Brigid Slipka

While most people make charitable donations for the connection with friends who asked or family members affected or communities involved, that small but important percent are focused on how their gifts have an impact.  And perhaps, to have the highest-impact, they should not be giving toward charity at all.

In today’s Washington Post, Ezra Klein makes the case that philanthropists seeking to have a high impact with their donations shouldn’t look toward giving to nonprofit charity but instead be giving to organizations that influence government policy.  Money quote:

At their best, [political donations] act as force multipliers. If you donate money to a food bank, it can provide only as much food as your money can buy. If you donate it to a nonprofit that specializes in food policy issues, it can persuade legislators to pass a new program – or reform an existing one – that can do much more than any single food bank.

The argument is extremely persuasive.  Any impact-driven donor is looking to give in a way that stretches her donation the furthest, that has the most effect per dollar.  Political causes might far outstrip charity in their ability to create lasting change among people in need.

But: flip the page of the Post and you’ll find interviews with several prominent philanthropics about their giving choices.   When asked whether the donor separated their philanthropy and their politics, every single person said yes.

It is not difficult At. All. to see why.  Politics is astoundingly divisive and only getting more mouth-frothing each day.  Jumping into the fray gives me the willies.  Just writing this post is making my palms sweat.

But clearly, nonprofits and government are closely intertwined.  Consider:

- Childhood obesity: Nonprofits are focusing on healthful eating and exercise with mixed success.  Economists, meanwhile, argue that the epidemic is caused by falling food prices in unhealthy foods.  The government subsidy for corn, a key ingredient in junk food (particularly soda) has artificially lowered the price for foods that put on the poundage.  A bag of Doritos is not only more tempting than a bag of apples, but it costs less.  Charities are trying to change behavior against a tide of government policy that makes junk food and soda more appealing to our thinning wallets.

- Health care: Insurance works when huge numbers of people are grouped together, spreading out the risk.  Everyone pays in to it a little bit, and only a small percentage need to be covered from that large pool.  If pooling is not available, insurance companies will choose to not cover those more likely to get ill (or make the cost astronomical).  Meanwhile, those who are healthy won’t buy insurance.  Charities can treat those uninsured who get squeezed out of the insurance pool, but can’t do anything about the fact that the number of uninsured is growing fast.  Only government can make insurance companies and healthy 20-somethings buy-in to the pool and spread out the risk for everyone.  Laws can change behavior that feels counterintuitive to one individual but in fact makes the whole citizenry better off.

There’s lots of philanthropic buzz around impact investing, or the opportunity for philanthropically-minded people to make business decisions that have an impact on social causes.  But government decisions are just-as-if-not-more profound.  While the work of the nonprofit and private sector is important to high-impact giving, it is critical that any discussion of how address philanthropic issues include the public sector as well.