Matthew Lau: Government spending squeezes out charitable giving, and that’s bad

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomeFP CommentMatthew Lau: Government spending squeezes out charitable giving, and that’s badAs government social spending rises, private giving becomes rarer. But private charities can do things governments can'tLast updated 27 minutes ago Private generosity makes society both better, and better off, in ways government spending cannot. Photo by Carmen Murillo/Getty ImagesA study last week from the Fraser Institute shows that as government social spending has risen in Canada over the decades, private charitable giving has fallen. In 1961, government social benefit spending was 4.8 per cent of GDP; by 2025 it was more than nine per cent, almost double. Over the same period, the percentage of tax filers who reported giving to charity actually rose from 24.5 per cent in 1961 to 29.6 per cent in 1990, following favourable changes in tax treatment in the 1980s, but then it fell to just 16.8 per cent by 2023.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountCorrelation does not prove causation, but there are good reasons to believe the expansion of government and decline in charitable giving are related. When government spends more, it taxes more, leaving people with less to give. In addition, as some economists have explained, people may conclude from increased government spending that if the government is taking care of the poor, private individuals and private charities don’t have to. It’s the state’s job now. Milton Friedman thought that helped explain why in the U.S. charitable activity declined as government spending rose.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againWhatever the reasons for the trend, the replacement of charitable giving with government spending has negative consequences. There are many reasons why private charity is better than government spending. It relies on voluntary activity instead of coercion. It’s more efficient, accomplishing more good per dollar spent. It’s better for both the donor and the recipient. And it can accomplish good that government cannot.The first two points are connected: because private charities rely on voluntary donations, they have to demonstrate to their donors they are putting the funds to good use. When people are free to choose what charities to give to and how much, they can research how the charities use the money and not give to organizations that waste it, spend too much on administrative costs, blow their funds on extravagant luxuries for executives, or are otherwise ineffective in carrying out their mission. Not so with government agencies, where failure to achieve objectives is generally put down to insufficient funding and rewarded with increased money coerced from taxpayers.There is good evidence that those who wish to help the disadvantaged generally agree government is an ineffective or inefficient way to do so. After all, despite the significant decline in giving over the years,16.8 per cent of Canadian tax filers still gave to charity in 2023. By comparison, how many voluntarily donated to government by deliberately remitting more to the Canada Revenue Agency than they were required to pay? Far fewer than 16.8 per cent, is my guess.People believe government is inefficient for the simple reason that it is. Milton Friedman once pointed out that if you divided total government welfare spending in the U.S. by the number of people the government defined as being in poverty, they would each receive above-average incomes. If spending on the poor actually went to the poor, Friedman said, they would be rich. Similarly, in Canada today, the City of Toronto’s shelter and support services budget in 2026 is $946.2 million for operating and capital expenditures. The shelter system is expected to accommodate an average of 9,808 people a night. That’s over $96,000 annually per homeless person accommodated. As Friedman said, if government spending on the poor actually went to the poor, they would be rich.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.How is private charity better for both donor and recipient? As former U.S. Supreme Court justice Antonin Scalia observed in 2013, “The transformation of charity into legal entitlement has produced donors without love and recipients without gratitude.” Donors now help, not because they want to, but because they have to. Recipients no longer feel thankful to receive help but demand it as an entitlement.Private charity can do one important thing government spending cannot: promote virtue. Private charitable organizations, especially religious ones, seek not just to do good but to encourage people to be good. By contrast, promoting virtue is outside the government’s scope, and social services spending goes towards material help only.Private generosity makes society both better, and better off, in ways government spending cannot. The expansion of government spending and decline in charitable giving are therefore unfortunate.We apologize, but this video has failed to load.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.