-income shoppers). Pitch the idea, and ask retailers for a price discount in return for good PR ("Price Chopper has teamed up with Catholic Charities to bring you Shopper Sustenance cards..."). In addition to cutting fat out of the process, such a plan would inject the beneficiary's local community economically and allow him a wider range of goods to choose from. Bloated charities and givers desiring a more conspicuous transfer would resist such an arrangement, but others skeptical of charitable profligacy would appreciate it, as it would comparatively 'take' from the retailer and charity and give to the beneficiaries.

As far as alleviating poverty goes, I'd still prefer more resources be devoted to worthy causes like Project Prevention and the instituting of a merit immigration system coupled with an end to immigration of a large Hispanic underclass to decrease the number of children born into hopeless situations and to raise menial wages/decrease competition for unskilled jobs, respectively, than to the above. But the formula most charities currently use is riddled with waste.

1 comment:

Billy Bob said...

The problem with the 50 cent can of green beans, which now costs $5, is that the donor would not have the priviledge of "looking into the eyes of the receiver".....After all, the primary beneficiary of a charitable transaction is the giver, not receiver.