Giving high and giving low

Slate the other week ran a fun essay by successful business writer named Doug Smith, who proposes the creation of a legal futures market in charitable contributions.

His writeup will make many people's eyes glaze, alas, but it is an interesting concept. The idea is that someone wanting to make a donation to Favorite Charity would actually "buy" a clump of futures contracts from someone else who previously gave to that charity. Someone else wanting to make a donation would actually "buy" the clump of futures from the first person; in both transactions the charity gets the proceeds. The actual amounts involved would vary the way hog-belly futures contracts do: rising and falling as they are bid up or down in a (no doubt online) trading system.

The contracts would rise and fall in value due to the demand for making charitable gifts to that specific charity compared to others, which is the first potential social value of this: an efficient way for donors to express (and therefore be motivated to research) their conclusions about the relative merits of different non-profits. Some folks in the audience are now recoiling in horror but from me this gets a big cheer. The specific amount of each donor's tax deduction would also end up varying, which has some other interesting implications. (It's all contrived but of course so are lots of systems we take for granted, including the concept of nongovernmental not-for-profits that are exempt from taxes.)

Smith thinks that such a system governing charitable contributing would sharply increase the annual amount of philanthropy in the U.S., for a couple of reasons; could be, though I can also think of reasons why maybe not. There's no serious proposal in Congress for anything like this and the new political lineup in DC probably ensures there won't be, so for now it's just a think-tank exercise.