At Best, Charity Equals Central Planning Plus Good Intentions

At worst, it's a tax give-away to the rich for giving money to their fancy college:

Bargain for billionaires: Why philanthropy is more about P.R. than progress

Although many on the right (and the sycophantic center) long for the good old days of charity, such dreams are exactly that — profoundly unrealistic. Conservatives, who distrust human nature so profoundly most of the time, place far too much weight on human benevolence when it comes to charity. There simply is no way to ease poverty with charity. For one, charitable contributions in 2011 were only about $300 billion, far below the $707 billion that the government spends on income security and healthcare for the poor. Given the relative weakness of the U.S. safety net already, one funded entirely on charity would be abysmal. And $300 billion is all charitable donations; many donations aren’t aimed at helping the poor, but instead religious or cultural endeavors. One study finds that of the $250 billion given to charity in 2005, only about 30 percent went to aid the poor. Often, “charity” is simply a means to evade taxes. The Walton family, for instance, uses complex “charitable” trusts that end up sending more money tax-free to their heirs than charitable causes.

While government programs like food stamps face strict and rigorous oversight from both the government (GAO) and media (Fox News), private charities face little scrutiny. Government welfare programs are, contrary to popular belief, incredibly successful at reliving poverty and have incredibly low rates of fraud. And these programs must represent the will of the people, rather than a small elite. Social democracy is a huge project, and requires large portions of GDP. (U.S. government revenues as a percentage of GDP is 10 percent lower than the OECD average.) Churches, foundations and other private organizations are simply too decentralized and inefficient to ever provide that level of aid.

Meanwhile, even well intentioned charity spending usually doesn't work. Why? Poverty is defined as a lack of money. How do you solve a lack of money? Give poor people money, duh. But that isn't what we've been doing. From Wired Magazine: The Hyper-Efficient, Highly Scientific Scheme to Help the World’s Poor

Over the past 50 years, developed countries have spent something like $6.5 trillion on assistance to the developing world, most of those outlays guided by little more than macroeconomic theories, anecdotal evidence, and good intentions.
It turns out that retrospective analysis of a program’s impact or even suggestive case studies from a few targeted households can be worse than useless in understanding how a program actually affects a community in the real world.


But in the realm of human behavior, just as in the realm of medicine, there’s no better way to gain insight than to compare the effect of an intervention to the effect of doing nothing at all. That is: You need a randomized controlled trial. And that means you need to climb down from the ivory tower and do some serious legwork in the places you’re trying to help.