The implicit assumption of the proposed change: that government will do better things with that money than will philanthropy. The Obama Administration has shown a willingness to act on just that belief. It has, for instance, announced the establishment of a new White House Office of Social Innovation—which will make grants (totaling $50 million) directly from the White House to individual non-profits. Some non-profit “social entrepreneurs” have supported the idea—tempted by the possibility of using government grants to grow. But it’s crucial to note that, as is typical when government calls the shots, only certain types of organizations working in select areas will qualify—including “energy efficiency, civic engagement, and poverty reduction” programs. This government-led giving contrasts sharply with the wide-ranging, sometimes quirky, but historically creative nature of American philanthropy.

The same legislation which created the Office of Social Innovation will also direct which non-profits will be able to attract the volunteer labor which is so often their lifeblood. The Edward M. Kennedy Serve America Act, signed last spring, authorizes an increase in the ranks of the Americorps program from 75,000 to 250,000. Although it sounds as if it should be a program of young people in uniform building trails and bridges, Americorps, too, is a grant program—which provides not funds but subsidized labor. Organizations that get its “volunteers” (who are paid a federal stipend for two years) must apply to either state or federal government. Proponents of this “national service” program see it as a way to involve the young in civic life, but they fail to see that it empowers government to decide what sort of volunteer work is worth doing—and diverts volunteers from groups which may not be adept at filling out grant applications or which (worse) may lack the right political connections.

It’s tempting to think that sending money and troops to charities which get some sort of White House seal of approval will help more of those in need. But there’s good reason to doubt that will actually happen. In the 1960s, the Johnson Administration’s “Model Cities” program sought to clone, all across the country, a small number of successful non-profit community development organizations. The result was often misuse of funds, as powerfully described by the late Senator Daniel Moynihan in his classic book, Maximum Feasible Misunderstanding. Nor do we lack current examples. In Washington, DC, for instance (according to recent Washington Post report), millions in government contracts to help AIDS victims instead went to organizations with “few or no clients, incomplete spending records or (who were) not running any AIDS programs whatsoever. Meanwhile, (those) living with HIV/AIDS have struggled to find care.”

Such years-long malfeasance is much harder to pull off in the world of philanthropically-supported non-profits, which operate under tough IRS review, as well as the review of their own boards and industry ratings-agencies such as Charity Navigator. The record of government in providing social services certainly does not justify diverting billions for such purposes away from private charities—but yet that’s the direction in which we’re heading.

Howard Husock

Howard Husock is the Vice President, Policy Research and the Director of the Manhattan Institute's Social Entrepreneurship Award.