Investigation the Nature of Charity - Essay Example

CHARITY FUNCTIONS It has been argued that the only function that charities can ever perform is that of relieving the symptoms without treating the disease. In effect, charities merely salve peoples conscience while maintaining the status quo. While social organization has been an essential aspect of modern existence, few would argue that even the nations with the most functional government systems have been able to address the ever-burgeoning amount of social challenges. This gap between government remedies and social ills has long been a concern of organizational theorists in who examine corporate social responsibility, as well as humanitarians who work towards social change through establishing or donating to charities (Weisbord 2004). Although the general public consensus is that charities make a strong contribution to the social good, growing bodies of theorists and researchers have argued that the only function that charities can ever perform is that of relieving the symptoms without treating the disease (Rydenfelt 1983). In effect, charities merely salve peoples conscience while maintaining the status quo. Within the world of finance such charity functions have emerged as firms or individual investors have placed funds into trusts with the intention that their donation is making a significant real world contribution to social progress. This essay explores this equity trust relationship through an examination of the extent that charities can truly be understood to make significant real world contributions, and argues that many of the current charitable organizations must structurally rethink their approach to humanitarian aid. When examining the extent that charities contribute to social progress one of the essential considerations is the establishment of a working understanding of the charity concept. In the United States, charities are clearly defined as non-profit organizations (NPO) that have philanthropic interests that directly contribute to the public good (Marion 2004). While the United Kingdom has a similar understanding as the United States, rather than defining the charitable organizations as the non-profit organizational label they are distinguished by the Charities Act. Originally established in 1993 the Charities Act has undergone a number of considerable amendments over the last two decades (Kihn 2012). The Charities Act 1993 was established by the Parliament of the United Kingdom as a means of altering the regulatory framework around which charities act (‘Charities Act, 2006’). The main provisions established in this act are the definition of the requirements to become a charity and the establishment of a Charity Tribunal to hear appeals from decisions of the Charity Commissions. Subsequent changes to this act, with the most recent 2011 act making alterations to the requirements for registering charities (Kihn 2012). These notions are significant as they establish the important elements of the United Kingdom’s charity trust system. Even as there are considerable amounts of charities that fall under the auspices of the United Kingdom’s Charities Act, a number of researchers have criticized these institutions for lack of true understanding of social change. Additionally, there are a number of laws that these charities benefit from. This is significant as it indicates that to a degree they fall under the auspices of government funding. Hudson (2009) indicates that the law grants charitable trusts in the United Kingdom exemption from most taxes, and the trustees have freedom from legal action. Although this research has found no direct link between the tax exemption and charitable inefficiencies, it seems highly possible that this policy has allowed a system to emerge where the government is actually subsidizing ineffectiveness. Each case is specific, yet there has emerged an overarching argument against these institutions. This argument contends that these equity funds simply stave off the immediate problem, yet fail to target the long-term solution. Metaphorically this process would be similar to attempting to stop a hole in the roof by placing a water bucket beneath the hole. While the bucket will catch the water for a period, it will ultimately overflow and leave the hole in the roof still gaping open. This perspective has emerged in a variety of contexts. Perhaps one of the most notable charities operating in the United Kingdom is Oxfam. This organization is involved in an array of charitable missions. Indeed, everything from climate change, health, education, gender equality, poverty, and hunger in Africa fall under this organization’s mission. Oxfam’s approach to charity in Africa has taken on a three-pronged approach: emergency response, development work, and campaigns for change. One of the most distinguishable challenges researchers have made to United Kingdom charitable donations has been in Africa. Indeed, one considers Oxfam’s actions in Africa as a strong microcosm for the broader scale challenges facing United Kingdom charity trusts. Such foreign aid has been challenged along a number of grounds. Peron (1999) examined the long history of charitable donations to Africa and argued that in large-part they have been ineffective. Even when the challenges of such a large-scale process are taken into consideration, much of the research seems to support Peron’s (1999) argument. In further understanding these challenges, one considers that there are a number of areas that have been targeted by charitable organizations. Perhaps the most prominent area of concern has been food shortages in the region (Peron 1995). Regarding this consideration the World Bank has noted that approximately seventy-five percent of agricultural projects in the region have failed (Glassman 2011). Another prominent area of charitable effort has been that directed at curtailing the spread of AIDS on the continent. While effort to reduce HIV have been more effective than those to stem the tide of hunger, it seems that both instances in great part have fallen starkly short of the original intentions. A further analysis of specific charitable efforts towards ending food shortages demonstrates a number of thematic trends. The Mopti Millet Organization, another charitable organization, set out to increase grain production through Africa (Whitaker 1998). Their operation ultimately faltered after government agencies intervened and placed official state prices on the cost of grain, effectively mitigating any progress that the charity made. Another effort attempted to establish a fish-freezing plant in Northern Kenya (Whitaker 1998). In addition to contributing significantly to food production, the plant was intended to provide a significant means of employment for villagers in the region. After completion requiring significant amount of equity it was discovered that the plant required more power than the regional infrastructure could offer. Another significant charitable mishap occurred in Tanzania. In this instance, $10 million in charitable donations were gathered and implemented in the construction of a cashew-processing plant (Whitaker 1998). Although well intentioned, upon construction it was discovered that the plant had a capacity nearly ten times greater than the cashew production of the entire country. Because of the size of the plant necessitated considerable operational costs, the African residents ultimately came to recognize that it was cheaper to process the cashews in India. In terms of HIV prevention, charitable organizations have faced similar challenges and frequent shortcomings. The European Union itself has fallen prey to such misguided efforts. The EU donated over $2 million to South Africa as a means of creating an ‘AIDS’ awareness play – Sarafina II (Melone 2000). In retrospect this effort has been highly criticized by experts in the field. The $2 million constituted nearly twenty-percent of South Africa’s AIDS budget and it is argued that the funds did little more than function as an elaborative public relations show. For instance, a heavily promoted version of the play was performed in Soweto, yet less than one hundred people attended (Melone 2000). Another prominent area of concern that charitable organizations have targeted is climate change and a bevy of related environmental concerns. One such notable effort that both United Kingdom and United States charities have targeted is deforestation in Indonesia (Bauer 1978). In addition to a number of smaller charitable organizations, such major groups as the World Wildlife Federation (WWF) and Greenpeace have aggressively organized and ensured that tens of millions of dollars have flowed into the region (Bovard 2010). The United Kingdom PATT Foundation has particularly worked to “reduce the threats of deforestation and climate change and help conserve the country’s tropical forests, wildlife, and ecosystem processes” (Bovard 2010). Within this spectrum of understanding further consideration has given to the establishment of cap-and-trade legislation that would place penalty restrictions on large-scale Indonesian operators that are deemed to have negatively impacted the environment (Bovard 2009). This last consideration is slightly ironic when one recognizes that such legislation has not even been adopted in much of the industrialized West because of a belief in economic inefficiency of such an approach. Although the charitable efforts in Africa and Indonesia were undeniably well intentioned, it seems that in great part the Achilles heel of these approaches is a misunderstanding of the process of cultural and economic development. Considering the instance of charitable donation in Africa it seems clear that the efforts have been limited both in terms of governmental organization and regional infrastructure. In the instances where effort was made to establish greater food production, the structures were either inefficient or the production was thwarted by government operations. Such occurrences indicate that the condition of food shortages in the region is far more complex than simply building food agriculture. Indeed, it’s been noted that the United States alone produces enough food surplus to feed the starving portion of the African continent. Rather than food production being the issue it seems clear that the challenge is in developing more functional government and institutional pathways. This paradigmatic notion of improving conditions in Africa, but also in Europe and the Industrialized world, contends that social ills are to a great extent the result of inefficient governmental structures, regulations, as well as regional infrastructure. In African what the charities have done is attempt to import a Western and ethnocentric view of existence onto an African cultural apparatus. Namely, they have attempted enforce advanced cultural institutions and modes of production on a society that has not technologically developed to the extent where these innovations strategically fit into their operations. Hollander (2004) argues that while these charitable organizations oftentimes regard wealth as an oppressive or evil force, in reality it is wealth that creates that advanced governmental and cultural institutions. Hollander’s (2004) specific contention is that affluence is the greatest remedy for the environment, as a wealthy nation will increasingly attempt to work within the government to establish regulatory measures that enforce environmental sustainability. Ultimately it seems then that the only way to aid world hunger, or stop deforestation is through promoting a strong and robust African economy. The question then becomes why these United Kingdom charitable organizations continue to engage in such actions if they continually prove ineffective and inefficient. To a great degree it seems the answer can be found in the very nature of the investor and trust relationship. In addition to tax benefits, there is a general qualitative agreement that many investors engage in charitable acts to create a stronger public image, as well as to gain a feeling of goodness (Maren 1997). In this context of understanding, the charitable organization is not simply a repository for social progress, but is instead a politically and socially mediated institution of investor intentions (Maren 1997). As the charitable organization must pander to public interests for its very survival, it is not surprising that the charitable efforts it undergoes are those with the greatest outward displays of goodwill. One considers that it is difficult for a multi-millionaire investor to improve his reputation by investing in organizations that only indirectly support improving social ills. While to an extent it seems that charities have misguided intentions, recent years have witnessed the emergence of a new form of dynamic charitable institution. To an extent these charities have been able to avoid the pitfalls of capitulating to donor interests, as individuals with already existing public appeal at least outwardly manage them (Hancock 2010). One of the most prominent examples is the Bill and Melinda Gates Foundation, established and run by former Microsoft CEO and world’s richest man Bill Gates. Another similar foundation is the Clinton Foundation, established by former United States President William Jefferson Clinton. These charitable foundations have garnered considerable public attention and financial support; indeed, the Bill and Melinda Gates Foundation recently received multi-billion dollar donations from seminal value-investor Warren Buffett. To a large degree the reason the foundations are seen as making significant contributions to the public good is that they have placed a stronger emphasis on the process of efforts, than the process of ensuring the efforts have relevancy from a publicity standpoint. Indeed, researchers have noted a bevy of contributions these foundations have already made. For instance, the Bill and Melinda Gates foundation has made great contributions towards establishing financial services for the poor and infrastructure development in the emerging world (Hancock 2010). One recognizes that these initiatives seek to target the process of the issues at hand rather than merely the symptoms. In conclusion, this essay has examined the notion that the only function that charities can ever perform is that of relieving the symptoms without treating the disease. Within this mode of investigation the nature of ‘charity’ has been considered. Prominent charitable efforts made in both Africa and Indonesia have been analyzed as a microcosm of the broader process of charity donation. Finally efficient and effective charitable foundations were considered. Ultimately, it’s clear that if charities in the 21st century truly wish to make a difference in the world they must more thoroughly consider the deep structural issues underlining their efforts. References Bauer, P. (1978) “Western Guilt and Third World Poverty,” in Karl Brunner, ed., The First World and the Third World. Rochester, N.Y.: University of Rochester Policy Center. Bovard, J. (2009). “The Continuing Failure of Foreign Aid,” Cato Policy Analysis 65, Bovard, J. (2010) “The World Bank vs. the World’s Poor,” Cato Policy Analysis 92 Charities act 2006. (2012). Retrieved from http://www.legislation.gov.uk/ukpga/2006/50/contents Glassman, J. (2011). Foreign aid. Retrieved from http://www.forbes.com/sites/jamesglassman/2011/04/08/foreign-aid-the-good- and-bad/ Hancock, G. (2010) The Lords of Poverty. New York: Atlantic Monthly Press Hollander, J. (2004). The real environmental crisis: Why poverty, not affluence, is the environments number one enemy. University of California Press. Hudson, Alastair (2009). Equity and Trusts (6th ed.). Routledge-Cavendish. Kihn, S. (2012). Apb updates guidance for charities act 2011 . Retrieved from http://www.accountancylive.com/croner/jsp/Editorial.do?channelId=- 601057&contentId=2102153&Failed_Reason=No BVCookie present to retrieve the session.&Failed_Page=/jsp/Editorial.do&BV_UseBVCookie=No Peron, J (1999) Die the Beloved Country? Johannesburg: Amagi Books Peron, J. (1995) Exploding Population Myths. Chicago: Heartland Institute. Maren, M. (1997) The Road to Hell: The Ravaging Effects of Foreign Aid and International Charity (New York: The Free Press Marion R. (2004). Governing Nonprofit Organizations, Harvard University Press. Melone, A., “Battered Mugabe hits back as verdict looms,” Guardian Limited (UK), June 25, 2000, http://www.observer.co.uk/international/story/0,6903,336202,00.html. Rydenfelt, S. (1983). A Pattern for Failure. New York: Harcourt, Brace, Jovanovich. Taylor, F. (2011). The principles of scientific management. Retrieved from http://www.marxists.org/reference/subject/economics/taylor/index.htm Weisbord, Marvin (2004). Productive Workplaces Revisited (Chapter 2: Scientific Management Revisited: A Tale of Two Taylors; Chapter 3: The Consulting Engineer: Taylor Invents a New Profession. Templeton Press. Whitaker, J (1988) How Can Africa Survive? New York: Harper & Row Read More