Thursday, October 13, 2011

The effectiveness of charity

For my Public Finance class, I have chosen to write a paper on the effectiveness of private charity versus the government antipoverty programs. My starting point is a working paper titled "Faith-based charity and crowd out during the great depression" available through NBER working paper series. The first assignment is to do a write a review of a working paper related to the topic we have chosen for our final paper. This working paper discusses how New Deal programs effected the existing faith-based charity with an emphasis on crowding out effects, i.e. how government spending on charity reduces private charity contributions.

The are two aspects to government antipoverty programs, often misreferred to as government charity. There are the in-kind transfer payments such as welfare and food stamps and there is public financing of private charity organizations.  The question becomes, what is more successful? Or does government programs create new problems that make both options inferior to private charity donations?

Direct payments to needy individuals can only be effective if there is an incentive to leave the program. Can bureaucrats be as effective as private charities in creating incentives for impoverished individuals to improve their lot? Does the rent seeking of faith-based charities due to government funding reduce their efficiency below that of privately funded charities? Can privately funded charities obtain enough funds to meet the needs of all the needy without some kind of subsidy?

In my paper I hope to be able to answer some or all of these questions. Ultimately, I would like to use this paper as part of my dissertation in which I would like to address each of these questions in far more detail. I am looking for resources that I could use that examine the question. I need papers, books or data sets that I can use for my analysis. Any suggestions that can be provided by my readers would be greatly appreciated.