He argued that charity is not the answer but ensuring that people have higher wages, more jobs and a more equitable tax system. He said that if billionaires paid their fair share in taxes, there would be more than enough revenue to provide vital social services, adding that too many people give to the charities they know, regardless of whether those organizations are effective.
Stern agreed, saying people give out of habit to brand names without doing proper research of the groups.
Berg pointed out that many organizations spend more money on fundraising and promoting themselves than on providing services. He said organizations should be judged not by how much product they put out but by how much impact they’ve had in fixing the problems they’ve set out to address.
Stern said the most effective way to help is by giving money so it can be put toward the greatest need. He added that donations should be given throughout the year and not just at the end. Many people make large donations at the end of the year to get them in for tax purposes.
The average American household gives $2,974 each year. Statistics show that middle- to low-income people give a higher percentage of their incomes than wealthy individuals.
Berg said engaging in public policy advocacy is also an important way of helping people. “Congress and the president, over the last few years, cut food stamps … by $14 billion,” he said.
Stern agreed, noting that the government is the biggest source of revenue and support for the social sector and that many programs that nonprofits survive on have been cut by the government.
However, Berg says, government food assistance programs are generally more economically efficient than charities because they have more oversight than nonprofit organizations.
There are about 1.1 million charities in the United States. Some of the most popular are education-based, human services and health charities. Charitable donations have increased since the official end of the recession in 2009.
Berg said one way to gauge whether charities are effective is by looking at how much money their executives make in relation to their employees and at the amounts spent on services. He says charities should be transparent and have their tax forms and financial information on their websites.