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The Government's Effect On Charitable Giving


Published: August 12, 2019

The greatest period of charitable activity occurred in the 19th century, when government spending was small as share of the economy. However, once the government spending grew, it diminished the incentives for individuals to give voluntarily. When people believe the government should take care of those in need, charitable giving falls.

Discussion Questions

  1. Do you think the government and charitable organizations should work together?
  2. Do you think that locally run charities are more effective at identifying who needs help and how to best to help them?

Additional Resources

  • Watch “What Do We Owe Our Country?” with Milton Friedman. Available here.
  • Read Milton Friedman’s essay, “Why Government is the Problem.” Available here.
View Transcript

The greatest charitable activity occurred in the 19 th century when government was small. 

When total government spending was 10% of the national income federal state and local... 

that’s when you had Carnegie establish the public libraries... 

that’s when you had the private charitable hospitals put up... 

that’s when the Red Cross started... 

that’s when the Boy Scouts started. 

What’s happened is as the government has gotten bigger and bigger 

it has destroyed the incentives for individuals voluntarily to engage in activity. 

If you look at what happens to people’s contribution these days, 

a hundred years ago those contributions would have gone the person to charities to help people in the main. 

Now it goes to museums to symphonies to similar things. 

Why? Because we say the government is taking care of that.