BP, the company that caused the worst environmental disaster in U.S. history, has opted to funnel tens of millions of dollars through state governments rather than private charities doing the bulk of the work in the Gulf Coast region. By embracing government bureaucracy over private efficiency, the company is forcing charities struggling to respond to the enormous human needs—needs created by BP’s catastrophic spill—to rely on government to deliver the funding they must have to continue their crucial and irreplaceable work.

BP announced recently that it was sending $52 million to four state governments for behavioral health support and outreach programs. It has provided just $1.1 million to Catholic Charities Archdiocese of New Orleans, the largest social services provider in the region.

The charities have let BP know their needs. BP received an $11.5 million proposal from 27 non-profit organizations in June, but has not yet responded. Two-thirds of that money would provide direct assistance for food and housing, and the rest would support an increased demand for counseling. BP did not return a call or e-mail seeking comment on the proposal.

Since the early days of the spill, charities have taken the lead role in offering services. They continue to be the primary source of assistance to individuals suffering from the spill. Acknowledging this fact, Gov. Bobby Jindal (R-La.) announced he would send $6.6 million of BP’s money to Catholic Charities and other private organizations.

The need is real, and large. At one distribution site, the Mary Queen of Vietnam Community Development Corp., people started arriving seven hours before the building opened so they could collect one of 25 food vouchers provided each day. A lottery system was later implemented to ease the strain, but they need many more vouchers to even begin to reduce the need.

The money from the state of Louisiana will certainly help, but more is needed. Catholic Charities operates five oil spill relief centers, offering a host of badly needed services, and has already spent $2.2 million.

According to its most recent update, Catholic Charities has provided emergency assistance to more than 23,800 people and has distributed $587,247 in food vouchers and $78,770 in emergency food boxes. The charity’s affiliate, Second Harvest Food Bank, has provided more than 305,000 meals in eleven Louisiana parishes. Nearly 8,000 people have visited a crisis counselor for problems ranging from anxiety to depression.

This is what most worries the chief executive of Catholic Charities in the Archdiocese of New Orleans, James Kelly. “We as a community are coming out of Katrina, Gustav, Ike, and the tidal wave of the recession,” Kelly explained at his office, a few blocks from the iconic Superdome. “It's not exactly what you need when trying to rebuild a community. Now we're hit with the oil spill. I'm concerned about the mental health of the people—their psyche."

But unlike a devastating hurricane, which comes and goes, there’s no telling when some people will be able to return to their livelihoods. The spill has hit fishermen and oystermen particularly hard, leaving them fearful that they’ll be feeling the oil’s impact for years, but it has affected many other businesses nearly as much.

President Obama’s deep-water drilling moratorium and new regulations on shall-water rigs haven’t helped to reduce their anxiety. Businesses are losing income, and there’s widespread uncertainty about the future. "The moratorium is adding salt to the wound,” said Martin Gutierrez, executive director of neighborhood and community services for Catholic Charities. Gutierrez would know. He’s on the road all the time, interacting with individuals at the charity’s oil spill relief centers.

Catholic Charities is also paying close attention to mental health based on research after the Exxon Valdez spill in Alaska. Pastoral alliances in that state advised Kelly that it was very hard for people to move on with life until they’ve dealt with the emotional and psychological toll.

That won’t be easy to do without additional assistance. The financial package BP provided to state governments was a good start—albeit a little late—but there’s no excuse for ignoring the request from private charities. These organizations are providing a vital service and addressing a problem BP created.

Private charities have a history of providing superior services to government. They are “mediating institutions,” as Peter Berger and Richard John Neuhaus called them in their book, To Empower People, able to understand, engage, and help people precisely because they are closer to them and more personally engaged with them than a government agency can ever be.

Charities “have intimate knowledge of those in need—they understand social problems in up-close and personal ways,” writes the Heritage Foundation’s Ryan Messmore.

Driven by deep convictions and compassion, such organizations can provide loving forms of assistance and care that government programs cannot offer. And they often do so for less money. Smaller and more flexible than most government bureaucracies, local congregations and charities can also spawn creative social innovations that benefit those in need.”

That’s the first loss from the imbalance of BP’s choice of funding. BP’s reliance upon government also crowds out the charities. The mere perception that government is doing more discourages people from giving to private charities.

A dollar of government spending supplants up to 50 cents in private donations, notes Arthur Brooks, president of the American Enterprise Institute, in Who Really Cares. Messmore points to a study showing that President Franklin D. Roosevelt’s New Deal programs caused a 30 percent drop in church-based charity from 1933 to 1939 as government expanded.

Natural disasters such as a hurricane bring an outpouring of private giving. Commercial disasters don’t. Nonetheless, charities forge ahead, doing what only they can do.

“Do I believe in the resiliency of the people of Louisiana? Absolutely,” says Kelly. “They are phenomenally resilient people.” But those people are being severely tested right now, and the longer BP waits to provide aid for private charities, the longer they will suffer the effects of BP’s mistakes.

Rob Bluey directs the Center for Media and Public Policy at The Heritage Foundation.