Charity Vouchers [public policy idea]

by RYC2 min read10th Jul 20199 comments



[Originally posted to]

People sometimes object to the charitable tax deduction on grounds that it is "undemocratic", incentivizing wealthy individuals to exert philanthropic influence instead of filling the public purse. On the other hand, well-targeted philanthropy surely achieves more good than paying extra to the government (which may just go to paying down the public debt, funding unnecessary wars, military parades for the Great Patriotic Leader, corporate welfare, and tax breaks for the wealthy).  If choosing where best to donate your money, "the US government" would seem an unlikely answer.  We recognize that charities could use extra funds more effectively. So it seems worth exploring ways to boost the philanthropic sector whilst avoiding the potential downside of concentrating power in the hands of the ultra-wealthy. The obvious solution: charity vouchers.

Charity vouchers would be a bit like basic income, but only usable for donations to eligible charitable organizations. Every citizen would receive charity vouchers (e.g. $1000 per month), to decentralize public spending and social responsibility.  To overcome collective action problems and benefit from economies of scale, individuals could choose to transfer their vouchers to a trusted 'meta' organization (like GiveWell) to disburse on their behalf.

Like basic income, charity vouchers nicely separate the issues of "redistribution" and "size of government". They're the sort of thing that small-government "compassionate conservatives", if any still exist in this age of Trump, clearly ought to support.  The democratic left should like the redistribution of influence, empowering ordinary citizens to shape public spending, thereby making use of the local knowledge and values of diverse communities.  Market liberals will laud the efficiency gains of making trade-offs transparent: money spent on one cause is not available for another, and making this more salient may help to reduce wasteful spending that sounds nice in isolation but clearly isn't worth the opportunity costs.  Moderates may appreciate depoliticizing control of the public purse, reducing the stakes of political contests, and reducing the power of (increasingly dysfunctional) political parties.

There are tricky questions of implementation to consider. (1) How generous should the vouchers be?  (2) What current spending would these replace?  Or, to shift the implicit baseline, what things should government directly fund independently of citizen-supported funding?  (3) Should citizens be able to direct their vouchers to specific government departments, e.g. the military, or education, or social security, rather than choosing between NGOs or the government as a whole? (4) How restrictive should the eligibility criteria be for charities?  Do we want to allow any non-profit to qualify, or must they provide credible evidence of achieving humanitarian goals?  (5) How could we best prevent self-dealing? (6) Should everyone's donation choices be made public? Or just aggregate data?  (7) Should there be any regulations or restrictions on how (and how much) eligible charities may advertise to the public?

Let me know what other key questions you can think of.

Also, what do you think would be the likely consequences of implementing charity vouchers (in whichever way you think best)?  I suspect major beneficiaries would include children, cute animals, and the global poor (relative to current public spending).  Churches too, if they were eligible, though they arguably shouldn't be.  Spending on the elderly would likely be reduced from current levels.  Total social spending may increase, as public support for citizen-driven philanthropy may well be higher than public support for government-chosen priorities. If so, this strikes me as an overall positive prospect (though the 'cuteness' bias in animal welfare is unfortunate).

All thoughts / comments / objections welcome.


9 comments, sorted by Highlighting new comments since Today at 4:17 PM
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Btw, I do very much appreciate feedback on this idea, so if the folks downvoting this post could take a moment to explain why, that would be most helpful. Thanks!

I expect most of the money to be given to local charities and not to government or to charities like give well. UBC (Universal Basic Charity) will quickly turn into UBI. That not a bad thing either.

Overall I expect it to have the same effects as UBI.

I'd also predict similar effects, though with a smaller magnitude, since some of the funding will be chewed up by marketing and processing costs for charities.

Yes, that sounds plausible.* If one didn't like this possible consequence, restrictions on eligible charities (e.g. to require non-locality) could change that.

*Though it's curious that most interest in politics is at a national rather than local level, by contrast.

Information that makes me lean toward "most giving is local":

  • In 2017, roughly 31% of all American donations went to religious institutions, and I'd guess that almost all of that money was for local churches and missions. Only 6% of giving was international.
  • More than half of all animal-related giving goes to animal shelters (again, I assume these are mostly local shelters).
  • Many popular giving categories are almost exclusively local: Community centers, food banks, museums, charity hospitals...

Not necessarily disagreeing, but I wanted to point out that this relies on a perhaps-controversial claim:

Claim: Even though government is supposed to spend money to achieve outcomes the public wants, it is better to give the money to the public so that they can achieve outcomes that they want.

Hi Rohin, thanks for your comment. Can you clarify where you thought I was assuming that claim? I didn't intend to make any claims about what government is *supposed* to do. Rather, I claimed that (1) philanthropic spending can do more good than typical government spending, which gives us reason to want to incentivize philanthropic spending, but that (2) many people worry about the anti-democratic / inegalitarian effects of such incentives, which we can avoid by having the incentives take the form of philanthropic *vouchers* (that empower everyone equally) rather than tax deductions (which mostly empower the wealthy).

Sorry, I'm claiming government is supposed to spend money to achieve outcomes the public wants. (That felt self-evident to me, but maybe you disagree with it?) Given that, it's weird to say that it is better to give the money to the public than to let the government spend it.

I think the claim "philanthropic spending can do more good than typical government spending" usually works because we agree with the philanthropist's values more so than "government's values". But I wouldn't expect that "public's values" would be better than "government's values", and I do expect that "government's competence" would be better than "public's competence".

Ah, got it, thanks. My follow-up post describes one important reason to think this isn't "weird", namely, decentralized spending is truly decided/influenced by everyone, whereas government spending is effectively just decided by the winning party, who may not have any interest in representing the entire public.

I think there is some reason to expect that the public's values *as expressed by allocating a fixed sum of vouchers* could diverge importantly from the values they express when voting. (How many ppl would've funded the war in Iraq over their kids' schools, had the tradeoff been made so explicit?) And public choice theory gives us reasons to expect government "values" to differ from voters'.

I agree the "competence" objection is the big one. Of course, voters aren't directly *implementing* projects here, so the question is whether they can identify other agencies/organizations that are more competent (on average) than government. A lot would depend upon what sort of media infrastructure developed alongside the policy. (One can imagine celebrity or church endorsements etc. having a lot of influence on ppl's choices. Obviously it would be preferable for expert endorsements/advice to get more public attention, if possible...)