Who Makes a Profit from Charity?
In the aftermath of the earthquake that devastated Haiti in 2010, a money game was played by all involved in the relief effort.
I had begun my effort for duty free imports a week before with my first elucidation on the correlation of “dignity,” for adolescent boys who had so recently seen their parents crushed like so many eggshells, to my T-shirts now sitting in a dusty depot in demurrage. Picture me here leaning forward for emphasis, “While they may bed down on canvas cots and clean themselves with poisoned water, I have never met a Haitian adolescent yet who did not prize looking smart.”
“No,” I continued, “not a penny to their name and bereft of parents, but God forbid a ragged shirt or, for that matter, stepping out without an aura of bootlegged l’eau de toilette.” At which point, Monsieur Labonté slowly rubbed his eyeballs, and when he removed his hand from his face, it was as if to say, “Spare me. Please.” And then the grin as if between friends who were both in on a joke.
So Monsieur Labonté was a gro moun in the local parlance. In mine, “the lanky pitcher who knew the game.” “You again,” he had laughed each time I had broken past his gatekeepers with a new development in the case — yet again another revised airway bill, held on high.
Monsieur Labonté. Impeccable cuffs, a gold adornment on his wrist, yet seemingly above the fray, even though I could not imagine that airport customs was not enmeshed with temptations. I sensed he was quite entertained by my old white man’s insistence that there must be a way. With my being careful never to suggest the actual fastest way since I knew that any chips I had in the game were laughable. And would a man of such easy humor ever dare to do covert business with an international “benevolent” who claimed right on his side in all such matters?
So anyway, what was the game we shared? Here it is: The manufacturer has an overstock of T-shirts and would like a tax write-off. So it values them at full market price and donates them to a charity. The enterprise gets good publicity as a “caring” organization. Or “giving back to those in need” as they like to say. And a dollar for dollar tax exemption.
The airline then accepts them and puts them on a plane, which has empty space in the hold. They also value that space at market rates and then claim that as a tax exemption — while they also advertise their good deed among the public.
The charity then accepts the T-shirts because they can be included in their annual report as “overseas relief” and thus added to their bottom line as “program value.” This process serves to reduce the ratio of admin to program costs, which is measured by industry watch-groups and subsequently allows the charity to allege that it spends less than 10% of its donations on administration costs — “90% of all you give goes to the needy overseas,” they proclaim on their website.
One fine day, the goods arrive in the airport depot in some God forsaken country, which, in turn, taxes them; in many cases, at the same rates as if they were commercial imports. The charity pays the tax and assigns that cost as “program costs” as well. Some charities that have no spare cash try to negotiate the tax downward. Thus the tale of my adventure above. The trick here is that the local government has you “coming and going” since if you dig in too hard and too long during the negotiations for the best price/tax, you will exceed your free storage limits (usually 20 days) accorded the airline cargo. After 20 days in Haiti, the daily rate is $300 a day.
If and when you liberate the cargo, you offer it to the orphanage, which may find it “inappropriate” (such as one delivery I received of sports bras to the Shia heartland in Iraq) or the wrong sizes (such as a container of American men’s large footwear to Vietnam). Thus the option for our orphanage: to ignore the agreement with the donor and sell the T-shirts in the local market and use the cash for what God only knows — antibiotics or crucifixes.
Needless to say, I could have avoided all this venality by simply using a fraction of the money spent on import taxes to teach computer literacy for the kids in this impoverished orphanage.
On this particular day, Monsieur Labonté and I had managed to push the ball forward. He would apply a different tax rate to the T-shirts. “But please get me another airway bill which calls them something else. Textiles are our biggest export here; you don’t want to take away jobs from Haitian workers, do you David?”
“But these are free,” I argued. “The orphans wouldn’t have them at all if they had to pay.”
I had begun to leave and Monsieur Labonté, now beside me, ever so slightly nudged me toward the door. “Bring me the new airway bill and I’ll see what I can do.” The game was starting to get tiring for both of us.
*[Excerpted from Avant Garde of Western Civ by David Holdridge, published by Press Americana.]
The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.