Underfunding anti-poverty programs

There was an interesting piece this week in the New York Times by Nicolas Kristof and Sheryl WuDunn. They describe a program that funds nurse visits to low-income families to provide advice on child-rearing, and cite a RAND study which finds that “each dollar invested in nurse visits to low-income unmarried mothers produced $5.70 in benefits.” Sounds good? Yes, but the program seriously lacks funds. The article concludes with a familiar lament, which ultimately is directed to donor preferences: “We wish more donors would endow not just professorships but also the jobs of nurses who visit at-risk parents; we wish tycoons would seek naming opportunities not only at concert halls and museum wings but also in nursery schools. We need advocates to push federal, state and local governments to invest in the first couple of years of life, to support parents during pregnancy and a child’s earliest years.”

One question that arises from the authors’ lament relates to the charitable deduction, under which donor preferences among public charities are treated equally. The issue is whether tax policy should aim to direct donors more toward certain charitable ends rather than others. Or, in the frame of the article: should tax policy equate a naming opportunity at a concert hall with funding a successful anti-poverty program? Present law already favors gifts to public charities over private foundations. A question in the context of tax reform thus is whether a preference for one type of charity over another should be made more on functional grounds. If the charitable deduction were converted to a credit, it would be easier over time to tie the amount of the credit to the desired end of the subsidy, perhaps with a relative preference for certain charitable ends or programs. All charities that currently benefit from the deduction could continue to benefit, but the credit for giving to some would be greater than for giving to others. It is a controversial question, but tinkering with charitable tax incentives to direct donor preferences toward more pressing needs is worth serious consideration.

Roger Colinvaux