Providing for the public good: Corporate-community relations in the Era of the receding welfare state

In his pioneering research on corporate-community ties in Minneapolis-St. Paul, Galaskiewicz (1985a) examined the social conditions that guided corporate philanthropy in a given metropolitan area. Two conditions, however, suggest the need for revisiting the type of research taken on in that original study. First, Galaskiewicz's study lacked a comparative dimension for examining the institutional environments that drive variation across localities. Second, a great deal has changed in the institutional conditions that drive corporate ties to their communities since the 1980s and early 1990s, the most important institutional change coming from the Tax Reform Act of 1986. We identify two significant factors that contribute to variation in local philanthropic commitments of corporations to the metropolitan communities in which they are headquartered. First, local corporate tax rates increase corporate giving overall, but they drive down corporate commitments to their localities. Second, the local state's involvement in the Low-Income Housing Tax Credit (LIHTC) program of 1986 also drives down local corporate giving. Thus, activist states that are successful in capturing the fiscal resources of corporations through a variety of institutional mechanisms end up driving down the philanthropic commitments of the corporations that are headquartered in those localities. We illuminate these relationships through in-depth qualitative research in three case cities and data on a nationally representative sample of 2,776 corporations.