Giving When It Hurts: Rethinking charity in the midst of an economic crisis

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This article is part of a package on rethinking charity in the economic crisis. For more, read Ladling Soup, Raising Hell: Nonprofit insider Robert Egger is out to reform charities from within, The Revolution Will Not Be Funded: It’s time to liberate activists from the nonprofit industrial complex, and Tips for Practical Giving: Where to give, what to ask, and the lowdown on emerging philanthropic trends.

Most of us tend to think about charitable giving during the holiday season, at tax time, or when a scandal involving a well-known nonprofit or benevolent philanthropist makes headlines. In the past few months, though, as the world economic crisis has intensified, questions about how much to give, and to whom, have taken on a new urgency.

Perhaps you’ve decided to scale back your charitable giving until the market finds its footing again. Perhaps you’ve seen friends, family, or neighbors slip a rung or two down the income ladder and wondered if there will be enough help to prop them up. Perhaps charity is no longer something you can choose to dole out, but something you suddenly need, as debt, unemployment, and the rising cost of health care bring the threat of financial doom to your doorstep.

As the recession rolls on, the people who run the nation’s social service nonprofits expect people’s needs for food, shelter, and other types of assistance to rise dramatically, just as donations from businesses and individuals are falling: In December, a survey of nonprofit professionals reported the gloomiest fund-raising outlook in a decade. At the same time, cash-strapped government agencies at the federal, state, and local levels are further cutting back on social spending and allocating less money to nonprofits that citizens have come to depend on for a wide variety of services. Making matters worse, a number of these same nonprofits—as well as an array of municipalities, school boards, and public works agencies—got caught off guard by poorly structured investment portfolios and scandals, like the Bernard Madoff affair, and have seen their risky Wall Street investments all but vanish.

To consider how we might remedy this state of affairs, it’s worth asking how we got here. In a way, it’s quite simple: We’ve outsourced compassion. Over the past few decades, the United States has deliberately and steadily shifted the burden of meeting social needs from the government onto a loosely organized, haphazardly regulated patchwork of nonprofits. Many groups have overlapping or competing missions, many are closely aligned with business interests through their funding or their boards, and many rely heavily on foundation funding, which ties them even more closely to Wall Street’s fortunes.

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