This is pretty far outside my reading area, but I thought it was extremely interesting. Here’s the citation:
LEROUX, K., WHO BENEFITS FROM NONPROFIT ECONOMIC DEVELOPMENT? EXAMINING THE REVENUE DISTRIBUTION OF TAX-EXEMPT DEVELOPMENT ORGANIZATIONS AMONG US CITIES, Journal of Urban Affairs.
Kelly Leroux is an assistant professor at the University of Illinois, Chicago in the School of Public Administration.
From the abstract:
Questions surrounding the distribution of benefits have served as the focus for much research on local economic development. While nonprofit community development corporations (CDCs) emerged in the 1960s as one means of redistributing economic development benefits by targeting job training and business growth programs toward the urban poor, CDCs now represent only a portion of all nonprofit economic development organizations (NEDOs) in the United States. Newer forms of these organizations have emerged in recent years, carrying out diverse economic functions. This evolution of the nonprofit economic development subsector raises a critical question: Do nonprofit economic development activities remain concentrated today in poorer cities, or do wealthier cities also have high levels of nonprofit economic development activity? This study aggregates finance data for several types of NEDOs to the city level, for all U.S. cities with population 50,000 and over, in order to examine this question. Multivariate regression is used to estimate the effects of city-level demographic, institutional, and fiscal explanations on the level of NEDO revenues per capita. The findings demonstrate that revenues from some types of NEDOs, such as CDCs, remain concentrated in higher-poverty cities. However, wealthier cities have higher concentrations of revenue generated by nonprofit business assistance organizations and nonprofit real estate organizations. This paper concludes by discussing the implications of these findings for current federal and local policies related to tax-exempt organizations.
Now, this doesn’t strike me as being a terribly surprising result when you sit back and think about it: rich people give money, and rich people are clustered in particular cities and within particular geographies within those cities. However, I had never put the issue together before I read this manuscript.
However, that’s not what Leroux finds, at least not entirely. She draws on individual analogues: so just as wealthier folks benefits disproportionately from the nonprofit provision of arts and culture nonprofits,
NEDOS (nonprofit economic development organizations) differentially benefit cities according to the overall amount of wealth. She disaggregates the NEDOS into different type and finds:
Specifically, NEDOs that were created to support the growth and development of private businesses, and those created to develop and promote commercial, industrial, and residential real estate, are found in cities with higher average incomes, and fiscally stronger municipalities. Given that the purpose of local economic development is to improve the economic well-being of a city and its residents, these results suggest that nonprofits specializing in business assistance and real estate may be making wealthier cities even more well off. In light of the current federal budget crisis, and commensurate fiscal challenges of state and local governments, it seems timely to raise the question of whether these specific types of economic development organizations continue to warrant across-the-board tax exemptions.