Corporate Philanthropy in the New Urban Economy:

 

 

The Role of Business-Nonprofit Realignment
in Regime Politics

 

by

Leonard Nevarez

Department of Sociology

Vassar College

 

Accepted for publication in Urban Affairs Review

November 2000

 

 

METHODOLOGY

 

To study corporate philanthropy, I used ethnographic and quantitative methods to compare business support for community nonprofits (a) among the three new urban economy sectors and (b) against local banks, a control group from the traditional urban business community. With their centrality in financial and civic networks, local banks are leading institutions in the traditional urban business community (Kono et al. 1998; Mintz and Schwartz 1985, 196). However, they do not intervene in city politics as much or strategically as developers, who are usually the largest business contributors to electoral campaigns (e.g., Warner, Molotch and Lategola 1992, 96-98) and philanthropic areas like as the arts (Whitt and Lammers 1991). Thus, banks offer a reasonable baseline of significance with which to compare the new urban economy sectors.

Out of the vast array of community nonprofits to study, I purposively selected three fields that exemplify differing civic traditions and political consequences. Importantly, the first field is found inside the business community's traditional civic arena, whereas the last two lie outside. The first, traditional charities, includes venerable health, welfare, and social service providers like the United Way, the Boys and Girls Club, Red Cross, and the Police Activities League. These nonprofits characteristically have a politically quiescent or centrist thrust that makes them suitable for generating a "nonpolitical" ideology that contrasts to the "political" efforts of the business community's progressive opponents (see Hyland, Russell, and Hebb 1990; Rose-Ackerman 1980; Piven and Cloward 1977). Philanthropy and voluntary service to these traditional charities also confers upon business leaders a measure of status in the local "old boys network." A Santa Monica restaurateur explained to me how this worked: "You were president of the Boys Club, then you were president of the chamber, and then you got on the city council, and you did all the favors for all your buddies that you knew." These charities can also reinforce local dependence when, for example, the traditional urban business community's favored nonprofits join local chambers of commerce and become clients of local businesses like banks and phone companies. For these reasons, corporate philanthropy to traditional charities serves as an indicator of conventional business-nonprofit alignments in the traditional civic arena.

The second community nonprofit field, environmental organizations, refers to locally headquartered organizations (as opposed to local chapters of national groups) that address ecological impacts of human systems, habitat and animal conservation, and other environmental issues. In the research sites, they mobilize grassroots activism and legal action against unwanted development and growth, and they advocate local policies, like environmental regulations and land-use restrictions, that businesspeople usually lambaste as hazardous to job growth and a "probusiness" climate (Pertschuk 1982). For this reason, growth coalitions and traditional industry often view environmental groups as "the enemy." Corporate philanthropy to environmental organizations thus indicates an unconventional and more progressive alignment between business and nonprofits that lies outside the traditional civic arena.

The final community nonprofit field, higher education, refers to local universities and community colleges, institutions that assume greater significance in the new urban economy as high-tech leaders look to them to conduct basic research and train future workers. At least in the places I studied, higher educational institutions have had poor "town and gown" relations and weak links to the traditional urban business community. Therefore, corporate philanthropy to higher education represents a second site for business-nonprofit alignment outside the traditional civic arena, albeit one with perhaps less ideological antagonism to the business agenda than environmental organizations.

I gathered quantitative data on two forms of philanthropy&endash;financial gifts and personal service by either the firm or top-level executives&endash;for the largest nonprofit institutions in the three targeted fields at each of the three research sites, for a total of nine nonprofits. To place these data in their ethnographic context, between 1996 and 1998 I interviewed 75 informants whom I organized into two pools. The first was a snowball sample of 43 executives or business organization leaders from the software, entertainment, and tourism sectors. I asked them about how and why they supported community nonprofits through philanthropy and collaboration, as well as comparable attitudes and behavior that others in their industry held. The second informant pool consisted of 32 purposively sampled community leaders, such as traditional business leaders, local politicians, and community nonprofit staff; it also included executive and/or development officer from the nine targeted nonprofits, as well as five environmental organizers and two social service nonprofit executives from other prominent community nonprofits. I also gathered ethnographic data from corporate and organizational brochures, Internet websites, and newspaper articles.

Before I examine business-nonprofit alignment in the three targeted fields, I address how typical philanthropy is among these sectors. Although my nonrandom sampling technique prevents me from making probablistic generalizations, at least three fourths of my entertainment and tourism informants gave some kind of money, in-kind gift, or service, even when their generosity was modest. By contrast, only between one third and one half of my software informants said their firms undertook philanthropy of any kind. Given that my sample favors industry leaders, these rough levels suggest that for software firms, philanthropy does not appear to be normative behavior. In nonphilanthropic firms, informants usually offered explanations like, "We don't have the time or the money right now to participate very fully." Executives from younger companies frequently cited having insufficient profits for philanthropy (although this factor did not always deter younger or unprofitable companies from giving, or encourage older or profitable companies to give). As for their lack of voluntary service, many executives cited a lack of free time. In a typical comment, a software CEO told me, "I travel for maybe 40% of my time, so I can't get involved in projects where there are regular meetings. I end up dropping the ball because I've got to do my job."

 

TO NEXT SECTION

TO PREVIOUS SECTION

TO TABLE OF CONTENTS