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A couple weeks ago the Nudge blog proposed letting Americans direct a tiny portion of their tax dollars to social programs of their choosing in an effort to strengthen their connection to government. Last Sunday, Gerard O’Neill proposed letting Irish citizens decide how to spend the country’s €914 million Irish Aid budget.

In the case of Irish Aid, I see it working like this: at the start of the year each registered voter is given a voucher worth their part of the total Irish Aid budget — about €286 each, given a population of 3.2m aged over 18. Each citizen can “spend” their voucher during the year, by giving it to any one of the Irish NGOs registered with Dochas. The charities can advertise their activities in developing countries (as they already do) in order to attract voucher donations. Citizens should also be able to elect to pay their voucher directly by standing order to a charity of their choice, giving the charities some sense of continuous funding…

I would suggest that Irish charities champion my proposal — or something similar — themselves, because if they don’t, they face the possibility of experiencing the “crowding out” effect. Recent research shows that for every $1,000 that charities receive from government, private donations fall by $560. This is mainly because charities invest less effort in fundraising, and also because private donors see the state funding and figure their own donations won’t make enough difference.

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