Corporate
Philanthropy in the New Urban Economy: The
Role of Business-Nonprofit Realignment by Leonard
Nevarez Department of
Sociology Vassar
College Accepted for publication in
Urban Affairs Review November
2000 A good deal of scholarly
research and public concern hypothesizes an inverse relation
between economic restructuring and civic sentiment. In this
scenario, economic restructuring heralds an era of rootless,
globally oriented companies with little noneconomic
attachment to the places they inhabit. Local investment in
sectors like software, entertainment, and tourism is
determined by structural shifts in information production
and discretionary consumption, not entrepreneurial energies
from Main Street. Thus, compared to the local histories and
sentimental ties held by the traditional urban business
community, firms in these new sectors lack an understanding
of "how things are done" locally. For the nonprofits serving
these communities, this civic disconnect threatens a decline
in corporate philanthropy (e.g., Galaskiewicz
1985). Urban political economy reframes
this popular hypothesis by suggesting that corporate
philanthropy signals more than local altruism. It aligns
business actors to particular nonprofits and, where the
latter speak for rival constituencies and advocate competing
visions for urban politics, embodies a quiet strategy of
business activism. Urban regime theory advances this claim
by positing that corporate philanthropy not only reflects a
political agenda but also helps businesses execute it. In
urban regimes, coalitions of public and private actors
promote various political agendas in a context of political
economic structure and local agency (Elkin 1987). In the
United States, for example, land-use home rule and economic
competition for capital investment structurally compel local
business actors to compete for and promote urban growth, but
this or any other business agenda becomes policy only
through negotiations with local public officials. To be
stable and therefore effective, urban regimes require
capacities for civic cooperation, such as selective
incentives for coalition unity, shared understandings and
identities, and a business structure that makes private
actors amenable to cooperation. Not all regime actors are
equal, however; by controlling resources like money and
access to public and private decision-makers, the urban
business community tends to set the informal rules for civic
cooperation, even when it loses policy battles (Stone 1993,
1989). By making these capacities particularly visible, the
issue of "corporate philanthropy as usual?" sheds light on
how corporate activity and alliances sustain or alter the
urban business community's traditional hegemony in urban
regimes. In this paper, I investigate
corporate philanthropy's political consequences while
heeding recent calls (e.g., Cochrane 1999; Lauria 1999) to
refocus on nonlocal forces in urban politics like economic
restructuring. In cities of capital disinvestment, for
example, even the most savvy progressive regimes can do
little to forestall the desperate quest for tax revenues and
other economic resources that give "probusiness" actors and
agendas the upper hand (e.g., Stites 1997; Swanstrom 1985).
Are progressive possibilities more likely in the places
where capital is investing? As economic restructuring in the
US increases growth in postindustrial sectors, new firms
move next to and in some cases crowd out the traditional
urban business community, that is, Main Street mainstays
from sectors like development, finance, utilities, retail,
and business services. This setting provides an opportunity
to investigate whether firms with new relations to
localities and new ways of doing business alter the
traditional business-nonprofit alignments that maintain most
urban regimes. I look at local philanthropy in three diverse
sectors emblematic of the new urban economy. The first,
software, is shorthand for industries like software
publishing, Internet services, and computer architecture
design. The second, entertainment, refers to industries that
produce cultural commodities and services for popular
consumption, like motion pictures, recorded music, and video
games. The third, tourism, includes place-based services
like lodgings, restaurants, and special visitor
destinations; the sector is sometimes called "hospitality,"
since local residents and businesses also consume these
services. I
premise my inquiry around a broader theory of three domains
for regime alignment&endash;three "legs" that, when properly
fixed, stabilize a public-private regime of
governance.1
The first is the political domain, which entails direct
relations between the business community and
elected/appointed officials. These can assume explicitly
political forms, for example, in the electoral coalitions
that support candidates and parties, or in the governmental
bureaucracies that implement local policies (e.g., Ferman
1996; Whelan, Young, and Lauria 1994). Alternately, business
and political leaders may work together in private-public
partnerships, such as local economic development
organizations, that give business actors more autonomy and
less political accountability than electoral and
governmental entities (e.g., Squires 1989). In classifying
various configurations and levels of accountability, regime
researchers have dwelled substantially on the political
domain, in part because it ultimately generates the policies
that constitutes "hard evidence" for regime research. In
this paper, by contrast, I focus instead on the capacities
for civic cooperation made possible in the second and third
domains of regime alignment. The second is the civic domain,
which entails relations between community organizations, the
business community, and political actors (Ferman 1996). Some
civic groups are blatantly political, such as grassroots
advocacy groups that oppose business community objectives or
call for urban policy that does not serve a business
interest. More often, organizations in the formal nonprofit
sector depict themselves as "nonpolitical" and refrain from
political endorsements in order to maintain tax-exempt
status. Nevertheless, community nonprofits help the
traditional urban business community promote its political
agenda in at least three ways. First, their boards of
directors provide networking and deal-making opportunities
that complement other intercorporate interlocks, such as
corporate directorates, business organizations, and policy
discussion groups (Domhoff 1998; Useem 1984). Communication
flows, local understandings are shared, and norms diffuse
through these informal networks (see, e.g., Galaskiewicz
1985; Perucci and Pilsuk 1970). Second, business leaders
socially construct a local "we feeling" by offering
financial gifts, personal service by corporate executives
and workers, and more episodic forms of business
collaboration with nonprofits (Molotch 1976, 314; see also
Cox 1999). Philanthropy thereby imbues corporate donors and
their political agendas with nonprofits' "harmonious" social
service mission (Hendon and Shaw 1987; Tesh 1984); it can
favorably influence third parties like residents and
decision-makers (Burt 1983), that is, when nonprofits do not
advocate the local business agenda outright (see Sbragia
1990; Whitt 1987). Third, philanthropy allows business to
influence the political climate by shaping the agenda of
resource-dependent nonprofits (Silver 1998; Jenkins 1998;
Haines 1984; DiMaggio 1983) and neglecting controversial
groups and causes that criticize business activities (Wright
1985; Powell and Friedkin 1983; Pertschuk 1982). Over time,
the reiteration of these functions produce a stable
alignment of certain sectors for certain causes. In the
local arena, for example, the traditional urban business
community tends to favor a regular set of nonprofit fields
and organizations, usually health and human service
charities and art museums (Himmelstein 1997; Ziner 1997;
Whitt and Lammers 1991; Useem 1987;
Galaskiewicz 1985). The civic domain occasions my first
research question: Do new urban economy firms sustain
business unity by supporting the traditional urban business
community's favored community nonprofits or, by contrast,
align themselves to a different set of community
nonprofits?2 The third domain of regime
alignment is the business domain, or the interrelations of
firms and business leaders involved or implicated in regime
governance. Urban researchers have often overlooked this
domain by assuming that businesses big and small have common
interests in local growth, either for their own business or
for the local market they serve (Logan and Molotch 1987).
Although the evidence for businesses' common growth
interests (usually dividing only over how and where to
channel growth) is robust, regime theory contends that the
unity of these interests must be produced through shared
practices, interorganizational networks, and common
understandings about the nature of community politics (Stone
1989, 175; see also Orr and Stoker 1994). Firms' amenability
to these imperatives is in turn shaped by economic dynamics,
corporate logics, and environmental conditions both within
and without the locality. I conceptualize this amenability
as business structure, which highlights what
relationships and activities they participate in to carry
out business and what firms need from the localities they
inhabit. Typically, the business structure most conductive
to uniting firms around a growth agenda involves direct and
indirect reliance on local populations, businesses, land
values, and other local relations whose growth translates
into profits&endash;traits that Cox and Mair (1988; see also
Friedland and Palmer 1984, 402) have conceptualized as local
dependence. Business structure also pertains
to philanthropy, as implied in the truism that "corporate
philanthropy is an oxymoron." Companies give charitably
because it affects their bottom line somehow. For example, a
business structure characterized by local dependence
encourages a firm to target its generosity in the community,
where it can best influence important third parties.
Alternately, dependence on nonlocal customers, suppliers,
decision-makers, and so on encourages a firm to direct its
generosity toward nonprofits with national or larger
constituencies (Himmelstein 1997). The business domain
occasions my second research questions: Do new urban economy
firms' business structures give them a different "bottom
line" interest in corporate philanthropy than the
traditional urban business community? * I thank the following for
valuable comments on prior drafts: Harvey Molotch, Krista
Paulsen, Thomas Beamish, Britta Wheeler, Todd Hechtman, Lisa
Torres, and the UAR referees. This research was supported in
part by U.S. Dept. of Interior, Minerals Management Service,
under contract 14-35-0001-30796. Back
to text. 1. I use
"domains" here simply for heuristic purposes, not to
supplant classificatory schemes for regime structures that
already exist, such as axes (public/private growth
alliances, electoral politics, bureaucratic politics: Elkin
1987) or arenas (electoral, civic, intergovernmental, etc.:
Ferman 1996). Back
to text. 2. This
question evokes recent concerns in voluntary sector theory,
which suggests that the ways in which "voluntary
organizations, the state, and the corporate sector relate
with one another is, and should be, historically and perhaps
locally specific and embedded in
socio-political-econmic-cultural context and ongoing
dynamics of change" (Ostrander 1987, 128, quoted in Whitt
and Lammers 1991, 388; emphasis in original).
Back
to text.
in Regime Politics*