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Thursday, December 30, 2004

Proposal: Federal matching funds for private tsunami-relief donations

    Posted by Adam Crouch

Update: Results! John points out that Canada's federal government has taken up my suggestion, and is matching some of its citizens' donations. I wish I'd emailed this to Paul Martin, so I could take credit :-P

By now I'm sure everyone has heard about the earthquake and resultant tsunamis, and the massive devastation they've caused. As of now, the death toll has climbed to 80,000, with no sign of stopping. 80,000. The number is so huge that it's almost abstract. To put it in perspective, that's bigger than TWENTY-FIVE 9/11s. And things aren't going to get better anytime soon, with disease, lack of clean drinking water, and a host of other problems on their way. The power of the quake itself was apparently equivalent to a MILLION atomic bombs, causing the earth to "wobble" on its axis.

In addition to the human cost, there is of course the economic cost. It's even threatened the very existence of the Maldives, famous as a posh vacation destination, whose average elevation is only 1 meter (3 feet). India's Andaman and Nicobar Islands, as well as their tribal inhabitants, haven't faired well either.

The Tsunami Help Blog that has sprouted up is also a good source of information about where to donate.'s donation page for the Red Cross has already raised US$3.5mm, from 58,000 donors.

Regarding relief efforts, there has been a big uproar lately over comments made by Jan Egeland, the UN's Undersecretary-General for Humanitarian Affairs. Regarding the relief efforts by rich nations, he said:
We were more generous when we were less rich, many of the rich countries. It is beyond me why we are so stingy. Actually foreign assistance for many countries now is 0.1 or 0.2 percent of gross national income, that is stingy.

Now, he may well have been right, in the sense that the initial pledges from the rich nations was not nearly enough to deal with the disaster. But it's always poor form to look a gift horse in the mouth. A day or two after his comment, the total pledged has reached US$250mm.

(Note: Australia has been very un-stingy, with an impressive amount coming not only from the national government, but from the state governments as well. At least those high taxes are being put to good use.)

Update: "Factory" points out in the comments that Australia's tax burden isn't actually as high as I thought it was.

In the US, Egeland's comment was taken as a direct swipe. I had to hunt down his actual quote to find that he had talked about rich countries in general -- all of the coverage I had seen/heard made it appear as though he was aiming directly at the US. This has caused an understandable amount of outrage -- the US gave 40% of all international aid last year, for a total of US$2.4 billion, just from government aid. Even that figure is dwarfed by private donations from US citizens. That's estimated at a staggering US$34 billion every year -- 1/5th of the GDP of Denmark. Denmark is typically cited as the most generous nation, because they spend the highest proportion of their GDP on government foreign aid -- 1.04%.

To the sure, the US's initial pledge of $15mm was pretty meager. After Egeland's comment, the amount was upped to $35mm, with a promise of more to come. I'd assume that the additional funds were already in the works, because of how quickly the number was upped.

There are two primary issues facing the US government now. The primary one, by far, is how to help the most -- how to free up more resources to give more, how to identify specific needs, and how to ensure that the aid is used most effectively. A distant second is how to solve their PR problem: how to make sure that the US has an image that's in line with the donations and aid of the government and its citizens.

My proposal: government matching funds.

For every dollar that an American citizen/resident donates, that dollar will be matched by the government. Matching pledges has been shown to be extremely effective in non-profit fundraising, because people get double the bang for their buck, leading them to donate more.

The federal government already does this to a certain extent for all charitable donations. Charitable donations can be written off on your taxes, decreasing your taxable income by the amount donated. So in a sense the government is matching 30 cents or so for every dollar donated, and this is commonly cited as one of the main reasons why private giving is so huge.

How much stronger would this effect be if the money was matched dollar for dollar, or even 50 cents for every dollar? The publicity and excitement that would surround such an announcement would get people riled up, break through the post-holiday clutter, keep the disaster at the front of the mind, and drive a lot more private donations. The US government would be able to do a lot more good than if they just donated that money straight out.

In addition, it would be a great solution to the PR problem. It puts the spotlight directly on the generosity of the American people. The goodwill would likely generate healthy dividends, and could even benefit American security, through decreased recruitment and sympathy for terrorism.

Certainly there are major hurdles to making this happen. If the government were to match donations to private charities, there would have to be an "officially approved charities" list, and there would be disputes about whether religious charities could be on it. A more feasible way would be to set up a government-administered fund that people would donate to, and that the matching funds would also go into. There would certainly be a decent amount of administrative overhead and hassle, but that should be overcome by the increase in donations. There would, of course, have to be some sort of cap, because it would be impossible to get $34 billion worth of aid approved by Congress, on top of the $2.4 billion in there to begin with. But that's pretty standard when matching funds are given.

The biggest roadblock, however, would be the fact that it would probably set a precedent. When future calamities occur, from natural disasters to terrorist attacks, there would be calls to do this again. There would be cries of, "isn't this suffering large enough? Don't you care about the victims?" Taken to the extreme, that would get us to a spot basically identical to today, where the government provides matching funds for all charitable donations, just that they would be matching at a higher rate.

The precedent issue is certainly a concerning one, and I don't see a clear resolution for it. But the idea of setting federal matching funds for private tsunami-relief donations is certainly an interesting one, and something that deserves further discussion and consideration.

Hopefully we'll see a few gazillionaires stepping up to the plate to do this on a smaller scale, matching funds for specific charities. Some have already given large sums as outright donations, so we can probably expect it to happen.

Sidenote 1: Many companies match their employees' charitable contributions. Be sure to check with your employer.

Sidenote 2: Can you imagine if this had hit on Dec 26, 1999, less than a week before Y2K? There would have been mass panic, around the world -- a significant portion of the world's population would have believed that the apocalypse was beginning. At least be thankful that the panic and damage has been confined to one region, rather than multiplying the world over.

Further Reading
- Fascinating and very detailed map of the tsunami's path - Japan's National Institute of Advanced Industrial Science and Technology
- FAQ about the earthquake - The US Geological Survey, which also has loads of technical data about the quake online
- Should you send money to tsunami victims? - Tyler at Marginal Revolution
- Concerns About Wasted Tsunami Aid - NPR

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