Local Charity Is the Best Charity in the Time of COVID

By Anthony Gill

As the world becomes mired in the COVID-19 pandemic, efforts to raise charitable funds are out in hurricane force. Nary an hour goes by when our eyes and ears are not bombarded by some plea to help the victims of the pandemic or the frontline responders. Musicians are performing online concerts with websites established to send financial contributions. The National Football League’s annual draft included never-ending pleas to donate to their “draft-a-thon.” And the cast of Parks & Recreation reunited to prompt folks into giving for a good cause. No doubt, other out-of-work Hollywood-types will follow in short order.

But is large-scale fundraising the proper response right now? Will another star-studded “fund-a-thon” asking you to send money to a central clearinghouse bring about salvation, or will it merely add to the immense deadweight costs our economy has been forced into experiencing?

While charitable giving is a vital component for a strong civil society, large-scale fundraising is the wrong response during this time of national coronavirus crisis. Indeed, these national and international “fund-a-thons” may be doing more harm than good.

Charity drives are an indication of our better angels. They demonstrate our willingness to care for others in times of unpredictable need. Civil society efforts to ameliorate trauma and suffering are frequently preferable to government welfare assistance as the former generally directs more resources to recipients and minimizes the bureaucratic costs of administration. But what should the scope of private aid be?

When crises are localized, an appeal to a broader community often makes sense. Individuals within a devastated locale will not have sufficient resources to rescue and rebuild, and people in unaffected areas can divert their excess resources to assistance. Within a nation that is built upon social trust, reciprocity in assistance is often expected. The Californians who send aid to the Gulf Coast after a hurricane should expect that Floridians will respond in kind when the “Big One” hits Los Angeles. This is a civil society insurance system that works when only some in society are affected.

Giving to a national charity (e.g., United Way) also makes sense when tragedies are localized. As a resident of Seattle, I know little of what citizens in Nebraska might need following a major flood, but a national institution that is devoted to responding to such emergencies can direct my caring impulse and cash into the proper resources tailored to the disaster. In this scenario, a general telethon raising cash would suggest itself as appropriate.

However, the current coronavirus pandemic is very different. The disaster, more or less, is everywhere, and is happening to everyone right now. It is as if the entire planet has become Tornado Alley and the twisters all struck at once. Moreover, the disaster is not merely limited to some natural cause (the virus itself), but the supposed cure (i.e., lockdown) imposed by all levels of government has generated unprecedented economic pain.

Under such conditions, efforts to raise charitable funds nationally make little sense. Money that I send to a Hollywood-based fundraiser in Los Angeles will merely be redistributed back to people in my local community. The added step of aggregating resources in a general clearinghouse will result in some of those resources being diverted to administrative and other transaction costs. Administrators of those national charities will need to be compensated; workers in their charitable supply chain will also receive a cut of what I send. Yes, the intentions are good, but the efficiencies are bad.

Realize that if you are in a position to send resources to the NFL’s charity, you are also capable of reaching out to someone down the street who needs assistance. And given that this pandemic is local to everyone, you will have unique knowledge about who is most in need in your neighborhood and what assistance is best suited for the circumstances.

This is particularly true with overcoming the serious economic costs that draconian shutdowns have imposed. The local pizza restaurateur who is used to seating a full house on most weekends is only doing a small fraction of his normal business with take-out orders. The staff that he employed is laboring under reduced hours or laid off altogether. The $200 you might send to Elton John’s preferred organization could go to buying meals or rent for these furloughed workers, or helping out with child care for hospital workers who are working extended hours.

The economic victims of COVID-19 should not be overlooked. While those suffering directly with the disease are hurting, we have devoted a great deal of medical resources to assist them. Businesses and employees are feeling the greatest side-effects from our attempted social cure. Granted, unemployment insurance, the CARES Act passed by Congress, and various other state efforts have tried to ameliorate the losses, but the bureaucratic costs and uncertainty of receiving aid cannot make up for the devastation of livelihoods that will invariably result in the coming weeks and months. Work does not just deliver a paycheck; it provides self-worth. The loss of one’s esteem and purpose may be the greatest damage to come from this pandemic.

If you feel compelled to help others, leverage your local knowledge. Understand that the free market historically has been one of the greatest deliverers of social welfare in human history. Use what you have to return the economy to its pre-COVID state of affairs by finding ways to make the trades you did before. And if that is not possible, charitably assist those who you did have ongoing relationships with – the bartender, barber, and fitness instructor. Preserve the exchange networks as much as possible. Your charitable efforts will be remembered and rewarded.

Source: AIER

Anthony Gill is a professor of political economy at the University of Washington, Seattle.

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