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
PHILANTHROPY
TO TRADITIONAL CHARITIES
Nonprofits in the first of my
targeted fields are represented by the United Way in Santa
Barbara and San Luis Obispo and the Boys and Girls Club in
Santa Monica (which has no local United Way branch). Only
Santa Barbara's United Way made available fund-raising data
from which I could calculate contribution statistics; I
therefore report new urban economy contributions to the
Santa Barbara charity in Table 1 and report verbal estimates
from traditional charities from the other two research
sites. Below and in subsequent tables, I am less concerned
to assess how generous individual firms and
executives are (i.e., what most nonprofit staff wants to
know) than how particular sectors align with certain
nonprofit fields. Therefore, I report contributions per
total firms in the local sector (and not the smaller
group of contributing firms); the reader can read across
each row to see which sector gave the most (indicated in
bold text) per total firms and, in parentheses, in absolute
dollars.
Table 1:
Contributions per firm (total contributions) to
Santa Barbara County's United Way
|
software
|
entertainment
|
tourism
|
banks
|
corporate
|
$142.80
($20,135)
|
$0.00
($0)
|
$0.00
($0)
|
$320.73
($16,357)
|
employee
|
$823.43
($116,104)
|
$0.00
($0)
|
$38.62
($25,606)
|
$320.73
($16,357)
|
Note: Individual gift
amounts were calculated using mean values of
reported gift ranges. Reported gifts only include
the top 20 corporate gifts, the top 30 corporate
employee gifts, and individual gifts over $1,000
(honored in the "leadership circle" ranks), which
combined represent 48% of the 1997 campaign
total.
Source: Contribution amounts come from Santa
Barbara County United Way, 1997-98 Thank You
Report. Total local firms derived from InfoUSA Inc.
(1998).
|
Although Santa Barbara's
software sector gave significant employee gifts, a few firms
and individuals skewed its generosity for reasons I explain
later. Otherwise, the traditional urban business community
set a philanthropic standard that new urban economy firms
did not meet. Besides their corporate-level significance in
Table 1, banks in Santa Monica contributed about 10% of the
largest traditional charity's 1997 income, equal to software
and entertainment donations combined; likewise, banks gave
more to San Luis Obispo's United Way than any new urban
economy sector. In Santa Monica, six software companies
contributed roughly 5% (mostly in-kind gifts to set up a
computer lab) of the traditional charity's 1997 total
income. In San Luis Obispo, only the oldest software firm
and the largest local internet service provider represented
software in the ranks of notably charitable businesses.
Table 1 shows no entertainment philanthropy, although this
is unsurprising given Santa Barbara's minuscule sector.
Entertainment-heavy Santa Monica offers a more typical
picture; roughly 5% of the Boys and Girls Club's 1997 income
came from four entertainment firms (a few other
entertainment firms gave much smaller gifts). Tourism
philanthropy to traditional charities appears to be
negligible; one Santa Barbara hotel offered the only cash
donation, and in Santa Monica, no tourism firms gave cash in
1997. However, Table 1 may underestimate tourism's
generosity, since informants from this sector said they
prefer to make in-kind donations; indeed thirteen other
Santa Barbara hotels and restaurants gave in-kind donations
not incorporated into Table 1.
Voluntary service to traditional
charities also suggests the new urban economy sectors lagged
behind banks and, by inference, the traditional urban
business community. In Santa Barbara, two bank executives
sat on the United Way's board (and 17 other bank executives
participated as campaign volunteers), as opposed to one
software executive and no entertainment or tourism
executives (although seven tourism executives served as
campaign volunteers). In Santa Monica, the Boys and Girls
Club board had two bankers but no one from a software,
entertainment, or tourism firm. In San Luis Obispo, the only
new urban economy representative on the United Way board
came from the largest local internet service
provider.
Circumventing the Traditional
Urban Business Community
Several characteristics of
business structure in the new urban economy inform these
patterns. The first, cited by many software leaders, is that
local philanthropy does not benefit companies serving a
nonlocal market. One software CEO told me, "If
[software] companies decide to give something away
to get visibility, it's because ultimately they want the
global PR associated with the gift." Two exceptions prove
this apparent rule. San Luis Obispo's largest internet
service provider gave because its customers are local
business, government, and nonprofit institutions, some of
whose leaders also sit on the United Way board. Also,
tourism's hidden in-kind generosity underscores its strong
dependence on local markets. Hotels and restaurants
frequently donate door prizes or auction items and loan
staff at reduced rates for fund-raising benefits. Some
tourism firms also host fund-raisers and other charitable
events, often the pretext for their in-kind donations. The
probable value of these in-kind gifts not only suggests a
greater level of tourism support for traditional charities
than indicated in Table 1, but also that raising company
profile before potential customers is not far removed from
tourism's philanthropic motives. In exchange, community
nonprofits plan their special event logistics with local
hotels and visitors and conference bureaus. As a Santa
Barbara chamber executive told me, "The hospitality industry
is interested in getting its name out locally."
Another factor for weak
philanthropy to traditional charities is implicated but not
adequately explained in a claim that many human service
executives make about software firms: these companies have
no civic responsibility because their employees and their
families do not use the charities' services. The Santa
Barbara United Way's executive director stated in a
newspaper editorial:
When
I first started meeting with CEOs of major
corporations 25 years ago, much more often than not I
heard national, state, and local business leaders talk
about the importance of services for their employees
and families being available. In the past several
years, except for a few standouts like Santa Barbara
Bank & Trust or Macy's or United Parcel Service,
more often than not the discussion never discusses
community or employee services but reaching targeted
audiences of influence (Didier 2000,
G2).4
However, undermining this
employee/service mismatch hypothesis is the fact that many
software and entertainment firms give to charities that
deliver human services like the United Way but, importantly,
which operate outside the traditional civic arena. In
entertainment, several informants told me they give
primarily to "industry standard" charities, like the
Entertainment Industry Foundation (Hollywood's equivalent of
the United Way) and the T.J. Martell Foundation (a disease
research nonprofit founded by music industry executives),
that solicit paycheck deductions and corporate gifts from
many entertainment firms&endash;often to the exclusion of
the United Way. Movie studios, record companies, talent
agencies, and entertainment industry organizations also have
their own philanthropic foundations; for example, the
National Academy of Recording Arts and Sciences (sponsors of
the Grammy awards) is the primary benefactor of MusiCares, a
national nonprofit that promotes music therapy and
education. Human service philanthropy is admittedly less
frequent in software, at least among younger firms; only one
software informant had established a corporate foundation
with a local human services component. However, amidst
growing calls for technology tycoons to share their wealth,
the emerging trend in technology sectors of "venture
philanthropy," whereby corporate donors "lend business
expertise, identify and support 'social entrepreneurs'
hungry to shake up the nonprofit world, and quantify their
results" (Kirsner 1999, n.p.), portends further neglect of
traditional charities by software leaders. "The problem with
older charities is that after awhile it's like a company.
You get wedded to one approach," one CEO/venture
philanthropist told a reporter. "Giving to the World
Wildlife Fund is a total waste of money. All of it goes to
overhead. Just like United Way" (quoted in Kirsner 1999,
n.p.).
An important factor, then, in
philanthropy to charities in the traditional civic arena (as
opposed to human services more generally) is whether
relationships exist between software firms and the
traditional urban business community. If they do, local
business leaders have a forum to urge software leaders to
give to their favored charities and engage the traditional
civic arena as the older business community does. This seems
to explain the atypical generosity of Santa Barbara's
software sector to the United Way. In Table 1, the four most
generous software firms, whose combined gifts ($112,685)
made up 80% of employee contributions and all corporate
contributions from software, have resided in Santa Barbara
since at least the mid-1980s; their corporate executives
have typically worked previously for several firms and
customarily participate in local chambers and high-tech
trade associations. Such histories of local participation do
not characterize most of the software firms I studied, as
the statement of a Santa Monica land-use attorney who sits
on the traditional charity's board suggests:
My sense is
[software firms] are either doing a lot of
wonderful things very quietly and I've missed it, or
they're not doing a lot of wonderful things. I'm not
aware of any of them taking an active role civically
or charitably, although I may be out of the loop on
that.
Similarly, entertainment's
generosity comes from donor relationships with mid-level
employees whose children use the Boys and Girls Club, a
group that does not necessarily bring high-level
entertainment executives into the "old boys network." The
president of a Santa Monica bank that manages several local
nonprofits' assets told me that entertainment firms are
"hard to reach. They haven't been here like we have. They
don't belong to any service club."
NOTES
4. This trend is more dramatic
in Silicon Valley, where the United Way branch of Santa
Clara County (the 30th largest in the nation) depleted its
$11 million reserve fund in May 1999. As the branch's
president told a reporter:
The Silicon
Valley Way of life is one of the best in the country,
but I don't know that there is a grasp on the part of
residents that there are people who need basic social
services&emdash;shelters for battered wives, mental
health services. I dealt with a number of companies
whose officials said, "Our employees make this much
money and they do not need these services, so why are
you here?" (quoted in Johnston 1999, 27)
However, United Way of America
officials noted that United Way giving is up in other
high-tech centers like North Carolina's Research Triangle
and Seattle (Johnston 1999). Back
to text.
TO
NEXT SECTION
TO
PREVIOUS SECTION
TO
TABLE OF CONTENTS
|