The modern welfare state has shrunk the voluntary sector.  In the 19^th century voluntary organisations and friendly societies were the main providers of health, education, and social security for the poor.  Without government intervention they would have grown enormously with increasing personal wealth.  Instead they withered as the state took over much of their functions.  This may be a good thing although no one knows whether the voluntary sector would have done better or worse than government.

However, the charities that remain have often supplemented their charitable income with government money. This involuntary charity is bad.  It has turned many charities into little more than arms of government, stifled free enterprise and reduced diversity.  Not only do the employees of such “charities” follow government priorities rather than those of their voluntary donors, but as civil servants they are unable to make moral judgments.  This encourages dependency in their clients who receive aid whether or not they are making an effort to help themselves. 

The table shows the proportion of state funding received by the larger charities in the UK in 1997-8.   The proportion will have increased since then.

The only sizeable charity that refuses all state funding is the Royal National Lifeboat Institution (RNLI).  It was granted financial assistance from the Board of Trade in 1854, but found the strings attached so onerous that 15 years later its directors declined all subsequent government funds.  It is hard to believe that the quantity and distribution of the lifeboats around Britain’s coasts would have followed the preferences of Britain’s sailors any better if they had been provided by the state.  They would probably have been much worse.  

The voluntary sector is usually the best placed to relieve distress.   Only if it clearly cannot cope should government take over.   Charities should resist government funding, and keep their independence

Table: Income from government as a percentage of all income for selected charities

Reprinted from Involuntary Action; how voluntary is the voluntary sector? by Robert Whelan, Istitute for Economic Affairs. London  1999.