PRIVATE-SECTOR PUBLIC PURPOSE INVESTMENTS
POTENTIAL FOR THE DENVER METROPOLITAN AREA
ARCHITECTURE & PLANNING AURARIA LIBRARY -
SETH M. G OLDST EIN AUGUST 12, 1982
PRIVATE-SECTOR PUBLIC POTENTIAL FOR THE
PURPOSE INVESTMENTS AND THEIR DENVER METROPOLITAN AREA
Presented in Partial Fullfillment of Graduation Requirements for the Degree of Master of Planning and Community Development
University of Colorado at Denver Coliege of Design and Planning Denver, Colorado
_ By Seth M. Goldstein
August 12, 1982
For Marjorie and Jennifer with love.
We are convinced that the private sector must take the initiative in urban revitalization. We must either negotiate a creative balance with government or waive our right to challenge.
Mr. Richard Wiley,
Executive Vice President, j First National Bank of Boston
TABLE OF CONTENTS
1 Philanthropy and the Private Sector 5
Brief history of "social responsibility" 7
Corporate philanthropy today 7
Factors determining contribution levels II
II Private Sector Public Purpose Investments 12
Types of public purpose investments 12
III Current Denver Situation 22
Fiscal condition 23
"New Federalism" 24
Current Needs 26
Political factors 26
IV Survey Analysis 29
Corporate profile 30
Contributions programs 31
Level of contributions 32
Perceived needs 34
Urban planning and urban revitalization 35
Project preferences 36
Denver Partnership Inc. 37
Public purpose investments 37
Source and adequacy of information 38
V Summary and Recommendations 42
Proposed goals for the metropolitan area 45
American government is undergoing a period of change. Two of the more important changes taking place are a redelegation of responsibility between the states and the Federal government for a variety of programs and secondly, the total elimination of a number of long-standing programs of particular interest to our cities. These changes, along with the increasing pressure of inflation, are forcing a search by municipalities of all sizes, for new sources of funds.
Taxation has traditionally been the main source of revenue upon which cities could depend. Though taxes have never been appreciated by the public, until the last decade or so they have been reasonably acceptable and of sufficient magnitude to meet most municipal needs.
With the introduction of Revenue Sharing in 1972 by the Nixon administration cities found their traditional funding sources supplemented. Local governments came to depend heavily on revenue sharing funds. Mcny learned to rely far too heavily on these revenues to pay for basic day to day city operations.
In recent years conditions have changed. During the past two decades local government has been forced to face some stark realities. Tax bases have shrunk as more and more industries have moved out of the central cities to places where land was available for expansion and transportation problems were minimized. Middle and upper income residents left the cities to move to the suburbs as an escape from the negative aspects of urban life. The new suburbanites became commuters who put wear and tear on city facilities and needed various city services, but who paid taxes elsewhere.
The move to suburbia did not include everyone. The least educated, the people with the lowest incomes, the minority groups, and those with the most
need for police, fire and welfare services became an increasingly large proportion of the central city population due to an inability to move or find jobs in the suburbs.
Many cities found it more politically expedient to continually create new programs or to build new facilities than to use city funds for more mundane purposes such as maintenance of older city infrastructure. As a result many cities today find themselves with decaying facilities that will require hundreds of millions of dollars to repair.
Another factor that is placing the cities in a difficult financial position
is the tax revolution of recent years. The American public has become more
vocal and more politically active in its opposition to increasing taxation.
Proposition 13 in California, Proposition 2fc in Massachusetts, and Colorado's
seven percent limit on budget increases are examples of how successful this
opposition can be. San Francisco for example expects to be faced with a $75
million annual loss in city revenues as a result of Proposition 13. Boston,
Massachusetts has aiso found itself in difficulty. The city's school system went
broke in 1981 and had to be assisted by the legislature which appropriated $9.4
million to keep the schools open two additional weeks. The city anticipated
having to layoff 400 city employees as well. The frightening thing is that this occurred a full three months before Proposition was to take effect. The purpose of the proposition was to limit property taxation rates. Faced therefore, with tax revolts, decaying infrastructure, increasing welfare roles, decreasing tax bases, inflation, and the elimination of a number of federal programs the cities are now being forced to make decisions concerning cuts in services end to search for new revenue sources.
While Denver is not in the same financial condition as Boston, San Francisco,
New York, or Cleveland it is faced with the same basic problems only to a lesser degree. The city has recently had to face the fact that it has both a ban on annexation due to the Poundstone Amendment, and a stabilizing population with little hope for growth due to a lack of space for in-fill development.
Inflation has eaten into city budgets to the point where capital improvement funds have had to be transfered to the general fund for operating expenses. This is a practice Denver can ill afford due to a backlog of needed repairs on streets, viaducts and buildings. Additionally, recent city budget cuts and the loss of federal "701" funds have brought about the loss of approximately half of the staff of the Denver Planning Office.
Even though Denver's problems are not of the same magnitude as those of some other major American cities they do have the potential for becoming severe. Alternative sources of funds for needed projects will have to be found and steps are being taken to involve the private sector in meeting these community needs. Many people are looking to the business community as part of the solution.
The purpose of this thesis is to explore the attitudes of the Denver business community, first in terms of its overall willingness to make charitable contributions, and secondly, and more specifically, its willingness to support planning and urban revitalization in the Denver metropolitan area. Recommendations will be made on how to gain access to these funds, what types of organizational structures would be acceptable to the private-sector for working with the community, and lastly how to maintain private-sector interest in public sector issues.
Ninety-five of the largest businesses in the metropolitan area were surveyed to determine attitudes relating to contributions and public purpose investments.
The attempt was made to determine future levels of contributions as well.
Denver is not in the same chronic condition as many of our other large cities are, however, it is apparent that conditions can worsen in the years ahead. Private sector public purpose investment may be a solution to part of the city's problems.
I would like to thank the following individuals for their valuable assistance during the preparation of this thesis. Ms. Lynn DeBlois, a consultant on public/private partnership, Washington, D.C.; Mr. Robert Yeager, Director, Urban Design Team, the Denver Partnership, Inc.; Mr. Rex John, Director of Community Affairs, Petro-Lewis Corporation; Mr. Patrick Massengill; Mr. Alan L. Center, Director, Denver Planning Office; Mr. Marty Flahive, Director, Denver Office of Policy Analysis; Ms. Karen Hilbert for her excellent typing; and Mr. Herbert H. Smith, Professor, Advisor and friend for his support and advice throughout this entire process.
Ever since colonial days, foreign visitors have commented on the extraordinary impulse of Americans to form voluntary groups and devise non-governmental institutions to serve community purposes...most of the recognized advances in American society owe their beginnings to ideas and actions generated within this sector.
John Gardner, Chairman, ^
The Independent Sector, 1980.
Philanthropy and the Private Sector
President Reagan has consistently expressed the need for private-sector solutions to public-sector problems. This has set off a debate concerning what the cities need and what the private-sector should do, or is willing to do to meet this need. Specifically the president is asking for increased volunteerism, increases in corporate and individual philanthropy, and the development of public-private partnerships. The President's Task Force on Private-Sector Initiatives has been established for the purpose of encouraging these activities. The Task Force defines the private sector as business, organized labor, religious and civic groups, educational and philanthropic institutions, service and neighborhood organizations, trade and professional associations, individuals and families.^ This definition will be used to identify the private-sector for the purposes of this study.
Philanthropy of one sort of another has always existed in America.
Traditionally the majority of such funding has been contributed to education, health and human services programs. Lesser amounts have gone to civic activities, and the arts. While planning and urban revitalization have not been totally excluded they have captured only a relatively small portion of the funds available.
This historically low level of funding for planning and urban revitalization is of particular concern to our nation's larger cities. The reason for this concern is two fold. First, planning and large scale revitalization is necessary in many of our larger cities if they are to ever regain their positions of importance and to move ahead as centers of commerce and culture rather than exist as large welfare communities. Secondly, President Reagan has reduced funding for, or has totally eliminated, a wide range of programs that have provided financial assistance to cities for such activities as planning, housing, mass transit, historic preservation, urban revitalization, economic and community development, and environmental protection.
Mr. William C. Norris, Chairman and Chief Executive Officer of Control Data Corporation delivered the keynote address at the 1982 National Planning Conference of the American Planning Association. During his remarks on public/private partnerships Mr. Norris indicated that as a result of President Reagan's budget cuts it was anticipated that everything from human service programs to environmental protection would experience a significant decrease in federal support by 1984. He estimated the total anticipated loss at
approximately $90 billion. He further indicated that contributions by the private sector would have to increase 150% between 1980 and 1984 in order to make up for this loss. The actual increase from 1980 to 1982 oniy amounted to 38%. Obviously significant improvement is needed if the private sector is to compensate for the current and projected budget cuts.
By far the majority of contributions originating within the private sector have come from individuals (averaging 75% annually). In I960 contributions by individuals totalled more than $42 billion. During the same period the total contributions from corporations and foundations only accounted for an additional $5 billion.^
The concept of "social responsibility" held little meaning for America's corporations during the period between the Industrial Revolution and the end of World War I. With the need to get our country back in order, and to help our returning military personnel to solve their war related problems and re-establish themselves in society, the nation's corporations started to assume a new role in community life.
The traditional philosophy that "business's only business is business" started to loose ground. Figures are not available on contribution levels prior to 1936, however, the idea of "corporate" or "social responsibility" went through its infancy in the period between World War I and World War II.
As shown on Table I. the overall trend in corporate contributions was an upward one between 1936 and 1972. The fluctuations found on this table relate mainly to corporate profits. The percentage of net taxable income contributed to charitable causes between 1961 and 1972 for example averaged almost 1.1%.^
Today there are more than 1.5 million U.S. corporations. Of these, only 20-25% make cash contributions and only 6% of these contribute more than $500 per year, in 1981 corporations contributed $2.7 billion, with nearly half of all corporate philanthropy originating from less than 1,000 companies.
As a percentage of pretax profits, U.S. corporations have contributed approximately 1% over the past decade. U.S. Internal Revenue laws prior to the Economic Recovery Tax Act of 1981 allowed corporations to deduct up to
Table 1: Corporate Contributions and Corporate Net Income before Taxes
before Net Income
Texes'1 Amount before
Year_______ ____ (S Millions) (S Millions) Taxes
1936 ................................. 7,771 30 0.39
1937 ................................. 7.830 33 0.42
1938 ................................. 4,131 27 0.65
1939 ................................. 7,173 31 0.43
1940 ................................. 9,348 38 0.41
1941 ................................ 17,700 58 0.33
1942 ................................ 21,500 98 0.46
1943 ................................ 25,100 159 0.63
1944 ................................ 24,100 234 0.97
1945 ................................ 19.700 266 1.35
1946 ................................ 24.600 214 0.87
1947 ................................ 31,500 241 0.77
1948 ................................ 35,200 239 0.63
1949 ................................ 28,900 223 0.77
1950 ................................ 42,500 252 0.59
1951 ................................ 43,900 343 0.78
1952 ................................ 38,900 399 1.03
1953 ................................ 40.600 495 1.22
1954 ................................ 38,300 314 0.82
1955 ................................ 48,600 415 0.35
1956 ................................ 48.800 418 0.36
1957 ................................ 47,200 419 0.89
1958 ................................ 41,400 395 0.95
1959 ................................ 52,100 482 0.93
1960 ................................ 49,700 482 0.97
1961 ................................ 50,300 512 1.02
1962 ................................ 55,400 595 1.07
1963 ................................ 59,400 657 1.11
1964 ................................ 66,300 729 1.09
1965 ................................ 77,800 785 1.01
1966 ................................ 84,200 805 0.96
1967 ................................ 79,800 830 1.04
1968 ............................... 87,600 1,005 1.15
1969 ................................ 84,900 1,055 1.24
1970 ................................ 74,000 797 1.08
1971 ................................ 83,500 365 1.03
1972 ................................ 99,200 1,009 1.02
Reflects total consolidated corporate net income before taxes.
Sources: Department of Commerce, internal Revenue Service, The Conference 3oard..
5% of their taxable income to charitable causes.
As a result of Mr. Reagan's tax reforms corporations are now allowed to contribute 10% of their taxable income. The act reduces the taxable income of corporations because it offers them more favorable depreciation rates and a number of other business incentives. It was felt that unless the allowable percentage for charitable contributions was increased those corporations already contributing at the 5% level would decrease their giving. It is too early to tell what effect the new act will have though it is possible that the higher allowable percentage in combination with increased pressure from non-profit groups, local governments and the President's Task Force on Private Sector Initiatives may yield increased contributions nationwide. In 1979 the total nongovernmental contributions, (corporate, foundation and individual including bequests), equaled $43.3 billion. Figure I shows how these funds were distributed. It is interesting to note the percentage of the total that each contributed corporations 5.6%, foundations 5.17% (note: there are only 600 foundations in the U.S. as opposed to 1.5 million corporations), bequests 5.15%, and individuals 84%.
The distribution of corporate contributions shows a marked difference from the distribution of funds from all sources combined. Of particular interest from the viewpoint of possible funding for planning and urban revitalization is the greater emphasis placed on civic activities (11.6%) by corporate contributors. This compares very favorably with the 2.8% indicated when all private sector contributions are considered.
Giving patterns differ markedly from one company to another. As indicated earlier approximately 98% of all U.S. corporations make no charitable contributions or contribute less than $500 annually. The other end of the spectrum is American Telephone and Telegraph whose $38.2 million budget for philanthropy
DISTRIBUTION of NONGOVERNMENTAL
CONTRIBUTIONS 1979 Total: $ 43.3 billion
Total corporate, foundation and individual giving, including bequests.
Arts & Humanities 6.2 %
Civic & Public 2.8 %
Other 6.8 %
DISTRIBUTION of CORPORATE CONTRIBUTIONS 1979
Civic Activities 11.6 %
TOTAL : $ 835.5 million
Culture a Art 9.9 %
Other 5.8 %
1979 CONTRIBUTION by SOURCE
SOURCE- AMERICAN ASSOCIATION OF FUND RAISING COUNSEL, INC.
made it the largest single donor in the business community in 1979. Second place was taken by the Exxon Corporation with contributions of $38.1 million.
Only six private foundations in the United States give away more money annually.
Certainly the amount of available funds plays a big role in determining
how much a company can give. However, there are a number of less obvious
factors that effect the level of contributions by a given company, and more
importantly for Denver, in a given community.
Probably the primary factor after consideration of the amount of funds
availcble is whether a community houses the company's national headquarters
or merely a regional office. Those with a headquarters office consistently fare
better than those lacking this type of facility.
Another factor is the age of the chief executive officer (C.E.O.). The
older the C.E.O. the higher the level of contributions made. One can only
speculate on the reasons behind this pattern. The religious affilliation of the
C.E.O. also influences the level of contributions. Companies led by a C.E.O.
who is Jewish seem to contribute larger amounts. Finally, the personal interests of the C.E.O. or chairman can play a significant role in determining the distribution of funds.
The most recent manifestation of the concept of "corporate responsibility" is Private-Sector Public Purpose Investments (also sometimes referred to as Corporate Urban Ventures). The list of possible corporate activities that fall under this heading is quite lengthy. It is likely that the size of the list will increase over time as additional needs and new creative thought come to bear. A more detailed discussion of Private-Sector Public Purpose Investments follows.
The business sector should step up as part of the private sector to participate fully in the emerging concept of public/ private partnerships. Government can't do it a!one...the problems are as much ours as government's...very simply, we are a resource that can be effective and, over time...will be used...voluntarily or otherwise.
Mr. John Filer, Chairman, Aetna Life & Casuality Company; Chairman, jq National Alliance of Business, 1980.
Private-Sector Public Purpose Investments
Public purpose investments made by the private sector are "business decisions or specific projects undertaken to benefit both the company and its community."'' These activities take place because they may assist the company to reduce turnover, increase productivity, improve the company's image, and aid in making the city a better place in which to live and work. Finally, such actions can create a better business climate thereby benefiting both the company and the residents of the city.
The activities that fall under the heading of public purpose investments can be considered to be decisions divided into two basic catagories, as shown in Figure 2. First are those that relate to general business decisions and include the use of company resources such as financial holdings, business operations and prestige. The second type is project-related decisions.
Placement of Capital
RESOURCES AVAILABLE for
CORPORATE URBAN VENTURES
SOURCE- S.R.I. INTERNATIONAL (1980)
Considering the fact that most contributing businesses give approximately 1% of pretax earnings to social causes it is easy to see how general business decisions could have more impact than traditional philanthropic giving. These decisions involve much more of the company's ccpital and other resources and are made far more frequently than philanthropic decisions.
The use of financial holdings is considered a public purpose investment if
company money is utilized in any of the following ways:
1. Deposit of funds in local banks that invest locally local deposits increase the assets of a bank making it possible for the bank to borrow more or at better rates. The return of profit to the local community and the opportunity to develop and maintain jobs locally is enhanced.
2. Targeted stock and investment portfolios This involves purchase of stocks and bonds that return profits to the local community. Investments of venture capital in local businesses is also a possibility. Again such activities help to generate jobs and incomes locally.
3. Purchase of bonds or other public-sector issues This activity involves the purchase of municipal bonds or investment in other financial activities to assist local, general or special-purpose governments. The corporation enjoys a tax exemption on interest earned while assisting local government to meet its infrastructure needs.
4. Investments in real estate This involves the purchase of land destined to be the site of a new plant or office facility. These facilities generate jobs in construction, operations and maintenance for local residents. 5
5. Direct lending to local companies This type of lending is designed to assist new, locally generated businesses in avoiding failure during their development phase. Small local businesses are responsible for
most new jobs in any given locale. The survival of these businesses therefore is important to the overall economic health of the community.
6. Lending to municipalities Lending of short-term ccpital to meet various occasional obligations aids a municipality by allowing it to avoid borrowing from the commerical market. The need to seek a commerical loan may cause the government to either increase its tax rate or to develop other revenue sources to meet its obligations. Such borrowing also increases the ratio of debt to assets which can negatively effect the city's bond rating and bonding capacity. Corporate lending therefore allows the municipality to meet its obligations while maintaining its ability to use its bonding capacity for other needs.
7. Placement of pension and retirement funds This is similiar to targeted investment portfolios and making deposits in local bcnks. Placement of these funds with a local company helps to develop that company's capacity to borrow or grow.
A similar application under consideration in Colorado is the use of State employee retirement funds to provide mortgage money that is very much needed in today's economy.
8. Location decisions The siting of a new plant or headguarters in a depressed neighborhood either to generate jobs or to stimulate additional investments in the neighborhood can have significant impacts. If President's Reagan's "enterprise zone" concept is implemented there will be definite benefits for the companies involved in terms of tax credits, wage allowances, etc.
Corporate operational decisions have the ability to be used to benefit both the company and the community. The three generally accepted decisions that fail in this catagory are:
1. Employment Policies Company employment policies that encourage employment of youth, handicapped, disadvantaged, or minority individuals provides much needed job opportunities. Other policies allowing short-term or vacation jobs, flextime, the provision of training, and a policy requiring hiring directly from the local community round out the package. The net effect is the establishment of an employee "drawing area" which assists the company in meeting its personnel needs more easily.
2. Procurement and purchasing Companies can establish policies requiring purchasing and procurement of equipment, supplies and other materials necessary for operation from the local community. Such a policy can even be directed specifically toward minority owned firms, or firms located in unstable or poor neighborhoods. This type of policy may provide the company with the opportunity to maintain more control over the design of equipment or goods it buys, and may allow for lower transportation and handling costs while supporting local business, or bringing income into depressed neighborhoods.
3. Provisions of services to the community and employees The provision of such services as day care centers, counseling programs for family crisis, alcoholism, or retirement and consumer issues helps to maintain the stability of the local community and possibly decrease accidents and absenteeism or increase productivity. Health maintenance services can also be provided through clinics and insurance programs.
Each of the above services can be made available to company employees as well as community residents.
The use of company prestige is the last type of business operations decision used in public-purpose investment. The prestige of a company can have a significant positive impact on the success of community projects. Businesses have considerable influence within a community. Company support for a project can stimulate other businesses to become involved and can generate citizen
support as weli.
The second type of corporate public-purpose investment relates to projects that are beyond the company's normal scope of business. There are two kinds of resources that a company may use for such projects donation of funds and in-kind assistance.
1. Donation of funds Donations are probably the most frequently used resource for corporate philanthropy and community projects. The big advantages to the company are that the amount contributed is tax deductible up to the limits of the law (10% of pre-tax income), and is easily traced for cost accounting purposes.
The company can choose a stance of high or low visibility when making cash donations. If it chooses to downplay its role it can pass the donated funds through another organization.
2. Loaned facilities, services, equipment, personnel and knowledge -Every company by the very nature of its business possesses certain skills, knowledge, equipment, and personnel that may be of use to a non-profit agency or for a given community project. Though not as traceable as cash for cost accounting purposes in-kind contributions allow companies to become more closely involved with a project than a company that ends its involvement as soon as a cash contribution is made.
Many things fall within this catagory i.e. computer time; use of meeting rooms, telephone systems, storage facilities, trucks, tools etc; services such as mailing lists, graphic work for promotional materials, printing, mail room services, corporate discounts on purchases; loaned executives to assist with needed management skills or other technical assistance; loaned manpower to provide workers for specific projects; loaned knowledge to assist in the resolution of problems relating to a community need or project.
A wide variety of public-purpose investments have been made across the United States incorporating one or more of the above resources. In order to
put into perspective the types of projects that could be undertaken in Denver it will be helpful to review various projects or activities that have already taken place in other parts of the country. The following cases excerpted from the report Making and Measuring Corporate Urban Ventures. (SRI International, 1980), are typical of what could be attempted in Denver.
* Taft Broadcasting Company of Cleveland, Ohio, and Birmingham, Alabama, has purposely chosen to locate its facilities in low-and moderate-income neighborhoods, and to use its profits to establish improvment programs in those neighborhoods.
Southern Bell Corporation decided to stay in downtown Atlanta, Georgia, and to expand its headguarters and operating divisions there. This decision saved 2,000 direct jobs and many more retail and service jobs while allowing the company to avoid the costs of moving and the risks of losing some employees.
Aetna Life and Casuality Company formed a Corporate Responsibility Committee, which guides the business decisions of the company in selecting projects for investment financing among the decisions made by Aetna within its normal line of investments are:
$1.7 million to finance the rehabilitation of a 17-year old office building in downtown Bakersfield, California, as part of the city's downtown redevelopment effort.
$250,000 eguity investment in a minority-owned venture capital firm in New York City to support the firm's efforts to increase minority ownership of radio and television stations.
$4.5 million to a major hospital in the Bronx, New York, to finance construction of a six-story parking facility for employees, patients and visitors, meeting a serious need for parking and helping to reduce traffic congestion around the hospital.
$1.3 million to finance the renovation of a historically significant in-town private residence in Houston, Texas, for use as office space. The building had been threatened with demolition, but will instead be restored and preserved.
Brooklyn Union Gas Co. began buying and renovating houses, then
selling them at a cost sufficient to recapitalize the working capital in its "Cinderella" program.
Citicorp has lent financial counseling and cash flow management expertise to two Bronx housing firms.
United California Bank has a program called Small Cities Project, which pulls together experts from major accounting firms, municipal trade associations, and universities to assist small cities throughout California in financial management. UCB attracts more local government accounts through this project.
Citicorp, through the Loaned Executive and Professional Program, gave the equivalent of 12 man-years of loaned executives to several local governments of the New York City area. This ultimately helps to protect Citicorp's holdings in municipal bonds, securities, and mortgages.
Thirteen companies joined together to form the City Venture Corporation in Minneapolis-St. Paul. This company was initiated with $4 million in capital and has as its objective the creation of jobs in inner cities. City Venture is a profit-making (and therefore dividend paying) corporation and has joined the effort spearheaded by Control Data Corporation to operate profitable inner-city plants, provides part-time and flexible-time employment on a large scale, create jobs at a lower cost than normal for industry, and stimulate the formation of other small companies.
Citicorp loaned executive expertise and helped form a Chamber of Commerce to promote and develop the merchant's interests in Sunset Park, New York. This helps protect Citicorp's mortgages and working capital loans in tfie city.
Lincoln National Life Insurance Co. formed Lincoln Life Improved Housing Inc., a housing corporation that renovates and constructs houses in Fort Wayne, Indiana. All of the costs of loaned executive time to counsel the organization ere absorbed by Lincoln National, and the profits from earnings are fed back into the company; but the parent company earns ail of the "profits" from the 5-year tax write-offs available.
National Central Bank and the Armstrong Cork Company decided to jointly build a 240,000-square-foot bank-office complex to arrest deterioration in downtown Lancaster, Pennsylvania. Three years later, they and other businesses including Educator's Mutual, an insurance company formed the Greater Lancaster Corporation for the development of the city. Over $100 million in investments have been made in Lancaster since the two companies began this project.
Fourteen companies joined together to form the Minority Purchasing Council, to help minority-owned firms compete for business contracts. They now hold a trade fair that brings business purchasing departments together with minority suppliers.
Aetna Life and Casualty and the City of Hartford, Connecticut, joined to build the $55 million Hartford Civic Center.
Twenty-five local businesses and the City of Baltimore joined to build both Charles Center and Inner Harbor I.
In St. Clair, Michigan, local business leaders formed the St. Clair Progress Corporation, a local development company. Through this LDC, the Small Business Administration helped finance 16 small businesses in the town's downtown area.
Aetna Life and Causalty created the Community Rehabilitation Corporation to demonstrate that it is possible to rehabilitate and sell apartments in the City of Hartford, Connecticut, in a neighborhood that was considered unsellable.
The Local Initiatives Support Corporation was organized in New York City in 1979. The purpose of the group was to direct corporate resources toward grass-roots neighborhood organizations. Initial funding of $5 million in seed money was contributed by the Ford Foundation and cn equal amount from private corporations. Today its budget is $30 million and it supports numerous chapters around the country. LI SC packages its funds and makes them available as grants or loans to wp^l established local organizations involved in development projects.
The South Bronx Development Organization Inc., is a non-profit public corporation created to plan and manage the development of a disintegrated urban area. The organization has received some $2.5 million of federal and state monies supplemented by foundation and project grants. SBDO serves as an intermediary between the residents of the South Bronx and the world of private and non-profit organizations that are trying to bj-^ng new life to the 20 square mile area populated by 500,00 people.
These then are examples of some of the projects that have been undertaken by companies either individually or in conjunction with other businesses or government agencies. It is impossible to state whether such projects will ever be attempted in Denver. Specific local situations and creativity will dictate the direction public-purpose investment will take locally. The following chapter will more closely examine the existing situation in Denver.
By no substantial growth potential 1 mean no new subdivisions and commercial development on the scale that some suburban areas have reported in recent years. We are lucky to keep our heads above water with the slight property-tax revenue increases we do generate.
Mr. Mike Licht Deputy Manager of City and County of
Revenu^ ^ Denver
Current Denver Situation
Denver is the largest city in Colorado with a population of 492,365 As the hub of the state's largest urbanized area and the state capitol it contains the region's greatest diversity of educational, cultural, and recreational amenities. Unfortunately the city also suffers from the region's most severe physical, social and economic problems.
At first glance Denver appears as if it would be free of financial problems. The construction boom of the last decade has left in its wake numerous high-rise towers developed as offices by the many energy companies that have chosen Denver as their rocky mountain regional headquarters. Some downtown housing has also been developed, in the form of high-rise condominium complexes. Denver enjoys high employment due in part to the influx of new companies and has so far avoided most of the economic downturn experienced by most eastern cities.
As late as May, 1978 as much as 83%^ of Denver's land area had already
been developed, thereby minimizing the opportunity for significant in-fill development. The ability of the city to annex additional land has been severely limited as a result of the Poundstone Amendment which took effect December, 1974. This, of course, has also limited the city's ability to increase property tax revenue.
Various other state laws also prevent the city from realizing greater
revenues from property taxation. The general fund property tax is limited to
a 20-mill maximum by statute. Since 1964 the city has levied 18.6 mills. An
increase in the mill levy to the allowable 20-mills would only generate an
additional $3.25 million however. The state imposed ceiling would have to
be raised significantly in order to meet the city's needs.
The property tax problem is compounded by the fact that state law currently
mandates assessing property at 85% of 1973 values. This is due to change in 19
1982. Property values as of 1977 will be used for assessment purposes between
1983 and 1987. Starting in 1988 this will change again to 1981 values. This
obviously will improve Denver's fiscal condition considerably. If the city could
use 1981 values currently in its assessment calculations it would immediately
realize an increase in its general fund of almost $58 million, or about 200
percent, to a total of $101 million.
Mayor Bill McNichols has opposed increasing the mill levy on the basis that such an increase would be an added burden on the poor. The mayor has also opposed increasing the city sales tax from 6.5 percent to the allowable 796 for the same reason.
in addition to the problems of inflation, property taxation, and a ban on annexation the city is faced with the fact that it has 'lost population during the last decade (22,313 persons or -4.3%), in addition its infrastructure is in definite
need of repair. Because of increasing costs the city has chosen to transfer
capitol improvement funds to the genera! fund to cover operating expenses. This is an action that the city cannot afford. Denver is faced with a backlog of needed repairs on its building, streets, and viaducts. Restrictions on weight and/or speed have had to be placed on some of the viaducts due to their extremely poor condition. Millions of dollars will be needed in the near future to pay for the necessary repairs.
Additional problems have arisen as a result of the actions of the Reagan Administration. The administration is making major reductions in many domestic federal programs. These reductions are to be accomplished through decreases in funding for some programs, administrative changes designed to reduce administrative costs for others, and by consolidation of categorical federal programs 22
into block grants.~
While a full discussion of the administration's program for budget reduction is beyond the scope of this paper it should be understood that the proposed changes will have a very significant impact on Denver, if they in fact take place. The proposals relating to welfare and medical assistance will increase the stress on the state budget and will therefore make it even harder than it has been in the past to institute such things as state revenue sharing a program that could be very helpful to the cities of Colorado.
The welfare/medical assistance programs fall within the "Tradeoff Com-
ponent" of the President's "New Federalism". Through this "tradeoff" the Federal government would pay for most of the Medicaid health-care program and continue funding the food stamps program. The states would take over responsibility for Aid to Families with Dependent Children (AFDC) the country's primary welfare program.
The second part of the "New Federalism" is the "Turnback Component". Under this component more than 30 federal programs relating to education,
transportation, community development and the social services will be turned
back to the states with a $28 billion Federalism trust fund to finance them.
Research on the New Federalism proposals has been completed by the Budget and Management Office of the City and County of Denver. Their analysis
shows that the state will be short as much as $189 million in FYI984 alone if the turnback takes place.
In addition the proposal has been made to eliminate Revenue Sharing at
the federal level and to turn it back to the states in FYI984. The Administration feels that the President's economic program will eliminate the need for this assistance. Unfortunately state legislatures around the country have a poor track record when it comes to showing concern for the nation's cities. The general feeling is that many legislatures may just let the concept of revenue sharing die. Denver's request for a locally shared income tax has already been refused by the legislature and has been ignored as well on a request for a locally shared sales tax.
All in ail it appears that the biggest impact of a "New Federalism" will be a worsening of the financial position of both the states and their cities. It wiii be some time yet before the final package will be decided upon, but alternative funding sources, and hard decisions on whether to continue various programs and services will no doubt have to be made.
The private-sector may be an alternative source of funds that can be used to make up for part of the federal budget cuts. No one can predict how much money may eventually be available since it is unknown how the many facets of the President's tax reforms cs they relate to business may interact and effect
one another. However, no matter how much is contributed the private-sector will expect that their money will be used in the most efficient manner end have the greatest possible impact. It is therefore necessary to rank the existing needs in Denver in order to take care of the most pressing ones first.
Working with the hypothetical idea that if "sufficient resources were available to meet ell the city's needs in a given period of time, this would be the ranking of priorities", Alan Canter, the Director of the Denver Planning Office ranked the city's needs as follows:
1. Housing (Particularily inner city)
3. Economic Development
4. Environmental Concerns
5. Human Services
8. Historic Preservation
9. Improvement of the Arts
Mr. Canter indicated that he has some problems with the concept of using private-sector monies for public purposes however. First he feels that the planning or revitalization needs identified by a public agency may not necessarily be those of a particular company or group of companies. This he feels is particularily true when considering applied research on generalized types of projects (i.e. improvement of traffic flow throughout the county). He feels that the self-interest of a company will cause it to concentrate on more narrowly focused projects of identifiable benefit to that company.
Both Mr. Canter and the Mayor oppose the use of private assistance for traditional public functions, in Mr. Canter's case this is due to the fact that his office must continually deal with developers on such things as zoning variance
requests, etc. To accept financial support for a project from a developer could possibly place the Planning Office in the position of having a conflict of interest if not in fact, at least in the eyes of the public.
In the case of the Mayor his opposition may be politically motivated though this was not expressed by Mr. Canter. A politician ccn control a situation much more effectively if government funds are used than when private-sector monies are involved.
The planning office has never received private-sector monies for any purpose. However, it should be noted that no real attempt has been made to market the Planning Office, again because of a fear of compromising its position on future issues or negotiations.
It cppears therefore that the door is effectively closed on receiving private-sector support for public planning in Denver. This is not the case however when considering the traditional type of public/private partnership.
Mr. Marty Fiahive, of the Denver Office of Policy Analysis, indicated that traditional partnerships are welcomed in Denver. By "traditional" we mean a situation in which a developer wants to develop a parcel for a particular purpose and the city accommodates him with the necessary zoning, an industrial revenue bond, a fast-track permit process or some other assistance.
In light of the fact that the Denver Planning Office recently lost 15 staff positions, it would be understandable if some attempt were made to develop other funding sources. This has not and appears will not be done based on the prevailing philosophy, if the source has to be the private sector.
Other cities are more progressive. Baltimore for instance has put into operation "Project Blue Chip-in". The city identified a broad range of needs for which it lacked funding. The list was published and made available to the
private-sector. In effect they were supplied with a "shopping list". According to Ms. Donna Sorkin of Public Technology, Inc. the project was reasonably successful. The city received funding for staff, studies, or projects that it could not otherwise pay for and the companies involved received publicity in return for their help.
Other cities have also received funding from local companies or foundations to support planning and revitalization activities. The question of possible conflicts of interest could be minimized, if not totally eliminated, if careful consideration is given to selecting appropriate companies from which to seek assistance. Companies that are firmly established in the community and are not actively involved in development, should be reasonably "safe". This is especially true of many energy companies that have recently settled in Denver. These companies have already completed, or at least started construction on, their office buildings. No significant zoning or other requests should be expected in the foreseeable future. Their business dictates that most of their activities take place outside of Denver namely exploration, drilling and mining. Considering the size of the investments made by these companies in Denver, and the unlikelihood that they will be making requests of the Planning Office, it would appear that they could be approached for support of studies or projects that would be of benefit to Denver without fear of conflict of interest. Many of these companies are also very sensitive to their public image, (though this was not reflected strongly in the survey), and such contributions could enhance this image considerably.
Many of these very same companies have expressed an interest in planning and revitalization as expressed in their contriubtions policies and guidelines. The following chapter will analyze the survey conducted for this thesis and will point to the private-sector willingness to support these activities.
The principal alternative to private philanthropy is government fundings. The sources of government funds, it must be emphasized, are tax paying individuals and business enterprise. It is in everyone's self-interest to support society through private social investments rather than through the complex and costly redistribution of tax dollars by government.
The Business Roundtable March I98P7
In order to develop some idea of the potential impact of public purpose investments on the Denver metropolitan area a survey was conducted. Based on the assumptions that:
1) the largest employers in the area would also be the companies with the largest revenues, and
2) that those companies therefore have the capacity for having the greatest contributions capability, individually or collectively, it was decided to survey all companies in the Denver area employing at least 500 persons.
The Denver Chamber of Commerce publication Largest Employers, Metro Denver was used to generate the bulk of the mailing list. Additionally, each company in the area that employs a fulltime director of community affairs was surveyed through the assistance of Mr. Rex John, Director of Community Affairs, Petro-Lewis Corporation. This additional sample was added due to their obvious committment to the community.
The total sample was comprised of 95 companies. Twenty-three surveys were returned. This was a return rate of 24.2%.
The survey questions were directed at identifying past, present and future contribution patterns by the companies involved, information was also gathered on corporate policies relating to contributions, willingness to support planning and urban revitalization activities, perceived needs in the Denver metropolitan area, and motives for making contributions.
Realizing that the survey needed to be designed to minimize completion time, it was organized so that most questions needed only one or more checkmarks to answer. A total of twenty-three questions were asked.
Completed surveys were received from ten sections of the business community. Those represented included: utilities (I), railroads (2), aerospace (2), manufacturing (5), brewing (I), natural resources/energy (6), real estate (I), food retailing (I), airlines (I), and banking (4). The numbers above equal more than twenty-three due to the strong involvement of some companies in more than one business sector. Percentages given for answers to many of the questions equal more than 100% due to multiple answers.
Slightly less than half of the respondents maintain regional offices in Denver (47.8%), nine or 39.1% a national headquarters, one a state headquarters facility, and two divisional offices. As discussed in Chapter II the type of office found in a given city has a significant bearing on the level of contributions that may be expected those with national headquarters fare better than those with only regional or divisional offices.
There cppears to be a movement toward distributing contribution dollars to some significant degree on the basis of the proportion of totai company
revenues generated in a given community. It is thought that such a plan will be more equitable and minimize headquarter's influence on contributions. The survey responses indicated that sixty-one percent (61.1%) already distribute contributions based somewhat on this formula.
Many people are looking to the energy companies in Denver as a possible source of large contributions. This may or may not be an accurate prediction. Only one of the energy companies that responded to the survey indicated that locally generated revenues in any way influence contributions and this response was of a regional not metropolitan nature. All of the remaining energy companies indicated that local revenues played no role in contribution decisions.
The vast majority of the respondents enjoyed pre-tax profits exceeding two million dollars in 1981. Only three (14.3%) had profits under one million dollars while four others were in the two to five million dollar range and fourteen (66.6%) exceeded five million dollars in pre-tax profits.
Every company that responded to the survey currently operates a charitable contributions program. The level of sophistication varies considerably between companies in terms of how these programs are operated however. Eleven companies or 47.8% maintain a full time staff for their contributions program. One company used a committee review process to make all decisions. The range indicated by the balance of the companies responding to the questions was from .7 persons to a maximum of three (3). It is interesting to note that two respondents indicated that their national offices located elsewhere maintained full time staffs of twelve (12) persons each to handle contributions activities.
Thirty-four percent (34.8)% indicated that they have specific application
evaluation criteria while over sixty-nine percent of the respondents (69.9%) have specific policies which guide decision-making relating to contributions.
Level of Contributions
The average percentage contributed by corporations nationally over the past decade has been 1.1%. The companies polled in the survey indicated an overall average of 1.30% in 1981. Twelve companies or 57.1% were in the 0%-l.0% range while six or 28.6% contributed l.l%-2.0%. Only two companies indicated that they had contributed the full five percent allowable under the law in effect at that time. One of these companies was in the natural resources/energy sector, the other in manufacturing.
When asked whether their companies anticipated increasing the percentage of pre-tax profits that it would contribute in the future, 47.3% of the respondents answering this question indicated that they did not. An equal number said they did anticipate an increase. Only one (5.2%) was uncertain.
Surprisingly 66.6% supported the idea that the business community should assume a larger role in providing funds, in-kind contributions, or loaned personnel to help meet community needs. One would have to assume based on the answers given in the previous question that the majority of the increased assistance will come in the form of in-kind contributions or loaned personnel.
The respondents were asked to indicate the degree of influence exerted by their chief executive officer, board of directors, stockholders and director of community affairs on policies relating to contributions. It was found that the director of community affairs was the most influential followed by the chief executive officer, the board of directors and lastly the stockholders. Interestingly the placement of the stockholders in the least influential position was the most clearly defined result in the survey.
The survey attempted to define the primary motive for corporate contributions in the Denver crea. Of the twenty-two companies answering this question 81.8% stated that their primary motivation was that "a healthy community is also a healthy business environment." The second largest individual response (45.5%) was that the company maintained "a philosophy that business has a responsibility to give something to society other than just goods and services." The next most frequently given response (40.9%) was "a desire to improve the environment in which our employees live.", followed by "a desire to maintain a good public image" (31.8%). Only one company indicated that its tax position motivated its contribution decisions. Another stated that since the company was part of the Lakewood community they felt they should participate in that community.
Following is a list of ten areas of interest suggested as possible recipients
corporate contributions. The respondents were asked to indi cate whether
their contribution policies allowed giving in these areas.
a. Health 95.7% 0.096
b. Housing 60.9 30.4%
c. Education 91.3 4.3%
d. Urban Planning 69.9 21.7%
e. Urban Revitalization 65.2 17.4%
f. Open Space/Recreaticn 65.2 21.7%
g- Human Services 95.7% 0.0%
h. Arts 95.7% 0.0%
i. Environmental/Ecological 73.9 8.7%
j- Other 26.1%
Ths "other" category allowed the respondents to list additional areas of interest. Four were listed. Included were youth, the elderly, impact mitigation (mentioned by an energy company), and activities in one specific community (Lak ewood).
The respondents were asked to rank a predetermined list of possible need areas, thereby defining what they saw as the greatest needs in Denver. The following list expresses the results starting with housing as the greatest perceived need and ending with historic preservation.
b. Human services
c. Economic development
g. Environmental concerns
h. Improvement of the arts
i. Historic preservation
The "other" category allowed the respondent to write-in areas of concern. Included were: water development, education and youth employment.
It is interesting to note that the perceptions of the business community differ markedly from those of the Director of Denver's Planning Office. They were in agreement on only two categories: housing (I); economic development (3). Overall the perception of the business community appears to be that mere needs exist in the health/human service areas than in physical development/
environmental areas. This may point to a need for some effort toward educating the business community on the physical and environmental needs of the city.
Urban Planning and Urban Revitalization
When asked whether the companies had contributed to either urban planning or urban revitalization during the past two years the result showed a fairly high level of activity in these two areas 57.9% had contributed to urban planning and 63.2% to urban revitalization.
Of those who had not contributed in these two areas the largest group (50.0%) indicated that "traditional social programs are given a higher priority by our company." Other responses given included "The market place should be the determinant of urban form." (16.6%); "There has been a lack of proposals in these areas." (16.6%); "These projects should be supported solely by traditional government revenues." (8.3%); "not sure funding of urbcn planning or revitalization is expropriate." (8.3%); and lastly "have not identified urban planning or revitalization as a private sector responsibility." (8.3%).
During an interview that was conducted to gather information for this study, a corporate contributions executive indicated another reason for reluctance to fund urban planning. He felt very uncomfortable with the amount of time it takes to complete planning efforts that involve committee activities. Most planning activities today involve citizen input as well as citizen participation on various committees. Businessmen routinely make decisions fairly quickly and then implement that decision by merely making a phone call and giving an order. The amount of time it takes to educate lay citizens in all of the technical and legal aspects of planning slows the process to the point where at least this
executive feels his money could be better spent elsewhere. Interestingly, this same executive realizes the possible benefit of good planning to both his company and the community as a whole.
The survey indicated that 59.1% of the respondents would prefer to fund a narrowly focused planning or revitalization project such as a community center or low income housing project. A small number (27.3%) show a willingness to support a metropolitan-wide project while only 18.2% expressed interest in funding a project that covered one particular community.
When considering any given project the respondents indicated almost a total unwillingness to fund salaries of staff (4.5%). Special projects ranked highest with 50.0% indicating a willingness to support such activities. Many respondents (36.4%) would support program operations, while 31.8% would fund the construction of facilities. Only 27.3% expressed interest in paying for the purchase of equipment.
The survey participants were asked to assume that a given request met their policy guidelines and to then rank a number of factors that might influence the final decision-making process on which project to fund. The most influential factor was the "availability of funds" followed by "defined community needs". The factor that had the least influence on decision-making was "emphasis by community groups". The number of employees that lived in the given community and the level of employee involvement were mentioned as possible influences in the "other" category.
This response somewhat parallels the response collected on stockholder influence. There appears to be a strong desire to deal with traditional business
tools, (money and information), and to stay away from outside influences or interference.
The survey did indicate however a willingness to take part in coalitions with community planners and citizen group representatives to develop a range of projects and programs that the respondent might later be asked to support. Over two-thirds of those answering were willing to have this sort of interaction (68.4%). It may be that this question was perceived as indicating a structured or organized form of interaction with the community as opposed to letter writing campaigns, picketing or sporadic media coverage of a citizen's group on a particular issue.
The Denver Partnership. Inc.
The survey attempted to determine whether the business community felt that the Denver Partnership was a satisfactory vehicle for the development of public/private partnerships and the encouragement of public-purpose investments by the business community. Ninety (90.0%) of the respondents felt that it was satisfactory. One company felt that the Partnership might be top heavy in terms of big business influence and that small businesses should play a larger role in the organization and its decisions.
The survey participants were provided with a list of corporate actions that commonly fall within the catagory of public-purpose investments. They were asked to indicate those activities that the company has taken pert in during the
last five years. The following is a list of their responses:
a. Targeted stock and investment portfolios 9.0%
b. Placing deposits in local banks for local investments 45.5%
c. Purchase of bonds or other public-sector issues 27.3%
d. Real estate investments designed to create jobs 27.3%
e. Direct lending to small local companies 18.2%
f. Direct lending to municipalities 13.6%
g. Targeted placement of pension & retirement funds 13.6%
h. Training or employment programs 77.3%
i. Procurement and purchasing from the locai community 54.5%
j. Provision of health or human service programs to the community 54.5%
k. Use of corporate prestige to support community projects 77.3%
l. Donation of funds 100.0%
m. Loaning of facilities, equipment, personnel or knowledge 100.0%
It is interesting to note that targeted stock and investment portfolios ranked so low. Many corporations have had this technique used against them by various civil rights and environmental groups in the last few decades. The low participation in this activity may in part be a reaction to being a target themselves.
Source and Adequacy of Information
The last thing that the survey tried to determine was the source and adequacy of information used to make contributions decisions. The majority (68.4%) of the companies answering this question felt that they already have sufficient information available to allow them to make decisions that would maximize the effect of every dollar contributed. Twenty-six percent felt they lacked sufficient information (26.3%). Five percent were unsure (5.3%).
A list of possible information sources was provided. Respondents were asked to indicate those sources currently in use.
a. 1980 Census, U.S. Bureau of the Census 20.0%
b. Mile High United Way Needs Assessment 73.3%
c. State Department of Social Services statistics 20.0%
d. The Denver Partnership, Inc. 46.6%
e. The Denver Planning Office 0.0
f. Denver Regional Council of Governments 33.3%
g. Other 40.0%
The sources listed in the "other" catagory included: Special research by other donors The Conference Board Human Resource network Local media-with verfication Personal research History of previous donations R eques t s / e va I uat i ons
The results derived from this effort were not totally unexpected. A number of the questions produced results that track perfectly with information gained from other published reports or from interviews. Specifically responses relating to the percentage of pre-tax profits contributed in I98i, the lack of influence of stockholders on contribution decisions or policies, and lastly reasons why companies make contributions have all borne out the validity of prior information.
While it is impossible to make an estimation of the annual contributions potential in the Denver metropolitan area due to the size of the sample, it is possible to come to some conclusions concerning future corporate activity in regard to public-purpose investments. The average percentage of pre-tax profit contributed by corporations in the Denver area is only slightly higher than the national average. However, it should not be expected that that percentage will increase greatly in the near future. Large increases approaching the allowable 10% level probably will not occur unless additional incentives are made available by government or unless conditions worsen considerably for society in general.
The most frequently indicated response as to the motivation for contributions was "a healthy community is also a healthy business environment." If the community environment degrades to the point where business is severely impacted both government and business will become increasingly involved. Until then corporate contribution levels probably will not exceed two percent on the average.
Increased use will be made of in-kind contributions or loaned personnel, equipment and knowledge. To the extent that local governments are willing to entertain or seek out offers of management expertise corporations will most likely oblige based on the idea that such help will make government more efficient and reduce taxes.
Of the 67.4% of the sample whose policies allow contributions for urban planning and revitalizaion only 57.9% have contributed to planning and 63.2% to revitalization of one sort or another. Among those whose policies currently do not allow such contributions the most frequently mentioned reason was that, "traditional social programs are given a higher priority by our company".
It may be possible to convince such companies that a change in their policy
would be to the benefit of both the company and the community. This may require an effort by the planning community in the form of seminars or informative discussions between corporate contributions executives, other executive officers, local planning officials, and officers of the Colorado Chapter of the American Planning Association.
One finding of the survey that is particularly interesting from a planning standpoint relates to the sources of planning information listed in the questionnaire. None of the respondents used the Denver Planning Office as a source. Only 33.3% used the Denver Regional Council of Governments (D.R.C.O.G.). Forty-six percent did however use the Denver Partnership (46.6%). The Denver Partnership of course has a few hundred local businessmen serving on its various boards and committees. It may be this fact that stimulates companies to use the Partnership as a source.
D.R.C.O.G. and the Denver Planning Office on the other hand may be perceived strictly as government agencies. Government is generally seen as inefficient and on the whole as a regulatory group. It may be that the impressions of the business community could be improved if some well thought out public relations and marketing activities are undertaken by these two agencies.
The following chapter will make recommendations on how the planning community can approach the task of increasing private-sector support for their activities.
A corporation exists in a community -local, regional, national, even worldwide. It must be concerned with the condition of that community, with the development of the best and broadest possible base of talents, and with the quality of life. The corporate citizen, like the individual citizen, benefits from a healthy community and should encourage efforts to make the community better.
President, a major 23
comm uncations company
Summary and Recommendations
The concept of corporate "social responsibility" has been evolving since World War 1. One of the more visible manifestations of this evolution has been the growth in corporate philanthropy in terms of both dollars contributed and the range of programs that have benefited. The distribution of dollars has gradually broadened to include more than just the traditional human service, health and education recipients to the point where it is possible to find corporate dollars supporting all but maybe the most controversial programs.
Another aspect of this evolution has been the increasing awareness, on the part of the business community that the urban environment in which its offices and factories are located, and where its employees and customers live, plays an
important part in determining the level of prosperity that business will enjoy. Decaying urban environments typically suffer from outmoded physical plants, high crime rates, poor quality housing stock, increasing welfare roles, and a middle class exodus of significant proportions. In such circumstances it becomes increasingly difficult to attract or keep good employees, or to conduct business in general.
A study of America's cities would show such conditions existing to varying degrees from coast to coast. Such a study would also show Denver as a city that has experienced a tremendous building boom during the past decade but at the same time has had to realize that it is not immune to the problems facing our other major cities.
Denver is being faced with problems beyond its control. Inflation is eating into the city's budget and the Reagan Administration has cut back on, or totally eliminated, a number of programs that Denver and other major cities have come to depend upon. Further reductions and the shifting of responsibility for a number of federal programs is anticipated in the near future. Undoubtedly, such reductions and program changes will put additional stress on already strained budgets. In addition Denver is faced with a stabilizing population and a statutory ban on annexation both of which limit the city's ability to increase revenues.
President Reagan has suggested that federal assistance has done more harm than good for local governments. He believes that local problems should be solved locally and he sees the private-sector playing a big role in providing both the solutions and the resources necessary to implement them. Much of the public has come to believe that the business community will be the answer to the Administration's budget cuts. This is an incorrect impression, for though the business community could certainly do more than it has in the past, it is
doubtful that it can or ever would totally compensate for the full amount previously provided by the federal government.
This study has sought to determine what role the corporate sector is willing to play in meeting the needs of the Denver metropolitan area, particularly in terms of urban planning and urban revitalization two functions that must operate effectively if the overall quality of life is to be enhanced in Denver in the years ahead.
The results of this study have been generally encouraging. The local corporate community not only maintains policies that allow contributions for the support of planning and revitalization activites but the majority have in fact contributed to these two areas in the past.
The most common motive stated by the respondents was that "a healthy community is also a healthy business environment". Obviously, self-interest is reflected in such a statement but there is more a realization that a company is not an island unto itself. There is an understanding here of the importance of the quality of life in the Denver area to the overall well-being of the companies that maintain their offices and other facilities in the city.
Though it is doubtful that the companies located in and around Denver will do any better than companies located elsewhere when it comes to overall contribution levels, it is evident that they are interested in working cooperatively with local planners and citizen group representatives. It would be most unfortunate if Denver and its surrounding cities failed to take advantage of such an opportunity.
Currently there is opposition to the use of private-sector monies for the funding of public-sector functions. It is important to realize this when discussing the potential for private-sector public purpose investment in Denver in the near
future. On the other hand this attitude may only be temporary since it can change with a change in city administration. Many other cities have actively sought the assistance of its local businesses. In turn the business community has responded and both have benefited. There is every reason to assume that Denver will experience similar cooperation. Therefore, for the purposes of this study it was decided to approach the subject with a more positive and progressive attitude.
The awareness of the business sector in terms of its responsibility to the community, and the types of help that businesses can provide is increasing due in large part to The Denver Partnership and its subsidary- Denver Civic Ventures. The Denver Partnership is attempting to foster public/private partnerships while Denver Civic Ventures is attempting to stimulate an increase in corporate giving. A major effort in this regard has been launched under the name of the Denver Business Challenge which is attempting to increase corporate giving to 2% of pre-tax profits. Ninety percent of the respondents to the survey felt that the Denver Partnership is well suited to accomplishing these goals.
Organizations similar to the Denver Partnership are not new. Other major cities, (i.e. Atlanta, Minneapolis), have organizations with the same general goals but this is only one of many possible models for developing public/private partnerships. It is beyond the scope of this paper to attempt to examine the numerous models that might be viable. However, an examination of potential long and short range goals for Denver in this regard is appropriate.
The long range goal should be the establishment of a permanent organization that would serve as a clearinghouse for project proposals, a collection point for funds and a register of private-sector funds available for worthwhile proposals that fall within specific categories. In effect such an organization would act
as a broker that could help facilitate implementation of needed projects by bringing together all of the necessary elements (i.e. money, organization, individuals, etc).
In the opinion of the author the reason that this must be seen as a long range goal is that for the metropolitan area to gain maximum benefit from such an organization some authority needs to exist that can reach decisions that are binding in regard to the setting of priorities and the allocation of resources. In order to bring this <>out, it will be necessary to establish a metropolitan form of government for Denver and its surrounding communities. A metropolitan government would have the authority to make the political decisions that will be necessary and to commit public resources as required. This concept has failed at the ballot box in the past due to the very same parochial attitudes that would otherwise doom the type of "broker" organization being suggested.
Such a scenario may never materialize. If it does not materialize the metropolitan area will be short changed on more than just lost opportunities for public/private partnerships and private-sector public purpose investments. Until such time as these politcal and organizational structures make their appearance it is likely that a piecemeal approach will be utilized in bringing together the public and private sectors. However, the short-range goal mentioned earlier should be to gradually refine this piecemeal approach to lay the groundwork for the relationships that will be needed to bring about the "broker" organization later.
No matter which cpproach is used, there are certain steps that must be taken by any planning agency in order to facilitate attempts to foster public/-private cooperation. The following discussion outlines these important steps.
* Market the planning agency: The planning profession as a whole suffers from a lack of understanding on the part of the general public, as to what planning is and how it can benefit society. This lack of understanding effects the ability of any planning agency to gain support for its proposals much less its day to day functions.
The first step in generating interest in any proposal is to develop interest in the capabilities of the agency itself and the standard products, (research reports, plans etc.), that the office produces. It is not necessary to wait for a corporation to come to the agency for assistance before starting to generate this interest. Most of the major corporations in Denver have contributions programs and the majority of these have policies allowing contributions in the areas of urban planning and revitalization. An offer of a free set of neighborhood plans and the city's comprehensive plan as an information resource for such companies would provide an opportunity to display the quality of work found in the agency and allow you to make contact with the executives responsible for a given company's contributions programs.
Traditionally planning functions and products have been designed for the use, and sole consumption, of governments, neighborhood groups, etc. Marketing principles should be applied to these services to make them more attractive to the corporate community. The survey conducted for this study found that not a single respondent used the Denver Planning Office as a resource. Under such circumstances it is doubtful that a corporation will go out of its way to fund a planning agency developed proposal.
* Do your homework; Determine which companies have policies that allow contributions for the type of project
that is being proposed and whether they have in fact made contributions in these areas. If no contributions have been made even though a company's policies allow such contributions it would be worthwhile to determine why not and to then write your proposal accordingly.
* Prepare a well thought out, well documented proposal:
Proposals presented to the business sector will meet with greeter success if clear, concise documentation is presented. The information provided should include a discussion on the need for the project, the benefits to be devired, and the costs that will be incurred. If the proposal is for a multi-year project projections of costs beyond the initial year should be included.
* Consider the motivies of the company and be prepared to market your proposal: Appeal to a company's self-interest by demonstrating how your project can directly or indirectly benefit the company.
Identify the company's motives in contributing to local programs. This is crucial to the successful marketing of a proposal. The motives provide an insight into the company's giving policies. By marketing the benefits of the proposal in such a way that it strengthens or enhances the companies motives, corporations will quickly realize the benefits of building a cooperative relationship.
It is important that private-sector interest be maintained in public-sector issues so that companies can be successfully approached more than once for support. Successful projects produce a favorable track record for those making the porposals. Therefore, it is very important that each project be well thoughtout and be determined to have a good chance of meeting its goals before any private-sector funds are sought for implementation. Care on the part of the
public agency in assuring that the corporation receives credit for its help can aid in the development of a long term partnership while at the same time help meet a company's public relations needs.
Any effort that can keep corporate representatives involved in the issues to that concern the planning community should be encouraged. Two things that couid aid in this would be placing corporate executives on committees reviewing planning issues and making presentations on the comprehensive plan or on urban problems to business clubs and board meetings.
All in all the planning community must make every effort to learn the marketing skills necessary to attract corporate support for public needs. It also needs to learn how the corporate world of philanthropy actually works not the typical superficial conceptions, but how it really functions (i.e. actual motives, influence of the C.E.O., company policies on contributions, proposal evaluation criteria etc.). The combined view of public needs and corporate philanthropy will better equip the planning community to seek out and successfully gain the private-sector support that will be increasingly important in the years ahead.
Dear Survey Participant:
The following survey is being conducted to gather information on attitudes toward public purpose investments by corporations in the Denver metropolitan area. The survey has been designed to minimized the time required to complete it. Most questions require a checkmark to indicate the appropriate answer. Please feel free to elaborate on any answer that you feel needs clarification.
Thank you for your participation in the survey. Please mail the finished survey to: Mr. Seth M. Goldstein
2333 So. Xavier St. PLEASE RETURN BY JULY 15. 1982
Denver, Colorado 80219
What type of business is your company primarily engaged in ?________
Is your Denver Office: a. National headquarters 9 39.1%
b. Regional office 11 47.8%
c. Other (Specify) 3 13.0%
Which of the following pre-tax profit ranges applied to your company in 1981?
9.5% _2 a. $0 500,000
4.8% _l b. 500,001 1,000,000
0.0% _o c. 1,000,001 2,000,000
19.0% _4 d. 2,000,001 5,000,000
66.6% J4 e. 5,000,001 +
Does your company currently operate a charitable contributions 100.0% 23 Yes 0% 0 No
What percentage of pre- -tax profits did your company contribute
57.1% J2 a. 0% 1.0%
28.6% _6 b. 1.1% 2.0%
4.8% __L c. 2.1% 3.0%
0.0% _Q d. 3.1% 4.0%
4.8% _l e. 4.1% 5.0%
4.8% f. 5.1%
Does your company anticipate increasing the percentage of pre-tax profits it will contribute in the future
47.3% 9 Yes 47.3% 9 No 5.2% 1 Unknown
Does your compcny feel that the business community should assume a larger role in providing funds, in-kind contributions, or loaned personnel to help meet community needs? 66.6% 14 Yes 33.3% 7 No
Does corporate policy allow contributions in the following areas?
a. Health 95.7% 22 0.0% _0
b. Housing 60.9% 14 30.4% _6
c. Education 91.3% 21 4.3% _l
d. Urban Planning 69.6% 16 21.7% _5
e. Urban revitalization 65.2% 15 17.4% _4
f. Open space/recreation 65.2% 15 21.7% _5
g- Human services 95.7% 22 0.0% _0
h. Arts 95.7% 22 0.0% _0
i. Environmental/ecoiogical 73.9% 17 8.7% _2
j* Other (List) youth 26.1% 6 elderly impact revitalization City of Lakewood activities 0.0% _0
Has your company contributed to the support of projects in the following creas
during the past two years? Yes No
a. Urban planning 57.9% 11 52.6% 10
b. Urban revitalization 63.2% 12 47.4% 9
10. If your company has not contributed to planning or urban revitalization projects why not?
8.3% _J_ a. These projects should be supported soley by traditional
16.6% _2 b. The market place should be the determinant of urban form.
16.6% _2 c. There has been a lack of proposals in these areas.
50.0% _6 d. Traditional social programs are given a higher priority by our
16.6% _2 e. Other (Please Specify) Not sure funding of planninq or re-
vitalization is expropriate; have not identified urban planninq an
revitalization as a private-sector responsibility.
What is the primary motivation for your company to make contributions or public purpo
investm ents? 81.8% _I8 a. A healthy community is also a healthy business environment.
40.9% _9 b. A desire to improve the environment in which our employees live. A desire to maintain a good public image.
31.8% _7 c.
45.5% JO d. A philosophy that business hes a responsibility to give something
9.1% _2 e. to society other than just goods and services. Other (Please specify) Tax position; as part of the community
we should participate in that community.
If your company were to contribute to planning or urban revitalization projects which
of the following would be most likely to be funded.?
27.3% _6 a. A metropolitan-wide project.
18.2% _4 b. A project covering one particular community.
59.1% JO c. A more narrowly focused project. (i.e. community center, iow
income housing project)
For any given project which would your company prefer to support?
31.8% a. Construction of facilities
27.3% _6 b. Purchase of equipment
36.4% _8 c. Program operations
4.5% d. Salaries
50.096 J_j_ e. Special projects
Which of the following does your company provide for its contributions program?
47.8% J_3 a. Full time staff. (How many )
34.8% 8 b. Specific application evaluation criteria.
69.6% 16 c. Specific policies which guide decision-making.
15. Please rcnge the following in terms of degree of influence on contribution policies.
(1 = high, 4 = low)
(average 1.62 _2 a. Chief Executive Officer
score) 2.33 _3_ b. Board of Directors
3.29 _4 c. Stockholders
1.38 d. Director of Community Affairs
16. Assuming a given request meets your policy guidelines how would you rank the following in regard to importance in the decision-making process when deciding which project to fund. (I = high, 5 = low)
(average 1.70 Jl a. Defined community needs,
score) 1.30 _l_ b. Availcbility of funds.
2.75 _3 c. Emphasis by community groups.
d. Other number of employees in community; fiscal management
e. Other employee involvement, reputation of community groups, number served.
17. Would your company be willing to take part in a coalition with community planners and citizen group representatives to develop a range of projects and program
that you might be later asked to support?
68.0% 13 Yes 26.3% 5 No 5.3% I Unknown
18. What do you perceive to be the greatest needs in Denver? (I = highest, iO =
lowest) (average 3.17 _4 a. Health
score) 2.50 b. Housing
4.17 _5 c. Neighborhoods
3.06 _3 d. Economic development
4.94 _7 e. Environemntal concerns
2.72 _2 f. Human services
5.72 _8 g- Improvement of the arts
4.89 _6 h. Transportation
5.94 _9 i. Historic preservation
j. Other youth employment (2); education; water development
19. The following is a list of actions commonly referred to as public purpose investment activities undertaken by corporations. Please indicate which of these activities your company has taken part in during the last five years.
9.0% _2 a. Targeted stock and investment portfolios.
45.5% JO b. Placing deposits in local banks for local investment.
27.3% _6 c. Purchase of bonds or other public sector issues.
27.3% _6 d. Real estate investments designed to generate jobs.
18.2% _4 e. Direct lending to small local companies.
13.6% _3 f. Direct lending to municipalities
13.6% _3 g- Targeted placement of pension and retirement funds.
77.3% J7 h. Training or employment programs.
54.5% J2 i. Procurement and purchasing for the local community.
54.5% J2 j* Provision of health or human service programs to the communit)
77.3% JLZ k. Use of corporate prestige to support community projects.
86.4% 19 1. Donation of funds.
86.4% 11 m. Loaning of facilities, equipment, personnel or knowledge.
20. Do you feel that the Denver Partnership, Inc. is a satisfactory vehicle for the development of public/private partnerships and the encouragement of public purpose investments by the business community?
90.0% 9 Yes 0% 0 No 10.0% i Unsure
21. Do you feel that you have available sufficient information on community needs to enable you to make contributions with maximum effect?
68.4% 13 Yes 26.3% 5 No 5.3% 1 Unknown
Which of the 20.0% 73.3% 20.096 46.6%
following information sources do you currently use.
3 a. 1980 Census, U.S. Bureau of the Census
I I b. Mile High United Way Needs Assessment
3 c. State Department of Social Services statistics
7 d. The Denver Partnership, Inc.
0.0% _0 e. Denver Planning Office
33.3% _5 f. Denver Regional Council of Governments
40.0% _6 g. Other (Please Specify) Special research of other donors
(2); the Conference Board; Human Resources Network; local media with verification; personal research (2); history of previous donations; requests and evaluations.
23. Does the proportion of overall company sales revenues generated in a given community determine to any significant degree the level of contributions made in the community. 61.1% II Yes 38.9% 7 No
Thank you for your participation
1. The Denver Partnership, Inc., A Public/Private Framework for the 1980's. (Denver, Colorado, 1981)
2. Editorial, Denver Post, June 7, 1982
3. Editorial, New York Times, May 3, 1981
4. The Denver Partnership, Inc., A Public/Private Framework for the 1980's (Denver, Colorado 1981)
5. C. William Verity, Jr., "Contributions Strategy Recommendations" (telegram to Mr. William Aramony, President, United Way of America) President's Task Force on Private Sector Initiatives, Washington, D.C., March 23, 1982
6. Editorial, New York Times September 27, 1981, p. 20
7. Editorial, New York Times. July, 1981
8. Editorial, New York Times, July 13, 1981
9. Interview, Lynn DeBlois, April 12, 1982
10. The Denver Partnership, Inc., A Public/Private Framework for the 1980's, (Denver, Colorado, 198!)
11. William C. Grindley, Making and Measuring Corporate Urban Ventures,
Menlo Park, California^ June, 1980 (Menlo Park, California: SRI
International), p. I
13. George C. Lodge, "The Desperate Plight of the Underclass", Harvard Business Review, (July-August, 1982), p. 60
15. Editorial, Denver Post, July, 13, 1981
16. U.S. Bureau of the Census, 1980 Census of Population, Washington, D.C. 1980 (Washington, D.C.,, U.S. Department of Commerce)
17. Denver Planning Office, Comprehensive Plan for Denver, Planning Toward the Future, (Denver, Colorado, 1978), p. 4
18. Editorial, Denver Post, July 13, 1981
22. Margaret Vetter Browne, The Impact of the Federal Budget on Denver,
Denver, Colorado, 1982, (Denver, Colorado, Office of Budget and Management), p. 1
23. Ibid, p. 1
24. Ibid, p. 1
25 Ibid, p. 1
26. Ibid, p. 2
27. Editorial, Downtown, September, 1981
28. The Conference Board, Inc., Corporate Philanthropic Public Service
Activities, (New York, New York:The Conference Board, Inc., 1976), p.
The Denver Partnership, Inc. A Public/Private Framerwork for the 1980's, Denver, Colorado: 1981
Denver, Post, Editorial, June 7, 1982; July 13, 1981
New York Times, Editorial, May 3, 1981; September 27, 1981; July 13, 1981
William C. Grindley, Making and Measuring Corporate Urban Ventures, Menlo Park California, June 1980. Menlo Park, California: SRI International, 1980
George C. Lodge, "The Desperate Plight of the Underclass", Harvard Business Review, Boston, Massachusetts, July-August, 1982. Boston Massachusetts: Harvard University, 1982
Colorado Department of Local Affairs, Division of Local Government,
Office of the State Demographer, Colorado Population Reports, 1980,
Census Report No. 2, 1980 Census Results: Population, Housing,
Age, Sex and Ethnicity, Denver, Colorado: Office of the State Demograher
Denver Planning Office, Comprehensive Plan for Denver Planning Toward
the Future, Denver, Colorado, May, 1978. Denver Colorado: Denver Planning Office, i978
Margaret Vetter Browne, The Impact of the Federal Budget on Denver,
Denver, Colorado, March, 1982. Denver, Colorado: Budget and Management Office, 1982
Downtown, Editorial, September, 1981
The Conference Board, Inc., Corporate Philanthropic Public Service Activities. New York, New York: The Conference Board, Inc., 1976