Jan Jan Sahayog - Know the Charity

Charity What it is?

It’s an act done out of humanly compassion and sense of duty, considering the society that we live in as our extended family. Like we’d help our siblings and very close friends in time of their need, we must be willing to help those who need our support very badly and to whom this support can be life transforming i.e. after certain period of time the receivers of charity would be strong enough to take care of themselves.

Further, charity is an institution, organization, or fund established to help the under-privileged. It’s a particular type of voluntary organization – one that takes a distinctive legal form and has a special tax status. A Charity can be organized in a number of different ways – it can be an unincorporated association, a trust or a company limited by guarantee. The ‘company limited by guarantee’ is the most commonly adopted structure for the purpose.

Why Charity makes an economic sense?

All the learned people and financiers would be aware of the basic theories in Corporate Finance. The basis of corporate finance is – to pass money (capital) from where it is low cost i.e. less valuable or less necessary to where it’s high cost i.e. more valuable or more necessary.Hence, the money is invested by the HNW Investors (who are earning low interest on bonds etc. and is less necessary for taking care of their needs) into the projects for whom the capital is costly and scarce. Thus the HNWI makes better return in the projects and the project’s promoters get the capital, which is sine qua none for their survival. Thus, additional value is created for both the parties.

The same is done by Charities or charitable giving. When the givers or donors give away certain portion of their wealth, which they were not using or not about to use in fore-seeable future, they gives away the money, which is least valuable to donors to the receivers of the charity or money, which is life transforming for the receivers.While the value created by investment in projects is in terms of money and can be measured in terms of ROI in percentage i.e. additional capital created for the investor on her investments.

The value created by charity/charitable giving is in terms of improvement in receiver’s life and growth in society. In summary, the charity or act of charity does exactly the same thing what an investment in capital market does (create additional value in the system); however, the investments in capital markets make the investors richer in terms of additional money, the charitable giving leaves them richer in terms of better society, better country and living conditions. The best examples are USA and Canada - According to a report, the civil society sector — comprising private, not-for-profit hospitals, schools, social service agencies, symphonies, environmental groups and many other organizations — accounts more than 7 percent in countries, such as Canada and the United States. By comparison, the utilities industry — including gas, water, and electricity — in these same countries accounts on average for only 2.3 percent of GDP, the construction industry for 5.1 percent, and the financial intermediation industry embracing banks, insurance companies, and financial services firms, for 5.6 percent.

Criticism of Charity

The use of the charity or donation system as a valid mechanism for solving social problems has been criticized. Ludwig Von Mises (an Austrian economist, historian, and philosopher) summarizes two such criticisms.

In the first, he refers to the exiguousness of the available means, sustaining that progress in the economic system will result in wealth and, therefore, greater charitable funds, since people give more when their own needs are met and, at the same time, increased wealth decreases the number of needy individuals.

However, the need for funding for social purposes also tends to increase and, on the other, economic progress also creates other problems that cause higher demands. For example, more resources must be destined to charitable activities due to environmental pollution, people handicapped by work and car accidents, invalidity due to psychiatric problems, and diseases due to genetic alterations caused by exogenous factors, to name a few.

The second criticism of the charity system is that it is based on pure feelings of charity and compassion. This implies that whoever receives the benefit is not protected nor assured that the benefit will always be available. Furthermore, this situation can be embarrassing and even humiliating. This criticism, in the words of Von Mises, is justified by the fact that charity always follows the reasoning that charity corrupts both the giver and the receiver: the giver by auto-glorification and the receiver by humbling and weakening oneself.

This statement should be contextualized since generalizations cannot be made, nor can the reason be shown for its existence and presence in human action. Hence, the inverse interpretation can also be made: some people who receive charity do not feel humiliated by it and are very thankful, just as some anonymous donors do not seek retribution nor do they auto-beatify themselves. We can only state that charity exists, has existed for hundreds of years, and does not seem likely to decline.

Religion & Charity

Greeks & Charity

According to Veyne, several conjoining factors produced the unique and opportune outgrowth of Hellenic philanthropy. First, Greeks regarded private wealth as a public trust. Second, ruling elites vied for honor via personal donations to embellish civic administration. Third, aspiring citizens emulated elite donors’ gift behavior to gain status for themselves. Fourth, ordinary Greek citizens asserted their traditional entitlement to notables’ benefactions. In return, plebeians skillfully offered deference to the generous while humiliating recalcitrant donors. Finally, insurmountable popular animus toward taxation for civic amenities made their provision incumbent upon wealthy donors. Euergetism was more than just extraneous or occasional “bread and circuses,” then; it became the essential “system” of Greek citystates.

This was a vital and dynamic philanthropic modus vivendi, peaceably integrating the various ranks of urban populations through the exchange of gifts. Investigating the creative force of euergetism shows how it effected enduring moral and social contracts between potentially antagonistic strata of urbanites. As Veyne insists, this makes it essential to regard ancient philanthropy, its institutions, and its material artifacts as the formative elements in a historical sociology of political pluralism.

Reasonful Giving

“No gift can be a benefit unless it is given with reason. Thoughtless benefaction is the most shameful sort of loss” (Seneca 1935). Allegiance to this axiom makes heavy demands on donors from whom Seneca expects the establishment of clear priorities in giving. Selection and distribution of necessities for the unfortunate must take precedence over delivery of mere embellishments to life or frivolous, ephemeral entertainments. Indiscriminate Greek modes of liberality are now condemned as grossly irresponsible.

They neither satisfy real public needs nor generate the deep gratitude between benefactor and beneficiary essential. The growing desire of Roman emperors to be seen as the greatest of all public benefactors led to their regulation of potentially competitive benevolent associations. Emperors built their reputations as superior donors especially by subsidizing construction of elaborate aqueduct networks and enormous bath complexes in the center of Rome and other cities (Boatwright 2000). Research on the vast architectural and symbolic scale of this largesse indicates that most munificent emperors did not give the Roman people baths out of a genuine solicitude for public welfare (Fagan 1999; Yegul 1992).

Christianity and Charity

The development of Christianity has profoundly influenced the motives of philanthropists, the formation of voluntary associations, and the ethos of self-sacrifice for individual spiritual growth and communal improvement. Investigations of Christian origins emphasize the importance of selflessness, voluntary poverty, alms deeds, and hospitality in the lives of Jesus and the church his first acolytes constructed.

Biblical scholars’ quests to recover Jesus’s original teachings have uncovered early commandments for believers to abandon all material possessions by almsgiving. Early disciples were also ordered to become more self-deprecating by alms seeking, courting rejection and abuse at every door. Here, church members’ cathartic identification with small groups of fellow believers, through loyal sharing of resources and total devotion to care of the needy, is also seen as the building block of a new faith (Johnson 1998). Early Christians worked together to universalize a personal charitable imperative previously restricted to elite members of Greco-Roman societies.

Why Charity is important?

In today’s materialistic society, charity is often seen as low priority. However the reality is that the community we live in has a huge influence on us personally – it fosters safety, responsibility and sustainability – so it is important that we take our community seriously for the greater good of humanity and for our own personal benefit. The concept is ‘to create a happy village’.

Most importantly though, you’ll gain an appreciation for what really matters – and it’s not fame or fortune! After-all, there are many high-profiled people who are great believers in charity and the planet. Bill Gates donates millions of dollars to charities, Bob Geldoff and U2’s Bono are great crusaders against world poverty, and many other celebrities offer money and their time to a variety of causes.

Yes, these people have the money to give and their image has done pretty well out of their endeavours – but at the heart of their generosity is the genuine desire to make a difference. And they do. But, you don’t need lots of money or fame to contribute to the community – we all can. It is my honest belief that we should all help those less fortunate than ourselves – and trust me, if you have the resources to be able to read this article on-line, then there are lots of people out there who are less fortunate!

Whether this help is financial through appropriate donations or through donating your time as a volunteer doesn’t really matter, but we should all feel some social responsibility to do something. Everyone can do something. You can do something. If you don’t have the time, donate. If you can’t afford to donate money, volunteer and offer your time or services.

Charity What it's not?

It’s not a favor that the giver does to the receiver; i.e. there is no need on the part of the giver to have an overwhelming feeling of auto-glorification
It’s not a way of glorifying ourselves among our fellow human beings.
It’s not supposed to be a passport to heaven as a good doer.

Know the Charity – A Concept