Economics 101 & Public Square

Are Churches Being Crowded out of Poverty Alleviation Efforts?

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When the worst happens, where do you turn for help?

Most of us have found ourselves in unforeseen circumstances, and we can each attest to the sense of relief that comes when our needs are met with sensitivity and grace.

In a 1979 study, Drs. Don and Rachael Warren evaluated seven institutions of poverty alleviation, including the local church, family members, ethnic associations, and others within their same zip code. They found that in a moment of need, we’re much more likely to turn to those who know us best, including individuals in our churches and families.

A contemporary study observes that these informal networks are important for developing resources and coping with stress. Yet even though decentralized charities or individuals provide the most generally preferred care, these institutions are eclipsed by government funded programs that have become the primary sources of aid over the last century.

Crowding out the Church

Prior to the Great Depression, most aid was provided through families, church communities, and other decentralized institutions.

Today there are 126 separate and often overlapping government anti-poverty programs. Federal welfare spending totals $14,848 for each poor individual in the US, according to a 2012 estimate. Combined with state and local spending, $61,830 might be spent on a poor family of three. Even though this figure exceeds the national poverty line, poverty persists.

Aid offered through churches and small charities cannot compare to federal welfare offerings. In economic terms, the effect of the competition between  church and  state is known as crowding out.

In a recent visit to IFWE, S. Michael Craven explained that to compete with federal welfare assistance, his organization has to offer benefits exceeding the rate provided in unemployment benefits. He elaborated, saying (emphasis added),

We try to take seriously the concept of “righteousness” in which we are called to “disadvantage” ourselves for the advantage of others. As a result, our management team is limited in their earnings relative to the lowest paid employees. Unfortunately, we are competing with public assistance that delivers the equivalent of  $12-$13/hr!

The poverty alleviation efforts of churches, charities, and groups like The Good-Works Company are not only uniquely equipped to handle poverty in their communities. They can also offer solutions that uphold accountability, better foresee potential consequences, and also honor the dignity of the person receiving the aid.

Unforeseen Consequences

All policy makers must explore the logical ramifications of their policies to prevent—to the extent that is possible—any unforeseen consequences of their policies. This is a very difficult task.

Aid policies are intended to improve the state of the poor, but even the most well-intentioned actions may lead to detrimental results.

An example of this is the history of the Aid to Families of Dependent Children (AFDC) program. In his book Losing Ground, Charles Murray evaluates the incentives for an unwed, pregnant couple to get married.

After the 1970 reforms of AFDC until its replacement by Temporary Assistance for Needy Families (TANF) in 1996, it was more advantageous for a young, single mother to remain unwed because the bill’s provisions rested on the assumption that a double-parent household would earn more. The smaller allowance to a married couple disincentivized getting married, even though by foregoing marriage couples were unable to enjoy its legal and emotional benefits.

The Consequences for Human Dignity

More devastating is the toll inflicted on welfare recipients’ dignity. To receive aid, individuals must prove need. As John D. Hanson explains,

To receive any “benefit” it must be proved that the applicant is truly poor. As a result, recipients of public welfare are often required to submit to conditions most people find personally repulsive and degrading.

No aid measure should entice recipients to subject themselves to worse conditions only to receive temporary assistance. Instead of being simply a road block to overcome, poverty becomes a way of life.

Bob Woodson, head of the Center for Neighborhood Enterprise, explains that,

The longer a person remains on welfare, the greater the possibility that person will make permanent dependency a way of life, as the welfare state succeeds in robbing its clientele of their self-discipline and their self-respect.

Poverty alleviation should empower people to become self-sufficient, not degrade them. The former the church is positioned to do well. The latter is an unfortunate result of well-intentioned but poorly executed efforts.

As Christians, let us be sure that our endeavors to help others find the strengths God has given them and cherish their dignity in the process. We need to empower institutions of the first choice – churches, families, and other means –and reform existing government structures to meet the needs of those facing hard times.

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