Charities on the Dole

Robert A. Sirico
The Wall Street Journal
March 31, 1995

For most of its 85 years, Catholic Charities has been a model of how private charity can work as an alternative to government welfare. But recently, it has begun to rely more and more on government contracts, and subtly, the nature of the organization, a network of 1,400 agencies in every diocese in the country, has changed.

In 1993, Catholic Charities took in more than $l.25 billion in federal, state and local funds. Public money accounted for 65%, of its total revenue last year (as opposed to the Salvation Army, which received 6%, of its budget from the taxpayer and Shriner's Hospitals, which received no public funds).

As state and federal governments made money available to nonprofits for alcohol and drug treatment programs, Catholic Charities shifted its emphasis to this area. The organization's Massachusetts offices now spend 80% of their money on substance abuse programs that serve only one quarter of their clients. Other tasks, like running thrift shops and soup kitchens, have taken a back seat.

Last year, Catholic Charities had to close a Brockton, Mass., thrift shop ("Peddlar's Fayre") as the agency shifted funds. Workers and board members charge that the change was made to carry out tasks that reflect the legislative agenda. "We have lost the heart and soul of the agency," a board member told the Boston Globe. The Catholic Charities Guild, the private fund-raising arm of the organization, even broke with the agency to open up its own thrift shop. "Our priorities are food, shelter and clothing," Guild president Cynthia Driscoll said, and "apparently the agency priorities are different than ours. "

Some people within the organization have begun to rethink their dependence on government grants and what they require. The Boston Archdiocese, for example, has given up its contract to provide child protective services, which is more of a police function than a charitable one.

Catholic Charities' dependence on government contracts also colors its public positions. When the Republican leadership suggested that charities need to do more after welfare cuts, the head of Catholic Charities objected. "We can't pick up what's going to happen, and it is unreasonable for Congress to talk like we can," Father Fred Kammer told Newsday. He forgot to mention that his own organization would be a major "victim" of GOP cuts.

Catholic Charities' mission statement says it is "dedicated to supporting families, reducing poverty in the United States, and enabling communities to become self-sufficient." No moral person could disagree with these goals, and Catholic Charities has accomplished them for many years. But the statement also says it helps "shape federal social legislation" and monitor "the public budget process to ensure economic justice." That, of course, is a political mission that may or may not have anything to do with actually helping people.

The changes at Catholic Charities illustrate the dangers of nationalizing our great network of private philanthropies. Federal, state and local governments combined will give $5 billion to major nonprofits this year, and the percentage of charitable budgets that come from the taxpayers seems to be increasing. The Non-Profit Times found that government money accounts for 22% of the organizations' budgets. That's up from 18%, in 1992.

Governments clearly like to contract out to nonprofits. It allows legislative priorities to be met with less money. In private nonprofits, there are no union pay scales, pension plans or health insurance plans to worry about. And governments can often make grants on the condition that the charity raises a percentage of the money from the private sector. But that also means that the nonprofit organization is subsidizing government projects out of private dollars.

The receipt of government money also presents private charities with difficult dilemmas. Subsidies relieve the organization of fund-raising burdens, but they can compromise the ideals of serving the truly needy as well. The goal of the religious charity goes beyond the mere maintenance of an individual's material needs, yet religious missions are often sacrificed to appease secular officials.

When tax dollars begin to dominate budgets, funds are not spent as carefully. Among mostly subsidized homeless shelters, the national average spending is $22 per person per day. By way of comparison, the St. Martin de Porres House of Hope, a homeless shelter in Chicago run by Sister Connie Driscoll, accepts no state funds and operates on an average of $6.73 per person per day. The House Of Hope has the best success rate in Chicago; only 6% of its residents end up on the streets again.

Even local charity boards are hamstrung when the organization takes taxpayer money. When they are not responsible for what comes in, they can't control what goes out. And when donors find out how much money charities get in taxpayer funds, they give less to the agencies themselves. The cycle of dependency begins and it becomes difficult to kick the habit.

If the Republican Congress is truly concerned with making welfare provision truly charitable again, it must rethink the trend toward contracting out the welfare state. Individual welfare dependency is nearly as bad as organizational welfare dependency. So long as we are privatizing, let's look at reprivatizing private charities. Only by the solicitation and use of private dollars can they be truly accountable to the public and truly helpful to the needy.