CAN CHARITY FILL THE GAP?

By DAVID VAN BIEMA ANN BLACKMAN/WASHINGTON, JENIFER MATTOS/NEW YORK JEANNE MCDOWELL/LOS ANGELES AND LISA H. TOWLE/RALEIGH

SIX YEARS AGO, RANDY ENOS WAS A cook in Brooklyn, making $10 an hour. Then he and the mother of his son Joshua split up, and Randy's own mother died. He felt a terrible void and decided to move. A restaurant-association hot line touted jobs in California, so Randy packed up Josh and went there. But the jobs didn't materialize, at least not at $10 an hour. Randy ended up washing cars at a garage in Glendale. As the work was seasonal, he got behind on his rent and one day received an eviction notice. "The scariest part," says Enos, 33, "is that if I hadn't found a place to stay, child-welfare services would probably have taken my son away from me.'' One shelter he tried accepted only women and children. But then he got lucky: he and Joshua were taken in by Gramercy Place Shelter in Los Angeles.

Gramercy, it turned out, is more than a room and a bath. It provides job training and counseling on issues from drugs to family planning. It arranged special tutoring for Joshua, who is in second grade, and even located a Cub Scout troop for him. Randy could earn "shelter money" to buy necessities, while 80% of his $490 a month from Aid to Families with Dependent Children (afdc) check was set aside by the Gramercy staff to build up some savings so he can move out and start paying rent on his own place. That will happen within two weeks, when he will return to his Glendale job and expects to train as a forklift operator. "I feel I have been blessed," Randy says, "with people here who have helped me out."

But for families such as the Enoses who hit bottom next year or seven years from now, Gramercy Place may not be there. It is a program of Jewish Family Service of Los Angeles, which, like many large private charities, makes up a major portion of its multimillion-dollar budget from government grants for everything from special education to alcohol treatment to emergency housing. Much of this money could disappear because of proposed federal budget cuts. Sharon Demeter, who runs the shelter, tries to imagine what she would cut first if the money were to dry up. First the education and job-training programs would go, then the caseworkers, who make crucial one-year follow-up calls to be sure the shelter's graduates are still doing all right. "The prognosis has always been fabulous for the people who come from this shelter,'' she says. But, contemplating the future, she is worried that "this place will have to shut down, completely shut down."

It is the giving season. Salvation Army Santas stand sentinel at city corners; heart-rending solicitations swell the mails. Americans at home with their families or shopping for holiday gifts are wondering, once again, whether they shouldn't share some of their good fortune. Unless something unusual happens, the Chronicle of Philanthropy estimates that charitable contributions this year will average something like $265 per person, or 1.27% of Americans' income--a total of $108 billion. By this measure Americans are the most charitable people on earth. Even so, deep gloom suffuses the country's charitable groups. Those who help the poor and desperate believe if the budget-balancing plan goes into effect as passed by Congress, charities and their clients face a potent double whammy: a drop in direct government support for charitable organizations just as demand for their help surges because of simultaneous cuts in federal entitlement programs. Bob Smucker, chief lobbyist for the public-interest umbrella group Independent Sector, says grimly, "It is the worst of times. And it is the worst of times."

The deficit-obliteration bill passed two weeks ago would, according to the Office of Management and Budget, cut $515 billion over seven years from programs affecting the poor, from afdc to Medicaid to Food Stamps, and give the states latitude to cut more. Even if President Clinton vetoes the bill and extracts concessions from Congress, reductions will probably be significant. Republicans maintain that the old programs are fatally flawed and that the new, pared-down ones will push people to escape poverty. But few who have studied the issue doubt that the transition will be difficult. And those who work in charity expect a new cascade of the homeless, the hungry and the abused to spill out of the government's shrinking safety net and turn to the private sector for help. Sharon Daly, head lobbyist for Catholic Charities USA, predicts that the need for her group "will just about double."

At the same time, Daly's organization will face its own federal cuts. Private charity isn't entirely private, and hasn't been for decades. In the 1960s, when the government greatly expanded its services to the poor, it turned much of the money--and the responsibility--over to those assumed to have an expertise in helping. As a result, 63% of Catholic Charities USA's $1.9 billion annual budget last year consisted of money from federal, state and local governments, including grants from eight different federal agencies. In return, the charity provided such services as battered-women's shelters, day care, home care for the elderly, foster care and adoption services, employment training, services for the homeless and assistance for people with aids. Most other large charities concerned with the poor (as opposed to nonprofit cultural or advocacy groups, which are sometimes also called charities) get somewhat less government money than the Catholic group, but the average probably still exceeds 31% of their total annual budgets. According to Alan Abramson of the Aspen Institute, the congressional cuts could cost American for-the-poor charities as much as $70 billion during the next seven years.

A report by Independent Sector derives some human calculations from that figure: 137,055 fewer meals over the next seven years for the elderly poor than would otherwise be provided by Jewish Family Service of Los Angeles; 349 fewer families served in the same period by San Antonio's Family Service Association child-abuse program. The Coalition for the Homeless in New York City, which serves 750 dinners a night--a bowl of chicken stew, an orange, fruit juice and a piece of bread--says funding for that program may drop a third.

The distress with which charities view the cuts varies more or less directly with the amount of federal funding they receive, although none seems happy. At the Association of Lutheran Social Ministry Organizations, which receives more than half of its $2.5 billion annual budget from federal grants, executive director Joanne Negstad compares the situation to an "earthquake" and a "hurricane." But Colonel John Bate of the Salvation Army, which is only 15% federally funded, is more stoic: "Over the years we have had to learn new ways to meet the needs of the people. We may have to revise our methods again. That's the challenge." Most groups will attempt to re-create a version of their federal partnership with the newly empowered state governments. But the total pot will be considerably smaller, and the confusing shakedown will occur at exactly the same time as the welfare system is devolving to the states. Lester Salamon, director of the Johns Hopkins Institute for Policy Studies and a longtime researcher on charity, thinks the Republican leaders of Congress welcome the chaos because they are intent on dismantling government involvement with charity on any level. "If the conservative agenda is to be fulfilled," he says, "they must cut back--in truth eliminate--such involvement. The first step is to return the responsibility for the partnerships to the states. Of course the states won't be able to handle it, the programs will die, and they will have achieved their goal. "

Yet on the face of it, at least, charity would seem to have no greater friend than House Speaker Newt Gingrich, who has said he has great tasks in mind for it. A New York Times op-ed piece last February quoted the Speaker as saying, "We must replace the welfare state" with a "strategy of dramatically increasing private charities." In a March interview with David Frost that touched on welfare reform, Gingrich was asked about "people who just aren't able to find a job opportunity." He replied, "One of our goals, candidly, is to increase the total volume of private charity." Gingrich's office says his position has not changed since that time

IT MAY NOT HAVE. BUT ANYBODY who interpreted his remarks literally (as many did) to mean that charity would make up for welfare cuts dollar for dollar would be gravely disappointed. Such a feat would be patently impossible, "like asking a child with a toy beach bucket to fill a huge canal," mutters Negstad of the Lutheran group. Arianna Huffington, the Gingrich acolyte who chairs the Center for Effective Compassion, a group dedicated to such issues, admits that "right now the private sector is unable to make up the difference." Many conservatives, especially those influenced by Gingrich's favorite author, Marvin Olasky, would argue a less preposterous variation on the theme: there is so much flab and inefficiency in both welfare and the big charities that small, nongovernment-funded groups, in sufficient number, would get better results.

Olasky, a little-known academic at the University of Texas, rocketed to Washington stardom when Gingrich read his book The Tragedy of American Compassion (Regnery Publishing) and pronounced it "great." A history of American charity, the book picks as its Golden Age the period around 1890. At that time, Olasky reports, most charity involved extensive personal contact by the charitable with their wards. This, in his view, had multiple advantages, which he alphabetizes as Affiliation, Bonding, Categorization, Discernment, Employment, Freedom and God. Perhaps the most important are categorization and discernment: late-19th century givers had the time and inclination to separate the "deserving poor" from drunkards and other idlers, granting simple succor to the former and steering the latter to more rigorous programs of personal (and often religious) salvation. Much of this disappeared when the government, prompted by the growth of the cities and the Depression, took over "charity" in the 20th century. Lacking discernment, Olasky reported, charity became handouts and then entitlements. By the 1960s, federal poverty programs were a mere money-distribution agency. To the drafters of the Great Society, not quizzing the poor about their moral qualifications for alms seemed like a stride forward for human dignity. To Olasky such anonymous compassion was worse than not giving at all: it bred generations of dependency.

Nor is Olasky particularly impressed with the private charities that government now funds. "The private programs have become government look-alikes," he says. "They tend to lose the personal touch, stop challenging people directly as they did before and lose their spiritual edge." He far prefers groups like CityTeam Ministries in San Jose, California, which runs alcoholism treatment and food programs, operates a men's shelter and houses 52 homeless families in its own apartment building. CityTeam accepts no federal grants because "we would be prohibited from having a spiritual element'' to the programs, says president Patrick Robertson. Instead, its workers operate on a "personal missionary" concept, persuading friends and families to underwrite their salaries, so CityTeam can boast that 70% of its $7 million budget goes directly to the needy.

In a perfect Olaskyan world, the government's role in helping the poor would shrivel, and groups such as CityTeam would "replicate" by the thousands across America. They would do so on a tremendous wave of charitable giving that some conservatives appear to believe will occur almost spontaneously in response to the cutbacks. Leslie Lenkowsky, head of the Hudson Institute think tank, notes a bump in giving during the budget-cutting Reagan years and suggests that "with a return to the economic and tax climate of the 1980s...a repeat performance is not inconceivable."

HIS CONFIDENCE PROVOKES GRIM smiles from those who have been tracking the field. Giving USA, a publication of the American Association of Fund-Raising Counsel, registered a 3.7% rise in all charitable giving in 1994 over 1993, but the figure includes contributions to cultural institutions and other nonpoverty-related causes. Giving for "human services," the category most closely associated with poverty work, dropped 6%. A poll by Independent Sector found that voluntarism, which also saw a boomlet in the late '80s, declined 5% in 1993 from 1991. In the same poll, 73% of respondents worried about having enough money for the future, compared with 57% in 1988. Says Smucker: "People seem to be more insecure about their financial well-being. And the more worried they are, the less they give."

At least a few conservatives seem a bit nervous about whether those people will give enough, fast enough. Olasky, for one, believes "anyone who says we can go through this transition and no one is going to be hurt is not only smoking but inhaling." Similarly, Republican Senator Dan Coats of Indiana is worried that as it stands, the Republican program could lead to "a social Darwinism that I think would leave most Americans pretty cold. It's one thing to say government is inefficient in use of tax dollars and has had some pretty poor results. It's another to simply say, 'Therefore our only solution is to eliminate the government effort.'"

Coats has introduced legislation to be taken up next year that would allow each citizen to subtract $500 from his or her tax bill and send it instead to any private group that spends 70% of its funds on the poor. "We're going to deliver $95.9 billion dollars [to individual charities] over five years," he predicts. His plan has the support of Olasky and progressive Republicans such as former Education Secretary William Bennett, who helped draft it.

But a similar proposal under discussion this year failed to make the final budget bill. Moreover, Coats says he intends to make up the estimated $96 billion tax loss by further reducing welfare block grants to the states by that amount. Claims Salamon of Johns Hopkins: "That's simply shifting money" out of one account for poor people and into another. Moreover, the flat-tax proposals circulating in the Republican ranks would be disastrous for charities, since they contain no tax incentive for private giving.

None of this should be of great concern to Glenn Bailey, who runs the Crossroads Urban Center in Salt Lake City. The largest emergency food pantry in Utah, Bailey's center fed an estimated 30,000 people last year, and is mostly supported by churches, foundations and individuals. Yet Bailey dreads the proposed federal cuts almost as much as the more government-dependent charities. "It's simple mathematics," he says. The number of clients will go up because "people won't be eligible for welfare at a time when they need [it]." If the other local food pantries, which rely heavily on federal funds, were "crippled and had to close, folks would not quit being hungry," he observes. And he's not sure his donors will jump at the chance to make up the difference. "Churches and private charities are already stretched to the maximum," Bailey says wearily. "They are not going to be able to make up billions of dollars. There is no way private [giving] can handle that. It's a bad argument." He pauses, then adds, "And that will become painfully obvious to average Americans when they see levels of pain and suffering never anticipated."

--Reported by Ann Blackman/Washington, Jenifer Mattos/ New York, Jeanne McDowell/Los Angeles and Lisa H. Towle/Raleigh