Social Capital and Philanthropic Contributions to Community Development Organizations

The Neighborhood Assistance Program (NAP) is a program designed to motivate private corporations to contribute resources to assist community development projects performed by Community Development Organizations (CDOs). In order to stimulate private corporations' participation, state governments provide tax credit incentives to the private sector. Florida's Neighborhood Assistance Program, which is officially named 'the Community Contribution Tax Credit Program (CCTCP)', has operated since 1980. Currently, the program grants 50 percent of tax credits to private partners, who made a contribution to eligible CDOs. This research aims to review whether the decision of the tax credit depends on organizational characteristics. By comparing and contrasting CDOs who created partnerships under the CCTCP and those who did not, this study will explore how successfully the program has been implemented. The followings are the main research questions for this research. 1) What and how do organizational characteristics determine the success of NAP-initiated partnerships? 2) How does social capital influence the ability of community based organizations to attract philanthropic contributions? The main data for this study was collected by conducting a survey of CDOs, which were designated as eligible sponsors for tax credit in fiscal year 2006/2007. A total 68 out of 107 CDOs responded to a mail survey conducted from Oct. 2007 to Dec. 2007. The Executive Governor's Office of Tourism, trade and Economic Development in Florida provided tax credit data including names of projects sponsors (CDOs), names of private firms and the amount of allocated tax credits. Moreover, information on social economic status of CDOs' implemented projects was collected from the U.S. Census Bureau. The information was collected based on ZIP Code Tabulation Areas (ZCTA) instead of based on Census Tract information. The results of ANOVA, Chi-square, and Gamma tests illustrate that some organizational characteristics, especially financial and human resource variables, are significantly associated with the success of creating partnerships with private corporations to receive the CCTCP tax credits. Moreover, it is observed that a large number of tax credits are allocated to a small number of CDOs and to certain type of CDOs, especially Habitat for Humanity affiliated organizations. In order to find out the influence of social capital, First, I observed whether board and staff members' activity influence the success of creating partnerships under the CCTCP. Further, this study analyzed more detailed of boards members in a CDO with factor analysis. Logistic regression analysis was utilized to find out the influence of social capital. Specifically, stepwise logistic regression analysis with block entry methods was employed. Based on the findings of previous analysis, this study concludes that first, there were certain variables such as financial capabilities of CDOs and doing housing projects determine the success of partnerships under the CCTCP. However, the success of partnerships and receiving tax grants also were determined by their efforts toward the CCTCP. Board members and Staff members' activity were the key determinants to create successful partnerships. The social capital, measured from CDOs' board members, did not influence the success of creating partnerships. However, examining other proxies of social capital especially board members and staff members activities showed significant influence for the success of partnerships. Thus, this study concludes that in general social capital influence the success of creating partnerships with private corporations under the CCTCP. The implication of this study can be extended to other states to introduce flexible Public-Private Partnership programs. Moreover, finding out how successfully the NAP has been implemented along with its goals and how social capital between CDOs and private firms has affected creation of partnerships with the NAP will provide references for generating future Public-Private Partnership policy frameworks for enhancing benefits of low-income communities. For the improvement of the quality of the program, firstly, this study advocates more educational efforts from the controlling agency. The survey results showed that many CDOs do not really understand the program thoroughly. Presumably, if CDOs do not fully understand the program, it will be really hard for them to convince private corporations to donate contributions. Secondly, it is strongly recommended that there be technical assistances for CDOs, those who do not have abundant financial and human resources to access the program. Since the tax credits are granted based on first come first serve standard, CDOs without resources are disadvantageous to apply tax credits. Lastly, it is recommended that there be more public awareness of the program. Not many CDOs as well as private corporations really know about the program. There should be more efforts to advertise the program to recruit private corporations who are willing to contribute donations to CDOs.