Charity Is a Broken Funding Model

03/08/2016 11:06 | Updated 03 August 2016

In my experience, most people with money have no reason to feel guilty or proud, and many are neither particularly smart or greedy either. Instead, they tend to be just lucky, and this luck is frequently accompanied by a sense of fault or shame at regarding their privilege and as a result, advocate higher taxes or donate their money in an attempt to alleviate themselves of their conscience. I say of these people that they are unfit to have the money they have come to possess for frequently I discover during my talks with such individuals I find that they do not understand the economic reality they occupy. Of course, for this belief, I have been called uncaring, and my attitudes disgraceful by people who fail to recognise that the world is full of people who want to get ahead with the least amount of effort. After all, one only need look at reports such as the one conducted by Third Sector who break down the senior pay of the top 150 charities by income and you will see a picture rather different to those painted by philanthropists.

William Shawcross, the chair of the Charity Commission, has even said that "disproportionate" salaries could bring charities into disrepute and for good reason too, the median pay among general charities was £145,000 in 2015. To put the numbers into perspective, a household name you are likely to recognise is Cancer Research UK, who have nearly 190 staff who were paid more than £60,000 the year the study was conducted. In comparison, the average constituent charity of the top 100 had 43 staff who earned more than £60,000. No wonder the National Council for Voluntary Organisations has urged charities to be more open about pay and some have even gone as far to call for a limitation on charity pay. David Fielding, the managing partner of the employment agency Attenti, however, has even criticised such calls to limit charity pay saying that "charities want dynamic, superb chief executives to drive and fulfil their missions." He claims that "if you're too restrictive and sanctimonious on salaries, you will struggle to recruit and retain the best possible leaders", which is an argument not unlike the one often made in defence of banker's bonuses in the ongoing debate surrounding that matter.

So where does your money go? Allow me to give you an insight dear reader, a report by the True and Fair Foundation, entitled A Hornet's Nest, found that of the 5,543 charities which raised more than £500,000 in 2014, only one in five spent less than 50% of their donations on good work. The same report also found that 292 of such charities spent 10% or less on charitable activities and that the likes of Cancer Research UK and the Guide Dogs for the Blind Association only spent 64% of their money on charitable causes. But the problem with charity goes much further, for charities often target only the symptoms of the problem and do not address the causes. They think too small and are unsuitable means to address the real issue that is providing a real solution that will result in change. Philanthropy only makes vulnerable recipients becoming dependent on uncertain aid which is subject to fluctuation and reduction a normality, something we may very well condemn as unethical by all accounts.

Perhaps now you are beginning to see the problem for what it truly is, a problem concerning the impact it has. If you give money to charity how do you know you have done well? Perhaps you feel good, maybe you even feel you can see the effects donations like yours are having, but you can never really be sure, and perchance you do not care to know, but if it is used up with no positive outcome as a result, then what may be said is that you have done badly as you have wasted a resource which could have been used to do good. Nobody can know for sure if they have done good, and this inability to measure indicates only one thing, any good done is likely to be only accidental. In essence, charity is the process whereby wealth is transferred by those who have shown they can create it to those who have demonstrated they cannot, as the Bonner's identify in their book Family Fortunes: How to Build Family Wealth and Hold Onto It for 100 Years. One only needs to look at what our non-voluntary donations known as taxes fund to see I am right, pointless wars, the incarceration of people in the war on drugs, the paying of inefficient bureaucrats, corrupted welfare, middle-class handouts and contracts, tariffs and special favours for the rich are all things funded by you and I the taxpayer and those impacts are measurable, and the jury's verdict is in, we do more harm than good.

The best way to help others then is by investing it wisely. Start a business, take on staff and produce rather than consume as this adds value to the economy and in turn creates prosperity. For it is evident to those who pay attention what the answer is and it is not by luck that every study conducted, period, has concluded that money is far better and more helpful to individuals than to the state. Redistribution of wealth is a broken system, done by the free will or volition of persons or by taxes it makes no difference, charity is not the answer. Instead, parental involvement, proper parenting, good education, and production of goods and services is what makes society productive and keeps us moving forward, not charity. It is the place of the family, not the state, to help members overcome problems, get them back on their feet, economics tells us this, ethics agrees and to an extent, be it small or large, evolution evidences my claim too. So to my critics, I say this, the next time you believe you are doing good, think twice and make the right decision. Charity is a broken funding model.