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Institution interdependence and voluntary associations: Interest representation in Los Angeles County
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Institution interdependence and voluntary associations: Interest representation in Los Angeles County
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INSTITUTIONAL INTERDEPENDENCE AND VOLUNTARY ASSOCIATIONS INTEREST REPRESENTATION IN LOS ANGELES COUNTY by Robert Karl Geiger A Dissertation Presented to the FACULTY OF THE GRADUATE SCHOOL UNIVERSITY OF SOUTHERN CALIFORNIA In Partial Fulfillment of the Requirements for the Degree DOCTOR OF PHILOSOPHY (Urban and Regional Planning) December 1986 Copyright 1986 Robert Karl Geiger UMI Number: DP32311 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. DissfflrtaSic n PubI sNng UMI DP32311 Published by ProQuest LLC (2014). Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code ProQuest LLC. 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106- 1346 UNIVERSITY OF SOUTHERN CALIFORNIA THE GRADUATE SCHOOL UNIVERSITY PARK LOS ANGELES, CAUFORNIA 90089 Ufb G3I2 3 f C This dissertation, written by Robert Karl Geiger under the direction of h..?.?... Dissertation Committee, and approved by all its members, has been presented to and accepted by The Graduate School, in partial fulfillment of re quirements for the degree of DO CTO R OF PH ILO SO PHY Dean of Graduate Studies Date December 3 , 1986 COMMITTEE DISSERT terson ACKNOWLEDGEMENTS I am very thankful for the support, encouragement, and good-will of my family and friends during the writing of this dissertation. Special thanks are in order for my parents who always knew the right thing to say and when to Lay it. I would also like to thank my committee members. Professors William C. Baer, Peter Gordon, and Harlan Hahn for their insightful comments, advice, and infinite patience. I also owe a deep debt of gratitude to the University of Southern California for the financial support that I received during the course of my studies. Finally, I would like to thank Larry W. Campbell, the Registrar of jCharitable Trusts for the State of California, and Michael W. Lewis and James E. Hartl of the County of Los Angeles for their assistance in obtaining the data that were essential for the completion of this research. 11 ABSTRACT This dissertation advances a framework for the analysis of how political resources are allocated, distributed, and subsequently applied in the pursuit of political objectives. The systems of resource allocation, distribution, and command create an institutional interdependence that structures the nature and scope of political involvement. These institutional ties were then assessed through a study of voluntary organizations and municipal governments in the incorporated cities of Los Angeles County. Data were collected for 8,560 voluntary organizations that demonstrated the significant size and substantial functional diversification of the sector. The data also showed a high degree of concentrated wealth within the sector which is of great concern due to the relationship between the financial resources of these organizations and their service providing and advocacy potential. A model was developed and tested to analyse the interaction between local governmental actions and private voluntary activities. Voluntary group resource command was 111 . shown to strongly affect local governmental expenditures and to a lesser extent vice-versa. It was shown that cities where this interaction was most pronounced tended to be lower to middle income chartered cities with a greater percentage of elderly and minority population than the regional average. This analysis also has serious implications for recent proposals to privatize collective services with voluntary effort. First, the voluntary sector as presently constituted is likely to poorly substitute for public provision. The sector functions best in those communities that have the requisite social infrastructure to support these types of activities. Since this infrastructure is distributed highly unevenly throughout metropolitan regions the efficacy of voluntary substitution for public provision is shown to be highly questionable. In fact, the services provided by these agencies were shown to supplement rather than substitute for public output. Last, the effect of voluntary expenditures on local governmental effort was stimulative; however, the effect of lost revenues from property tax exemptions and other inducements for private giving makes it unlikely that this public assistance leads to more net services produced per dollar spent. IV CONTENTS ACKNOWLEDGEMENTS............................................i i ABSTRACT..................................... i i i Chapter page I. OVERVIEW...............................................1 Introduction ...................................... 1 Theoretical Background ........................... 6 Voluntary Organizations and Political Resource Command ....................... 7 Voluntary Organizations in Pluralist Theory .................................. 9 Political Resources: A Conceptual Framework . 13 II. ORGANIZATIONAL RESOURCE COMMAND . . . ........... 19 Introduction .................................... 19 Voluntary Sector Resources And Political Influence............................... 20 Allocation of Voluntary Sector Resources . . . 26 Regulatory Controls ......................... 31 Institutional Linkages .................... 33 Distribution of Voluntary Group Resources . . 35 Resource Command of Voluntary Organizations . 39 Institutional Constraints on Resource Command............................... 42 Procedural Constraints on Resource Command............................... 46 Operational Constraints on Resource Command............................... 50 Summary and Conclusion ......................... 57 III. VOLUNTARY ORGANIZATIONS IN LOS ANGELES COUNTY . . 59 The Urban Voluntary Sector: Definitions and Measures ...... .................... 59 Voluntarism In Metropolitan Los Angeles . . . 66 Group Purpose And Activity Sector Size . . 67 V Voluntary Sector Resource Distribution . . 72 Organizational Revenue Sources ........... 77 Organizational Expenditure Patterns .... 81 Organizational Asset Holdings ............. 84 Summary and Conclusions ....................... 87 IV. INTERDEPENDENCE BETWEEN GOVERNMENT AND VOLUNTARY ACTIVITIES IN LOS ANGELES AREA CITIES......................................... 90 Introduction .................................... 90 Theoretical Background and Model Rationale . . 91 Model Rationale................................93 A Model of Voluntary and Public Expenditure Determination ........................... 97 Voluntary Groups ........................... 98 Community Income ........................... 99 Social N e e d s ...................... 100 Urban Structure and Ecology................. 102 Industrial Structure ....................... 103 Political Structure .......................... 104 Donation Potential .......................... 108 Tax Capitalization.......................... 108 Empirical Analysis .............................. 110 Regression Analysis ............................ 116 Model Results....................... 119 The Interdependent System ................... 120 Summary and Conclusions . ....................129 V. CONCLUSION.......................................... 131 Summary of Research.............................131 Policy Implications ............................ 132 Directions for Future Research ................. 134 REFERENCES................................................136 Appendix page A. 1RS TABULATIONS OF EXEMPT ORGANIZATIONS, 1977 . . 148 B. FORM CT-2............................................. 150 C. FORM 990 152 VI D. LIST OF CITIES IN SAMPLE .................. 156 E. ORGANIZATIONAL REVENUES BY SIZE OF POPULATION . . 158 F. ORGANIZATIONAL EXPENDITURES BY SIZE OF POPULATION............................... 162 G. ORGANIZATIONAL ASSETS BY SIZE OF POPULATION . . . 166 H. DATA SOURCES.................................... 170 VI1 LIST OF TABLES Table page 1. National Employment Linkages, 1977 ................. 31 2. Fiscal Resources Of Voluntary Organizations . . . 36 3. Voluntary Agency Employment And Earnings .......... 38 4. Purpose Classifications Of Organizations By Activity Sector ................................... 61 5. Number and Percentage Of Voluntary Organizations By Activity Sector .............. 68 6. Distribution Of Voluntary Sector Wealth, 1983 . . 69 7. Distribution Of Total Revenue By Asset Class . . . 71 8. Distribution Of Total Expenditures By Asset Class................................................. 72 9. Distribution Of Revenues, Expenditures, And A s s e t s...............................................74 10. Revenue Sources Of Voluntary Agencies Within Los Angeles C o u n t y .................................78 11. Revenue Sources By Voluntary Agency Activity Category, 1983 80 12. Expenditures Of Voluntary Agencies Within Los Angeles County ................................... 82 13. Expenditures By Voluntary Agency Activity Category, 1983 83 14. Assets Of Voluntary Agencies Within Los Angeles C o un ty...............................................84 VI 1 1 16. The Interdependent Model .............. 17. Community Profiles ..................... Organizations By Descending Population 20. Selected Regression Results, Equation One 21. Selected Regression Results, Equation Two 22. Selected Regression Results, Equation Three 23. Selected Regression Results, Equation Four . 24. Selected Regression Results, Equation Five . 25. Selected Regression Results, Equation Six . 15. Assets By Voluntary Agency Activity Category, 1983 ..................................... 18. 19. Intercorrelations Between The Independent Variables .............................. LIST OF FIGURES Figure 3. Direct And Indirect Influence From Service Production .............................. 86 110 113 114 119 121 122 123 125 126 127 1. Model of Political Resource Interdependency . . 2. Direct Influence From Service Production . . . EÊ.99 17 21 22 4. Influence Conversion Cycle ......................... 24 IX Chapter I OVERVIEW 1.1 INTRODUCTION Voluntary associations^ have long been recognized as an active and vital element of American social and political life. In fact, associations formed by individuals for the advancement of religious, fraternal, and community goals predate the establishment of the republic itself. This tendency was noted by the framers of the constitution who used it as a rationale for the freedom of association guaranteed in the first amendment to the Constitution. This tradition of private involvement in community affairs is part of the American civic consciousness. As viewed in 1835, Alexis De Tocqueville was particularly impressed with how individuals chose to form associations ‘ The terms voluntary association and voluntary nonprofit sector as used here represent organizations, activities, and services which are not associated with either the public or private economies, and which do not distribute economic surpluses to employees, investors, or donors. These terms, as applied, are not intended to refer to the methods which these organizations employ to conduct their business affairs, solicit donations, or recruit members. to address collective issues. In his classic study. Democracy in America, De Tocqueville observed that America was comprised of a nation of "joiners," a people who sought to join together collectively to solve what they were unable to address singly. These feelings are perhaps best summarized by the following quotation: Americans of all ages, all stations of life, and all types of dispositions are forever forming associations....Americans combine to give fetes, found seminaries, build churches, distribute books, and send missionaries to the antipodes. Hospitals, prisons, and schools take shape in that way. Finally, if they want to proclaim a truth or ,propagate some feeling by the encouragment of a great example, they form an association. In every case, at the head of any new undertaking, where in France you find the government or in England some territorial magnate, in the United States you are sure to find an association. (De Tocqueville, 1835, p.198) This trend is as evident today as it was in De Tocqueville's time. In fact, the current restructuring of the national economy and pressures for cutbacks of public spending on social programs have led to increased interest in the voluntary sector. These policy conditions are partially responsible for the rapid increase in the numbers of associations and the wide diversity in their functional specializations. To illustrate, the California State Registry of Charitable Trusts recently reported that they were processing 500 new applications a month for certification of exempt status' in addition to the 42,568 organizations currently holding such status. Nationally, in 1978, voluntary nonprofit service providing organizations numbered 810,000 and had revenues in excess of $142 billion (Weisbrod, 1978). When voluntary labor and other donations of in-kind services are considered, it is not unreasonable to expect this figure to double. Coupled with this dramatic growth of the voluntary sector in terms of financial resources and numbers, there has been an inclination to view these associations as an alternative mechanism for providing many of the public services traditionally viewed as the exclusive responsibility of government' to produce. ' From personal communication with Larry W. Campbell, Registrar of Charitable Trusts, June 21, 1985. ' This position is evidenced in the work of S.M. Butler, Philanthropy in America ; The Need For Action which addressed how existing laws governing private charitable activities could be modified to increase the effectiveness of these organizations as substitutes for governmental action. E.S. Savas in. Privatizing The Public Sector, also delineated several policy options (e.g. contracting and enhanced nonprofit enterprise) as two possible approaches for relieving government of service production responsibilities. Finally, the Reagan administration has made increased voluntary action a high priority element of its social policy. Public comment by the President has indicated his preference for private sector solutions to social problems over public ones. This interest in focusing on civic action and community spirit has led to the creation of a special office of Private Sector Initiatives, complete with an 800 telephone number (800)/8ACCESS. This office is currently This is an appealing proposition in light of recent pressure for tax reform and public sector retrenchment; unfortunately, it is also very difficult to evaluate due to a shortage of the necessary data on the economic and political capabilities of these organizations. This deficiency stems partially from the failure of policy makers and urban researchers to recognize the importance of the voluntary sector as an employer, service provider, and community resource, but also from the unavailability of data concerning the size, activities, and location of these organizations. To address this problem I developed a data base for Los Angeles County that is appropriate for this type of analysis. It combines the financial information reported by voluntary organizations to state and federal agencies with data on the socio-economic and community characterisctics of local jurisdictions. This data base is used here to test a series of propositions concerning voluntary groups and voluntarism, tests that were not possible previously because of the lack of just such data. The following broad areas of concern are explored: (1) What is the magnitude of wealth controlled by the local voluntary sector, and how is it applied; (2) How does an focusing its efforts on state-local issues, privatization of government where possible, and public-private partnerships. Association Trends no. 589, May 31, 1985. organization's command over these resources affect its ability to pursue political and economic objectives; (3) Are voluntary resources concentrated within a small number of organizations, and, if so, what does this imply about the utility of voluntarism as a mechanism for citizen representation and political participation; and, finally, (4) Are these organizations free to articulate their interests concerning public policy, or does government control and delimit their capacity to act? In evaluating these concerns, two different research! outputs are developed and analysed: (1) Estimates of financial wealth, sectoral size, and functional activities of associations in Los Angeles County cities are derived; and (2) A theoretical model, capturing a hypothesised institutional interdependence between groups and government is specified and tested which examines the relationships between the expenditure decisions of both while accounting for interaction effects. 1.2 THEORETICAL BACKGROUND Although modern political theory has frequently noted the importance of resources for individuals and groups seeking to affect the results of political exchange,* there remains a troubling lack of conceptual clarity about their definition and measurement.* Moreover, past research has tended to emphasize the resources of politically-motivated individuals and groups, rather than those held by state institutions, in spite of government's central role in affecting political discourse and outcomes. Lastly, contemporary political theory has tended to obscure the difference between allocation, distribution, and command over (or ability to apply) resources, and to disregard Following Dahl (1961, p. 226), political resources include personal time; access to money, credit, and wealth; control over jobs; control over information; social standing; personal attributes such as education level, intelligence, charisma, popularity, legitimacy; ability to obtain support from others because of shared social status, religion, race or ethnicity; and political rights; including the right to vote, participate in public affairs, and to hold elected officials accountable! for their actions. Property and legal rights obtained from the political system should also be added, as well] as the factors associated with the production of political outcomes. For example, we have come to regard land, labor, and capital as the primary factors of| economic production. In an economic sense then land' represents necessary raw materials, labor covers all] types of employment, and capital represents all produced means of production (goods manufactured to produce other] goods). Consequently, resources are always scarce] relative to the desired level of production, and hencé there is major political dispute over their allocation. constraints on resource command. These shortcomings obscure a critical aspect of political life: the institutional interdependence between citizen or group action, and state prerogatives. 1.2.1 Voluntary Organizat ions and Political Resource Command To redress this oversight an alternative theoretical framework is presented here that mitigates some of the problems with the analysis of political resources. The framework highlights how resources are allocated by the state and the market; how they are distributed among interests in society; and how they are applied in the pursuit of political objectives. It is important to note and over the role of government in determining their allocation (Scruton, 1982). As used here, the raw materials of political exchange are: time, wealth, and commitment; the labor component consists of employment directly related to political goals and the indirect employment generated from those activities; and political capital being personal attributes and rights enjoyed by participants in the political system. ^ These resources are the primary political assets of individuals and groups involved in political activities. They encompass a continuum from the tangible (those assets having physical substance or form) to the intangible (those assets not sharing these characteristics which results in substantial valuational difficulties). Only financial resources have been considered here. This results in some diminution of the overall resources measured but in the aggregate is sufficient to get a good portrayal of resource application for political ends. that the application or command of resources is constrained by the activities of other political actors, particularly governmental institutions. But at the same time, individual and group command of resources can limit governmental authority. The end result of this pattern of interactions is that the motivations and behavior of political actors are interdependent and simultaneously adjusting (March and Olsen, 1984). The conceptual framework is tested by analyzing the political influence of the financial resources of the more than 8,500 formally constituted voluntary organizations in the Los Angeles metropolitan region. The analysis explores the interdependence among these organizations and state institutions within a comprehensive, unified methodology. Voluntary organizations are particularly noteworthy for this investigation because of their preeminent role in conventional pluralist theories, and because of the growing magnitude of their activities. The allocation and distribution of voluntary sector resources are empirically assessed using national and local level census and Internal Revenue Service (1RS) data on organizational wealth, in the aggregate and by activity classification. In addition, the economic resources of these organizations are evaluated using data on employment and earnings of voluntary sector workers by activity class. 8 These data are supplemented by estimates of indirect earnings and employment linked to voluntary group activities, derived from an input-output model of the economy. The analysis also investigates how voluntary group resources are allocated and distributed by government through funding ties, laws, and administrative regulations. Next, constraints on the command or application of resources arising from the interdependence of voluntary groups and the state are analyzed. These research findings indicate that the reliance of groups on government for funding and legitimacy limits their influence in the political arena. These groups are constrained by; governmental efforts to address social problems through the voluntary sector, tax policy and administrative directives pertaining to tax-exempt ion for voluntary organizations, and government contracting with voluntary organizations. All of these governmental efforts circumscribe the behavior of groups and restrict their ability to use the political resources at their disposal. 1.2.2 Voluntary Organizations in Pluralist Theory The preeminent role of groups in American politics has long been noted by political analysts, and is now a fundamental premise of modern pluralist theory. Voluntary jDrganizations are an important and representative subset of the total number of groups, and are thus particularly useful for an application of the theoretical approach developed here. The following section undertakes a review of the assumptions of pluralist theory as it relates to groups. The review indicates the weaknesses of this type of analysis for issues concerning political resources. A Eurther analysis of the resource allocation, distribution, and command over resources of voluntary organizations lollows in chapter two. Lineberry (1980) notes the following key assumptions of pluralist theory: (1) Groups provide a key linkage Detween people and government; (2) Groups compete; (3) No one group is likely to become dominant; (4) Groups usually play by the ’rules of the game'; (5) Groups weak in one resource can use another--group resources are substitutable; and (6) A rough approximation to the 'public jinterest’ emerges out of the group struggle. The pluralist framework suggests, therefore, that public policy is a function of the balance between opposing group forces at any moment and that equilibrium solutions found in the political process tend to be the ones which maximize the net gain to group members. This means that groups have to oe rational in the pursuit of their goals and objectives. 10 The outcomes of these issue negotiations are the result of compromises which are due partly to governmental facilitation and political exchange, but partly also due to shifts in the temporary alliances among different groups. Individuals in this model are free to form groups, belong to as many groups as they wish, and face no barriers to forming new groups. Additionally, the decision to join a group must be made voluntarily, without coercion. The resulting voluntary groups and organizations are characterized by overlapping membership. The consequence is a stable political system for these reasons: the process of intergroup accommodation fosters an appreciation for the political system and the status-quo, whereby systematic structural conflict, which could endanger the entire political-economic system, is averted. The pluralist viewpoint implies that there is no scarcity of potential members, political skill, or other necessary political resources. However, in practice the effectiveness of voluntary associations in influencing policy depends almost entirely on their stock and skillful application of political resources. Moreover, most explanations for group formation and membership in voluntary associations either directly or indirectly acknowledge the pivotal role of resources (Polsby, 1980; 11 Dahl, 1961). Opportunities for applying resources to realize self-interested objectives are routinely cited as motivating group involvement in politics. Despite the centrality accorded by pluralist theory to group resources neither the nature of resources nor the processes by which groups secure and apply resources have been adequately explored. The dynamics of group formation, maintenance, and operation have been investigated, but resource allocation, distribution, and command have not been sufficiently delineated or empirically assessed. Moreover, the failure to consider constraints on resource command has obscured the interdependence of groups and government; rather, pluralist theory is uni-directional, viewing public policy as the result of group interactions but not vice versa. Aside from individual characteristics which are inherent in political actors (such as leadership skill and intellectual capacity), the market and government policy are the basic mechanisms for allocating political resources in society. In the case of voluntary organizations, however, a third allocative mechanism exists, namely, charitable contributions from individuals and business firms.* Neither the market nor charitable behavior is ‘ Charitable donations are provided by individuals, 12 entirely independent from government; for instance, fiscal and regulatory policy affect the private resources available for allocation to voluntary organizations, and tax incentives to giving increase the allocation to voluntary groups from corporations and individuals. 1.3 POLITICAL RESOURCES ; A CONCEPTUAL FRAMEWORK Theoretical explanations for patterns of resource allocation and distribution are a primary element of political analysis regardless of the analytical framework employed. Political resource endowments determine the range and effectiveness of organizational action within a political system striving to accommodate competing objectives. Lasswell's now famous concept of politics as the study of "who gets what, when, and how" perhaps best exemplifies this concern with the allocation and distribution of resources. However, as Polsby (1980) has noted, intentions plus resources are not sufficient to guarantee favorable outcomes from the political system (p.121). Clearly, resources are essential for influencing outcomes; we have come to accept the importance of "resources" (however defined) for realizing desired political outcomes. bequests, foundations, and corporations. 13 Unfortunately in the alchemy of existing political theory, there is no general agreement about the linkage between resource endowments and political success. Although there is wide theoretical agreement on an important indicator of political power (resources), little is known about how political intent is transformed into reality through resource application. There is no agreed upon definition of political resources (despite Dahl's (1961) extensive listing), nor is there agreement concerning the specific role of resources in achieving political outcomes. While alerting us to the importance of resources as a basis for political action, these existing definitions do not reconcile outputs with inputs. For instance, there is no way of knowing if four units of social status are more likely to bring about a desired outcome than two units of fiscal resources-- even if we could agree on what constitutes a 'unit'. Hence, while the allocational and distributional sides of the equation have captured our interest, they deal with only part of the process of how resource endowments are converted into political influence. In order to overcome this problem, a conceptual framework is advanced here that addresses how resources are applied— the command over political resources approach. 14 The framework illustrates the operation of the interdependent relationships between resource command (or application), allocation and distribution. The unit of analysis for studies of resource command can either be aggregated, e.g. state institutions, or disaggregated at the individual or group level. This versatility in research focus is advantageous: it affords a comparative basis for making generalizations concerning similar behavior at different levels of activity. The command over resources approach acknowledges the importance of resource allocation and distribution, but also examines institutional, situational, and operational constraints on resource use that affect outcomes. Structural or institutional constraints are linked to state preferences for political economic system maintenance: political action is initiated but also constrained by governmental prerogatives designed to insure social and political stability and satisfactory economic performance. Situational constraints are issue-related: political interests both respond to and are constrained by issues that either threaten or enhance their opportunities. Operational constraints are the procedural conventions, practices, processes, or regulatory norms of the political system. These constraints can result from interaction 15: among political actors, but most are the result of governmental policies. Typically all three types of constraints are contextual and temporal rather than being uniform and fixed. Similarly, the political actor's decisions about applying specific types of resources are not free from institutional constraints. There is a hierarchy of resource effectiveness which may change when the constraints on political action are altered. The utility of applying a particular political resource or mix of resources becomes a function of the constraints faced by political interests at a given point in time. The substance of political action therefore reflects the changing operating conditions and conventions of the political system. In sum, the allocation and distribution of resources clearly affect opportunities for resource command, but the reverse is also true: institutional, situational, and operational constraints on resource application can affect the way resources are allocated and their resulting distribution. By examining how resources are applied to solve particular problems, it is possible to simultaneously consider allocation, distribution and command thus providing a unified view of the political process. 16 ALLOCATION DISTRIBUTION C O M M A N D POLITICAL RESOURCES Figure 1: Model of Political Resource Interdependency These patterns of interactive adjustment to constraints underpin a methodology for investigating how institutional interdependence affects the application of political resources. A partial illustration of the command over political resources framework is developed by examining the resources and relationships between voluntary organizations and government. I have organized the dissertation in the following manner. The first two chapters provide an introduction and orientation to the study as a whole. Chapter Two consists of a fuller and more complete presentation of the command 17 over resources approach as a vehicle for the study of politically motivated actions. Chapter Three provides an empirical overview of the voluntary sector in Los Angeles] county and, in particular, emphasizes how the financial resources of these organizations affect their service providing and advocacy potential. A description of the research and statistical methodology for assessing interaction is presented in Chapter Four. In a concluding chapter, I sum up the implications of this research for improving our understanding of political life and offer a suggested agenda for future research. 18 Chapter II ORGANIZATIONAL RESOURCE COMMAND 2.1 INTRODUCTION The question of prime importance in a resource based approach to the analysis of public policy is the manner in which organizational resources are allocated, distributed, and subsequently applied in the pursuit of political objectives. Particularly significant in this type of model is the ability of participants in the policy making process to command the necessary resources for realizing group goals. This emphasis is especially important due to the lack of attention devoted to issues of resource command in the literature and to the direct relationship between resources (means) and the achievement of political ends. These processes are illustrated and analysed by studying the resource endowments of formally constituted voluntary organizations. The results of this exercise are then used to evaluate several hypotheses relating to issues of resource command and political outcomes. 19 2.2 VOLUNTARY SECTOR RESOURCES AND POLITICAL INFLUENCE Voluntary sector organizations apply their resources to address political and organizational goals in four basic ways. First, the production and sale of economic output by these organizations provides them with the necessary capital for funding group activities. The revenues needed for this function are typically obtained through one or more of the following: (1) contributions, gifts, bequests, etc.; (2) fees and grants from government; (3) program service revenue; (4) membership dues and assessments; (5) investment income; (6) fundraising income; and (7) income from other business related sources; (see Table 9 in Chapter 3 for a breakdown of these revenue items for organizations in the sample of Los Angeles County cities). Second, the expenditures by groups on organizational activities creates both direct and indirect political resources for them. For example, consider the political implications of an organizationally provided service as either a supplement or substitute for provision by a public agency (see figure two). The direct pattern of political exchange illustrated in the figure occurs when the group either provides a unique service, or, alternatively, either supplements existing public output, or substitutes entirely for public output. To the degree that government becomes 20 dependent on a voluntary group for a particular mode of service delivery, that group achieves an advantage in bargaining power vis a vis government on issues of importance to the group. In essence, this enhanced political influence accrues to the voluntary group because its decision to provide a service of value to the community allows government to re-deploy its resources for the pursuit of other objectives. Moreover, this also has the effect of improving the quality of the group's participation in the political system. O R G A N IZ A T IO N A L IN V O L V E M E N T P O L ITIC A L IN FLUEN C E SERVICE P R O D U C T IO N D IR E C T IN FLU EN C E Figure 2; Direct Influence From Service Production There is also an indirect effect (see figure three) resulting from group service production. Organizational expenditures lead to employment and wages which due to the magnitude of the sector's activities and its typically labor intensive production process are significant political resources (see Table 10 in Chapter 3 for J 21 categorical listing of organizational expenditures). Direct and indirect employment related to group actions are significant political resources for groups due to the ongoing need of government to have an employed and satisfied electorate which cannot be accomplished in the existing market economy without the assistance of the private sector. SERVICE + O R G A N IZ A T IO N A L + E M P L O Y M E N T & P O L IT IC A L P R O D U C T IO N IN V O L V E M E N T L IN K A G E S IN FLUEN C E D IR E C T IN FLU EN C E PLUS IN D IR E C T IN FLUEN C E Figure 3: Direct And Indirect Influence From Service Production Third, political resources are also conferred on voluntary groups by government through tax favoritism (charitable deductibility and property tax exemptions, to name just two ways) and special rights and privileges (e.g., lower postal rates). These various incentives contained within the tax code and other policy regulations provide voluntary organizations with valuable regulatory 22 relief that is not available to other segments of society. The problematical nature of these grants of relief has been highlighted recently whereby many groups have engaged in business related endeavors to gain more dependable sources of operating revenues in response to both governmental funding reductions and increased competition for private donations. Critics contend that tax-exempt organizations are unfairly competing with businesses that are required to^ pay federal, state, and local taxes as a cost of doing business. Clearly, this is an instance where the discretionary awarding of a public benefit works to provide resources for the recipients of those awards. Fourth, institutional linkages are created by the financial ties that exist between voluntary organizations, government, the private market, and charitable donors. These linkages provide both the communication channels and expertise that are essential for influencing decision-makers. Through the use of all four types of political resources, voluntary groups change the preferences, options, and resources of government and other groups in society. Figure Four graphically portrays this influence conversion cycle and its relationship to group resource endowments. For example, raw gifts, labor, and other 23 LA _l UJ LU < V U « c 3 > !=o Ou < Q. oc s VI VI LU k— u . u > O K Q LU VI Z < O LU VI I - O < Z z 3 o u . o _l UJ < u u 5 O ÏÏ Q. OC il Q. e c ii a . e c o o J s § 3 (w C < u L . 3 M ) 24 financial resources are converted into goods and services (i.e., inputs, conversion, outputs). As shown, each stage of the production cycle has a particular output which not only goes into the final product but is itself a unique kind of political resource. For instance, gifts of money are a political resource that can be converted into salaries for hiring staff which is a different kind of political resource, for staffs engage in organizational activities that are also political resources, and so on. This influence conversion cycle and the notion of institutional interdependence on which it rests structure the concept of political resources and their related allocation, distribution, and command into manageable proportions. A discussion of how political resources are allocated follows in section 2.3, distribution of voluntary group resources is considered in section 2.4, and resource command of voluntary organizations is explored in section 2.5. 25 2.3 ALLOCATION OF VOLUNTARY SECTOR RESOURCES The private market, government, and charity operate in a manner that serves to allocate political and economic resources to voluntary organizations. For instance, financial resources and capital assets permit groups to pursue their political goals, (i.e., become formally established; obtain knowledgeable and skilled staff; acquire and generate information about issues of concern; mobilize public and official opinion to support organizational ends; and pursue legal, legislative, and administrative routes to obtain their objectives). The role of organizations as employers is a secondary but potent economic and political resource that is allocated by these three separate but interconnected institutions. Politicians need a satisfied electorate, and so must rely on voluntary groups (as well as proprietary firms) to create jobs and build the social infrastructure necessary for the ongoing production of goods and services. Direct employment in voluntary ventures and employment in the many industries that directly or indirectly support voluntary activities are therefore political resources. Significantly, this resource does not need to be mobilized in response to specific issues. Rather, it is a contextual factor that conditions the decision making environment of government. 26 The rationale for indirect influence arising from the economic activities of voluntary associations is similar to Lindblom's arguments concerning business privilege (1977, p. 178). Lindblom suggests that: government officials cannot be indifferent to how well business performs its functions because poor performance can bring down a government. Public officials must see that some minimum level of production is achieved because they are, broadly, beholden to the citizenry (p.170-175). As a consequence, government is forced to rely on business because their operations directly affect society and this dependence leads to limited popular influence over a large number of crucial social decisions. Elkin (1982) concurs by observing that business privilege occurs because: businessmen appear to government officials not merely as representatives of special interests but as those performing functions that these officials need performed (p.722). Consequently, government often tends to consider its policy options in light of their impact on private economic activity. These arguments also apply to the voluntary sector because it too is a large employer. It directly employs a large paid labor force; it utilizes an immense cadre of unpaid volunteers; and together these two factors combine through linkages with the rest of the economy to produce still more jobs. In 1982, the voluntary sector employed 7 27 million workers, or almost 8% of total U.S. nonagricultural employment (Independent Sector, 1984, p.37). In some regions of the country, the sector constitutes an even larger proportion of economic activity— for example, 12% in the New York, Philadelphia, San Prancisco-Oakland metropolitan regions and 15% in the nation’s capital (U.S. Department of Commerce, 1981a). In terms of size relative to other major industry groups, total voluntary sector employment is equivalent to employment in wholesale trade; one-third the employment in government, services and retail trade; and one-fourth the employment of manufacturing (U.S. Department of Commerce, 1981a). The sector is in fact the fastest-growing component of the economy: between 1971 and 1982, voluntary sector employment grew 42%, as compared to 1% in manufacturing; 35% in for-profit service industries; and 19% in government (Independent Sector, 1984). As mentioned previously, individuals often donate their labor to voluntary groups and contributed approximately 8.4 billion hours in 1980 (Independent Sector, 1984). Assuming an average industrial wage for that year of about $7.50 an hour, (a conservative estimate), the value of volunteer effort amounts to about $63 billion dollars of labor power. Combined with paid 28 labor, this represents almost 10% of total national employment. Voluntary organizational expenditures on labor, goods and services generate additional economic activity, which in turn increases the jobs and income connected to the sector. In 1977, the Census reported 165,614 voluntary organizations that employed 4,950,531 workers, had a $41.69 billion dollar payroll, and spent $85.37 billion dollars. The expenditures made by these groups created an additional $45.6 billion dollars in earnings for employees in other industry groups, and 5.78 million jobs outside of the voluntary sector itself. Together, direct and indirect employment amounted to 10.7 million jobs or 10.9% of total national employment. Direct and indirect earnings totalled $90.5 billion dollars or 7.7% of total national earnings (Geiger and Wolch, 1984), Although employment effects vary by industry group, they are considerable in the aggregate. Politically, this is significant because of the close correlation between economic performance and a satisfied electorate. A smoothly-functioning economy, with significant job and] income creation potential, enhances the political viability of legislators and bureaucrats. Also, the jobs and income linked to voluntarism represent a significant inhibitor to 29 excessive control of group activities by government. In the case of voluntary organizations, this resource has additional significance because of its often unrecognized character. Interindustry linkages are significant indicators of the dependence of various industries on voluntary activities. As shown in Table 1 voluntary activities generate a sizable share of total employment in other industrial sectors. Linked employment greater than ten percent is listed which provides a reasonable overview of the impact of voluntary activities on the economy. These linkages represent the indirect economic resources held by voluntary organizations that are also significant politically. In conclusion, the economic and employment-enhancing attributes of voluntary organizations may be more significant than what has historically come to be regarded as the most important variable of group power— membership. In attempting to determine the political influence of a group, it is necessary to assess how that group is integrated into the political economy in addition to assessing the impact of membership on political dec i sion-mak ing. 30 TABLE 1 National Employment Linkages, 1977 ACTIVITY CATEGORY LINKED EMPLOYMENT (>10%) Finance 23.24% Printing and Publishing 17.13% Personal Services 17.00% Transportation, Local Government Transit, 16.40% Postal Business Services 15.62% Apparel 12.45% Real Estate 10.95% Insurance 10.85% Textile Mill Products 10.44% Miscellaneous Manufacturing 10.05% Source; Geiger and Wolch, (1984), 2.3.1 Regulatory Controls Relief from regulatory controls is a third kind of political resource that is not equally available to all private sector enterprises. Exemption from taxes as a public charity, private foundation,or other voluntary group is often crucial to an organization's ability to attract private contributions as well as government grants and contracts’ (Appendix A details the number of organizations 7 There are three basic tests for obtaining 1RS exemption under Section 501 (c)(3). In order for an organization to qualify for exemption, "(1) It must be organized and operated exclusively for one or more of the stated exempt purposes (charitable, scientific, literary or education, the prevention of cruelty to children or animals, or testing consumer products for public safety); (2) Its net 31 exempt from federal taxation, by exemption code). In essence, tax-exempt status renders a voluntary organization "fundable," opening the door to financial resources and the ability to influence public policy. The direct benefits of exempt status are considerable, particularly for charitable and social welfare organizations. The foremost direct benefits are tax relief and (for charitable agencies) tax deductibility of donations.® But there are others, including special employee benefit opportunities, exclusion from social security system rules, and special postal privileges which reduce mailing costs--a benefit that has become increasingly important with the advent of direct mail solicitations for fundraising and membership recruitment.* income must not inure, in whole or in part, to the benefit of private shareholders or individuals (except in the furtherance of exempt purpose(s)); (3) It must not devote a substantial part of its activities to carrying on propaganda or otherwise attempting to influence legislation, nor may it participate in or intervene in any political campaign on behalf of any candidate for public office" (Treusch and Sugarman, 1979). Specifically, exempt organizations are excused from corporate income tax, and often also state and local income, property and sales taxes (Hopkins, 1979, p.22); and charitable exempt organizations (Section 501 (c)(3) groups), provide donors the privilege of making tax-deduct contributions (up to 20-50% of gross personal income, and up to 5% of corporate income). Employees of exempt organizations may take advantage of special annuity provisions, and employers may not be 32 An indirect resource allocated by government to exempt voluntary organizations is a competitive advantage over for-profit enterprises engaged in similar service production activities.^® Because exempt groups have lower labor costs, lower mailing rates, and receive tax abatements, production costs are reduced, making service-producing voluntary groups more competitive in the marketplace. 2.3.2 Institutional Linkages Additional political resources enjoyed by voluntary organizations are due to government, market, and charitable funding of their activities, and the jobs and income that this funding creates. First, public funding opens channels of communication between organizations and government agencies. This access is vital for groups seeking to influence the opinions, and ultimately, the actions of public officials. Secondly, organization leaders and staff required to contribute to the social security system. Postal privileges reduce mailing costs by one half (Mancuso, 1984, p. 83). Each year, Congress in a revenue foregone appropriation to the Postal Service, covers the cost of the subsidy, which in 1984 was roughly $801 million dollars (Alliance of Nonprofit Mailers, 1984). ^ ® U.S. Small Business Administration, Unfair competition^ by nonprofit organizations with small business, Washington D.C., 1983. 331 have the opportunity and often the explicit obligation, to inform government administrators and politicians about their activities, viewpoints, and future agendas. Third, agency bureaucrats and legislators depend heavily on voluntary groups for information relating to social problems and constituent desires, providing groups with an avenue for promoting their particular interpretation of problems and preferences. Lastly, as is typically the case between regulators and the regulated, the expertise of voluntary organization staff and leaders is fundamental to the design of new programs and regulations, and to programmatic and regulatory reform. The economic linkages of voluntary groups to other industries expand the influence of their communications with government personnel as well as broadening the variety of messages sent. These institutional resources arise from corporate or foundation funding ties to voluntary groups (some of which may in fact be corporate spin-off groups set up to promote the patron's objectives); the industrial or occupational profile of users or members; or the additional employment in linked industries. For while the voluntary sector is not on a par with the steel or automobile industries, the effects of policies affecting the well being of voluntary groups must nevertheless be taken into 34 account by government because of the multiplier effects of their activities. And, just as in the case of autos or steel, state policy can in fact be structured so as to protect and enhance the political resources of voluntary groups. 2.4 DISTRIBUTION OF VOLUNTARY GROUP RESOURCES Less is known about the distribution of various types of resources among voluntary organizations than about allocation, or about how resource distributions affect political outcomes. It is reasonable to assume, however, that a highly skewed distribution over time leads to increasing inequality, as large resource-rich groups succeed in changing allocative mechanisms in their favor, and are able to resist constraints on resource command. The distribution of finances, jobs, and income can be considered on the basis of existing information. As shown in Table 2, educational, health, and charitable organizations possessed the majority of assets (50.3%) and revenues (53.3%) allocated to the sector as a whole. Within that class of organizations, almost one half ($74.3 billion) of sector revenues were received by health care agencies, followed by education/research with almost one quarter ($36.7 billion) in 1980. Unfortunately, analyses 35 of the distribution of resources according to classifications other than 1RS exemption status and activity category— for example, by political orientation--are not available, nor is information on the distribution of resources within each category. TABLE 2 Fiscal Resources Of Voluntary Organizations I. Distribution of Assets and Revenues; 1978 Assets Revenues Billion $ % Billion $ % Charitable, Educational, Health and Other Welfare 174.1 50.3 127.0 53.3 Organizations Other Exempt Organizations 172.3 49.7 111.4 46.7 II. Distribution of Revenues to Charitable, Educational, Health, and Other Welfare Organizations: 1980 Billions $ % Health 74.3 46.5 Educat ion/Research 36.7 23.0 Religious 18.0 11.3 Social Service 15.9 9.9 Civic, Social and Fraternal 5.5 3.4 Arts/Cultural 5.0 3.1 Foundations 4.2 2.6 Legal Services 0.3 0.2 Source is Independent Sector, 1984, p. 39, 44. 36 Like voluntary sector finances, we would expect the distribution of jobs and income to be somewhat concentrated' in charitable, educational, and health oriented organizations. In fact, this distribution is even more skewed due to the labor-intensive nature of these agencies; other voluntary groups employed only 13.9% of total voluntary sector workers (Table 3). Additionally, the incidence of linked employment and income varies by type of organization. To illustrate, across seven subsectors of voluntary activity recently evaluated in a national level input-output analysis, earnings multiplier values rangej from a low of 0.92 for residential care services to 1.29 for social service activities; while the range of employment multipliers extends from 1.58 for child day care organizations to 2.64 for membership organizations (Geiger and Wolch, 1984). This data shows that there are differential economic impacts associated with the range and size of voluntary activities and as a consequence thJ amounts and types of political resources linked to their job and income creation potential are varied. Table 2 by providing the distribution of voluntary sector fiscal resources gives some indication of the importance of public sector regulatory assistance to the 37i TABLE 3 Voluntary Agency Employment And Earnings Organization Type Employment % Wages/Salaries % (in 000s) (in billions) Health 3,052 46.8 45.9 56.2 Education/Research 1,403 21.5 17.5 21.4 Religious 697 10.7 6.7 8.2 Social Service 959 14.7 8.0 9.8 Civic, Social and 302 4.6 2.1 2.6 Fraternal Arts/Cultural 92 1.4 2.2 2.8 Legal Service 12 .02 .02 .02 Source is Independent Sector, 1984, p. 54. Data refer to charitable, educational, health, and other welfare organizations (501 (c) (3) groups) in 1982. various voluntary activity categories. Some types of groups, for instance, disproportionately utilize regulatory policies to their benefit. For example, regulatory resources creating competitive advantages for exempt groups are of particular assistance to organizations involved in such areas as scientific research and testing, and] professional service organizations (Magnotti and Hostetler, 1980), as well as merchandise sales, health care and travel (U.S. Small Business Administration, 1983). Knowledge of how institutional linkages are distributed across voluntary groups is minimal, and additional research on this area is clearly warranted. 38 Some groups do receive more funds from government and therefore may have stronger ties and influence; for example, in 1980 social service and health organizations both obtained about a third of their revenues from government, while education and research groups received only 16% from public sources (Independent Sector, 1984, p. 45). 2.5 RESOURCE COMMAND OF VOLUNTARY ORGANIZATIONS Voluntary organizations are able to command political resources and influence public policy, in part because of organizational wealth, membership strength, favorable regulatory policies, and institutional linkages. As organizations mature the relative importance of each of these factors changes. For instance, "young" organizations may not possess great wealth or political influence initially but oftentimes are still able to grow and become effective politically with the possibility that this growth itself could become a political resource. Government may or may not choose to assist the development of these organizations ; however, in the absence of regulations specifically prohibiting certain types of groups and group actions it is still possible for group leaders to obtain and apply the resources needed for growth. Consequently, 39 even in those instances where government may be openly hostile to particular groups without regulatory preemption, groups can be established and flourish in spite of a governmental predisposition to the contrary. This sometimes occurs when public sentiment for a cause is sufficiently strong so as to make it difficult if not impossible politically for government to openly attack the group and what it stands for. The ability of an organization to inspire the public's confidence and champion a popular cause is an equalizing political resource. In this case, many voluntary organizations are separate, albeit, single purpose governments that the public votes for with their pocket books. What this suggests is that the conditions surrounding group resource command are very dynamic and that sufficiently motivated groups with popular support can still be successful even under difficult circumstances. It must be noted, however, that in the vast majority of cases government policies directly and most convincingly influence the ability of groups to command the resources that they have been allocated. These policies also serve to indirectly influence patterns of intergroup interaction which, in turn, affects the manner in which constraints are imposed on one group by others. As a result, even though 40 it is possible for a group to prosper in spite of governmental interference this situation is always going toj be the exception rather than the rule. On a continuing basis, the disparity between governmental and private] resources is such that it is simply not realistic to expect that constraints on resource command are not significant determinants of the distribution of political power in society. Consider the following: (1) the need for government to manage social relations, and interest articulation in general, leads to the need for institutional constraints on the collection and distribution of voluntary resources; (2) governmental policies mandate both the organizational form' and content of voluntary initiatives allowing for administrative and judicial discretion in the enforcement of legal and regulatory requirements; and (3) public subsidies and contracts with voluntary organizations are used as a management strategy for providing certain collective services. Therefore, groups must learn how to deal with these three basic types of constraints which are institutional, procedural, and operationally based. All three types of constraints affect the allocation and distribution of group resources and the ability of groups to command their resource endowments. 41 Thus, voluntary organizations affect public policy but are in turn affected by the application of the state's own political resources: rules, regulations, conventions and financial incentives. By suggesting that the state has certain motives in defining and delimiting voluntary action, this does not imply that a simple straightforward relationship exists between governmental policies and voluntary groups. Public policies, in fact, are inconsistent and generate contradictory results for voluntary organizations and other private sector groups in society. Rather, the focus here is on the complex interdependencies which arise as voluntary groups and government utilize their respective political resources to obtain organizational and institutional objectives. 2.5.1 Institutional Constraints on Resource Command Institutional constraints are imposed by government to manage interaction between government and the governed in a manner that seeks to minimize political conflict among various factions as well as offering rewards for desired behavior. These institutional constraints result from government incentives and policies that influence the allocation and distribution of voluntary group resources. Such policies typically benefit those associations willing 42 to maintain the status quo, albeit government can take an activist posture and either directly or indirectly create a non-profit groups to further its own objectives. To illustrate, government provides support to voluntary associations in a variety of ways (e.g. contracts, tax favoritism, etc.) whose operations are expected to generate public benefits. However, there is a certain tension concerning acceptable levels of governmental oversight to protect legitimate public interests and to provide accountability, and excessive interference to discourage unpopular causes. This is essentially a normative question as to what constitutes an acceptable degree of oversight. It is also likely to be continually reassessed as popular sentiment for support of voluntary initiatives changes and as the cost of public sector inducements rises as the sector expands. The' resolution of this question at any point in time is a major explanatory factor accounting for how public and private resources are allocated to the voluntary sector and of the structure of public inducements to encourage these transfers. It is easy to see why the issues surrounding acceptable levels of governmental oversight are important institutional constraints on voluntary initiatives. 43 Insofar as voluntary groups operate outside of government, but enjoy its support through tax expenditure policies, it should be expected of government to closely monitor their activities. This is so because in a democratic political system, governmental institutions are designed in a manner whereby citizens are able to vote on issues and candidates, as well as influence policy decisions; in contrast to voluntary associations which are in many ways "extra" governments where there is no direct citizen control over how these organizations apply the tax expenditure benefits provided to them. As such, a certain amount of public sector oversight and control is warranted to provide the accountability to the general population that is lacking otherwise. We need look no further than the possible allocation of public support to a whole host of religious or other groups with extremist political views to see why such a policy is necessary. Recent reductions in federal expenditures for many domestic policy programs, including social welfare, provides another example of how state actions determine how resources are allocated to voluntary groups, and also how governmental policies impact the distribution of those resources. Evidence has shown that many community based advocacy groups have been hardest hit by funding cuts in 44 contrast to organizations which are more moderate politically. The competition for other revenue sources (foundations and corporations) has become intense, driving some groups away from controversial stands and creating operating problems for others, particularly small groups with limited financial and staff resources. In addition to changing the availability and distribution of resources, government has other means of restricting the resource command of troublesome voluntary organizations and altering group preferences for a particular course of action. As Marx (1979) points out, government agencies and personnel have and can exceed the levels of legitimate oversight by: (1) discrediting organizations and inhibiting their ability to attract nongovernmental funding by circulating unfavorable, image-damaging labeling in the media; (2) gathering information on groups in an effort to reveal subversive or conspiratorial activities; (3) harassing members or deter potential members from joining; (4) destroying group leaders by damaging their image, conducting grand jury investigations, falsely accusing or arresting them, creating tax difficulties, or co-opting them; (5) infiltrating groups and creating destructive internal conflict; and (6) encouraging external conflicts with other groups. "Sharp drops in federal support have prompted a scramble for limited corporation and foundation grants, but attempts to secure financing from private sources take time and strain the already skeleton staffs of smaller interest groups" (Coyle, 1983). 45 While groups themselves use these means of restricting the activities of opposition groups or government, their capacity to succeed is lesser because their resources are more limited and they seldom enjoy the degree of legitimacy afforded government to engage in these tactics. Thus the resource command of voluntary organizations is constrained by a whole series of public policy determinations and current institutional requirements. Programs funded to meet social needs and popular demands are candidates for cutbacks when superseded by other priorities. This causes some voluntary groups to collapse. Others may become highly competitive in their efforts to attract resources and members. Many organizations respond by establishing a cautious stance toward advocacy in an effort to maintain public funding and continue providing services to members and user-groups--services necessary to retain their own legitimacy and political resource base. 2.5.2 Procedural Constraints on Resource Command Procedures designed to enforce compliance with tax exemption statutes are often used by government both appropriately and inappropriately to restrict the resource command of voluntary groups which affects the outcomes of issue-related conflicts. Interpreting legal compliance can 46 be a costly process; the initiation of compliance investigations can be highly discretionary, and compliance regulations are often vague and inconsistent and hence open to constant reinterpretation, all of which permits institutions of the state to bring selective pressure to bear on groups who are (or could be) on the "wrong" side of issues. First, obtaining exempt status requires compliance with numerous requirements of the Internal Revenue Code as well as state and local exemption-granting institutions (Mancuso, 1984). The list of required steps is long and the assistance of attorneys is typically necessary, so that incorporation as an exempt organization is not costless. As such, small groups with minimal financial reserves are often discouraged by the complexity of the evaluation procedure. Maintaining exempt status can also pose problems. Organizations engaging in what the Internal Revenue Service considers questionable activities are subject to audit at the Service's discretion; the burden of proof that exemption regulations are not being violated lies with the organization itself. Discretionary investigations undertaken are, in some instances, prompted by executive or congressional requests, and thus can be directly linked to political activities of a voluntary 47 organization.!: In this way, compliance procedures affect the distribution of resources among voluntary groups, hindering the attempts of discredited organizations from commanding the political resources necessary for achieving their aims. Secondly, legal injunctions curb some types of activism by prohibiting exempt groups from engaging in propaganda, lobbying, electioneering, and other political activity to any substantial degree. In order to achieve compliance, voluntary organizations are subject to threats of audit, investigation, or revocation of exempt status. Moreover, reinterpretations of applicable codes periodically disqualify specific organizations or classes of organization from exemption, injecting uncertainty into an organization’s operating environment. Administrative discretion during investigations is enhanced by the ambiguity and vagueness of the relevant statutes and legal ! : Holbert (1975) provides a case study of 1RS discretionary activity involving the Sierra Club and public interest law firms, finding fairly clear linkages between political figures and 1RS action. Also, MacKenzie (1981) documents a 1967 incident in which the CIA enlisted the help of the 1RS to draw up countermeasures against Ramparts, which had published charges that the National Student Association was a CIA front; and cites a 1975 report by the Joint Congressional Committee on Taxation, that the Kennedy Administration had used the 1RS to suppress the radical right. 48 definitions of language therein. Clear definitions of group purpose, political activity, propaganda, and what constitutes a substantial portion of group activity are central for organizations seeking exemptions, but these terms are subject to broad and inconsistent interpretation by regulatory agencies and the courts. Besides the 1RS and the judiciary, the legislative and executive branches impose constraints on voluntary organizations' resource command. This has typically occured when voluntarism and exemption have themselves become political issues. For instance, foundations have been investigated by several congressional commissions (Walsh, Peterson, Cox, Reece, Patman, and Filer Commissions), which have in certain cases been supportive of foundation prerogatives, but in others have led to changes in foundation law diminishing foundation endowments and limiting their latitude to operate in the political arena.!* Other legislative efforts have sought to regulate ! * The most sweeping reforms were entailed in the Tax Reform Act of 1969, which imposed stricter standards of operation and accountability on foundations, and limited their ability to accumulate capital. Among other things the regulations restricted the grant-making process; limited the pool of potential donees to other exempt organizations; and most significantly, established a minimum disbursement requirement of (initially) 6% of investment assets or adjusted net income, whichever is greater. 49 the administrative, fundraising, and spending practices of public charities.!* Most recently, new federal administrative regulations attempt to control controversial political activities of voluntary organizations that receive public funds by disallowing reimbursement of federal grantees for the costs of political activities, some of which are allowable in the tax code.!* 2.5.3 Operational Constraints on Resource Command Operational constraints on voluntary groups arise out of the rules, regulations, and operating practices of government. One major governmental practice that creates such operational constraints is the implicit state policy of "government by contract" in many key service areas. In particular, the administration of housing, community development, and social welfare programs have been ! * For example, in 1975 bills were introduced that would have (1) imposed a charitable spending control provision, forcing certain public charities to use at least 50% of their gross revenues for charitable purposes (and not for management or fundraising) each year; and (2) required full financial disclosure and increased reporting requirements to government agencies (Manser and Cass, 1976). !* These sweeping constraints are contained in the controversial 0MB Circular A-122, "Cost Principles for Nonprofit Organizations", eventually implemented in revised form ( Federal Register , Friday, April 27, 1984) . 50 delegated to such voluntary organizations as nonprofit housing corporations, community development corporations, and nonproprietary social service agencies (Orlans, 1980). While government relies upon service provision by voluntary groups, the dependence of many groups on state funding and contracts clearly limits the extent to which these groups can try to alter public policy: excessive activism can easily lead to curtailment of public support. The use of voluntary groups to carry out public functions stems from their perceived efficiency in comparison to direct government provision. By contracting with voluntary organizations government augments its own institutional resources, gaining the ability to: (1) provide new or unusual services speedily, without having to build a bureaucracy to do so (Benton, 1979); (2) limit the size of the public payroll, avoid political constraints, minimize bureaucratic red-tape, while reducing the possibility of a budget maximizing, self-aggrandizing service bureau (Derthick, 1980); (3) avoid personnel ceilings, civil service requirements, and budget controls (Seidman, 1980); 51 (4) avoid the "categorical constraint," the need to equally apply public policy to all citizens (Douglas, 1982); (5) ease problems of accountability for service quality and efficiency because many voluntary groups are not tightly regulated in important areas (Lourie, 1979); (6) generate innovative solutions to pervasive policy problems, and guide reform initiatives because voluntary groups are viewed as being more flexible and less self-interested than government bureaus (Kramer, 1981); (7) maintain greater discretion over programs, by awarding or terminating contractual relationships on the basis of vague criteria; (8) leverage private funding sources, by assuming control over donations made to voluntary agencies under contract to government as a contractural condition (Miller, 1979); and (9) provide services at lower cost, primarily because labor costs (salaries and fringe benefits) are nearly 22% lower than the national average (U.S. Department of Commerce, 1981a). In acknowledgment of the fact that government, in the normal course of its operations, partially controls the 52 activities of voluntary organizations, a critical issue is raised concerning what the appropriate level of this control should be. Government operates under a system of checks and balances whereas voluntary organizations do not. It is, therefore, justified to have some type of public monitoring to ensure that these extra-governmental groups behave in a socially responsible manner. This issue is further clouded by the fact that these groups receive public assistance through governmental grants and tax expenditure policies. However, oftentimes there is no direct public input or control over how these funds are expended. Consequently, how does society institute mechanisms for group oversight without destroying the incentives and advantages of private group involvement that are desirable? This is a complicated and contradictory problem because the trend towards increased contracting and privatization of service delivery will clearly impact the ability of groups to command their resources for political purposes. An example of this are those organizations that have been created by governmental mandates and, as a result, are wholly dependent upon public funds. For those that are completely private, however, there is a choice that many groups in fact do select. By choosing to not 53 accept direct governmental support they are relieved of the constraints attached to the acceptance of these grants. Even so, these groups are still subject to a whole host of other regulations that affect group operations. Oversight requirements, in this instance, are reasonable and should be expected since it is inconsistent to exempt from public accountability these groups solely because society has decided to exempt them and their donors from certain provisions of the tax code. These special privileges are granted on the expectation that these groups will provide a valuable service to the community that would not be available otherwise, and as such is worthy of public support. Realistically though, since political resource command is in many ways directly connected to the financial health of groups, government has tremendous influence over them as a result of how these financial inducements are granted and monitored. Cases abound citing how public funding and related oversight, monitoring, and evaluation curtail organizational freedom. As one analyst noted, "An agency's freedom and effectiveness in social action or advocacy are in inverse proportion to the amount of public money it receives" (Manser, 1974)., When acting as vendors, voluntary groups "cannot be free from regulation, under any 54 circumstances, or from fiscal controls" (Lourie, 1979). Contractual relationships with government also inhibit the ability of these groups to maintain non-governmental programs. This occurs because donors are often not interested in funding groups under governmental contracts because they perceive the independence of the group to be compromised.^‘ Are these concerns serious enough to require the development of new institutions and procedures to^ facilitate private involvement in collective concerns while accommodating adequate governmental monitoring of the] utilization of these special rights and privileges? Unfortunately, this is an issue that will not be resolved anytime soon. It is easy to understand why voluntary groups are often unwilling to pressure government on an unpopular cause or in a related sense for a clarification^ in their status vis a vis the state on these matters. For groups struggling to maintain themselves the prospect of governmental aid is simply too enticing to refuse. Support !* While some argue that agencies have been forced to take advantage of public monies because growth in state' programs has "crowded out" private assistance, id appears that government programs have generallyj stimulated the expansion of existing groups. In the social services sector, donations made to organizations operating under government contracts to provide services are actually controlled by the sponsoring public bureau (Miller, 1979). 55 of governmental policies thus becomes a necessary evil when the alternative is extinction. In contrast, groups that are entirely independent represent the viewpoints and desires of private donors which by definition are likely to diverge from larger public opinion. To preserve this autonomy, they too find an incentive to cooperate with governmental dictates instead of making waves. The current institutional framework seems adequate to protect the interests of both the public and private sector; however, abuses of governmental power can occur unnecessarily constraining group freedom of action. Greater attention needs to be directed towards governmental behavior in this area so that government will be sufficiently restrained from interfering in the activities of merely "annoying" organizations. Increased social awareness needs to be developed regarding the value of the special rights and privileges accorded to these groups and of the positive contributions that they make to community improvement. Consequently, a continuing balance needs to be struck between public and private concerns so that an appropriate system of accountability can be preserved without unduly constraining group resource command. 56 2.6 SUMMARY AND CONCLUSION The command over political resources approach provides a new conceptual framework within which to analyze the configuration of power relationships and political influence in democratic states. This approach underscores the differences between how political resources are allocated and distributed, and consequently applied to specific policy objectives of groups and government^ institutions. Unlike earlier writing on the question of political resources, the possession of political resources does not automatically imply that those resources can be mobilized and applied. Rather, institutional constraints limit the degree of resource mobilization and goals achievement. This effort to more accurately define the nature of political resources--and hence enable a more concrete empirical analysis— reveals that interest groups and the state are both able to obtain resources (e.g. finances, staff, information, leadership) although the latter has a much wider range of potential powers than the former (e.g. powers of coercion, taxation, regulation, etc.); but the quid pro quo in a democratic political system is accountability. Moreover, group resource endowments constrain state action, while state resources circumscribe 57, group initiatives. This discussion is continued in Chapter Three where the political and economic resource command of voluntary groups is considered for metropolitan Los Angeles, and Chapter Four describes and tests a framework! for analysing institutional interaction for the same] region. 58 Chapter III VOLUNTARY ORGANIZATIONS IN LOS ANGELES COUNTY 3.1 THE URBAN VOLUNTARY SECTOR: DEFINITIONS AND MEASURES The voluntary sector of Los Angeles, as in other metropolitan areas, consists of individual and organizational donors, donees or recipient organizations, and passthrough agencies. Generally, donors make cash and in-kind contributions, donees provide services, and passthrough agencies solicit and channel resources from donors to recipients. In practice, however, these distinctions are not always mutually exclusive because the behavior of many organizations is mixed; they engage in both grantmaking and service providing capacities. Organizations arrayed along this continuum of voluntary sector behaviors encompass the nonprofit sector, the charitable or philanthropic sector, the "third" sector, and what is referred to as the independent sector (Wolch and Geiger, 1983).!’ !’ This characterization of voluntary activity follows the framework proposed by Weisbrod, (1977). Organizations, institutions, and activities covered by this definition include religious, educational, private foundations, 59 For the purposes of this research, only those organizations that are of a charitable or public benefit nature are analysed.!' Organizations meeting this criterion for 80 of the incorporated cities!* of Los Angeles county were then classified into seven primary activity sectors: religion; education and research; international activities; health; general charitable; arts and cultural; and social welfare and community services. Table Four lists the number of organizations in each of 101 distinct purpose categories and the frequency distributions for each of the activity sectors. The source Of information on the local voluntary organizations included in this sample is the magnetic tape file administered by the California State Registry of health, cultural, social welfare, advocacy, and neighborhood organizations to name only a few. Also, commonly included in this conceptualization of the voluntary sector are individual donors and volunteers and the social responsibility programs of corporations (Independent Sector, 1984). !' These organizations are typically tax exempt under California Revenue and Taxation code sections 23701d and 23701f (1RS equivalents are Internal Revenue code sections 501(c)(3) and 501(c)(4)). Additionally, from this portion of "public benefit" nonprofits, religious organizations, schools, hospitals, and government agencies have been exempted from the reporting requirement. State Registry of Charitable Trusts, communication, August, 1984. ! * See Appendix D for a listing of these jurisdictions. 60 TABLE 4 Purpose Classifications Of Organizations By Activity Sector ACTIVITY SECTOR AND AGENCY PURPOSE N % Social Welfare & Community Services Social Welfare General 670 7.83 Service Clubs 539 6.30 Veterans Organizations 282 3.29 jCivic League General 258 3.01 [Social Service 215 2.51 [Ethnic Or Racial Groups 212 2.48 Civic Improvement 177 2.07 Alcoholics 145 1.69 'Handicapped 133 1.55 (children 122 1.43 [Housing 121 1.41 Needy Persons 120 1.40 Aged 95 1.11 Local Association Of Employees 71 0.83 Animals 67 0.78 Conservation Of Natural Resources 50 0.58 Crime Prevention & Juvenile Delinquency 50 0.58 Legal Aid 39 0.46 Veterans And Armed Services 31 0.36 Social Welfare Public Safety 27 0.32 Transportation And Safety 24 0.28 Civic League Festival 13 0.15 Other Benefit To Individuals 12 0.14 Civic League Legislative 6 0.07 Social Welfare Quasi-Governmental 3 0.04 Social Welfare Municipal Building Corps 1 0.01 Education And Research Promotion Of A Purpose By Educ. Means 406 4.74 General Educational Purposes 299 3.49 Organized Youth Activities 251 2.93 Scholarships 249 2.91 Retarded Or Emotionally Disturbed 87 1.02 Grants To Educational Institutions 86 1.01 Recreation 81 0.95 Libraries 74 0.86 Research In Humanities & Social Sciences 71 0.83 Vocational Training 70 0.82 Student Aid Other Than Scholarships 65 0.76 61 TABLE 4--continued Research In Physical Sciences 54 0.63 Other Education 45 0.53 Educational Research 38 0.44 Other Specific Research Purposes 33 0.39 Education Of The Blind 16 0.19 Exceptionally Advanced Children 8 0.09 General Research 8 0.09 Adult Education 5 0.06 Aid To Teachers 1 0.01 General Charitable General Charitable Purposes 1034 12.08 Other Specific Charitable Purposes 33 0.39 Professional Fundraising 8 0.09 Community Foundations 6 0.07 United Funds, etc. 6 0.07 Arts And Cultural Performing Arts 221 2.58 Music 217 2.54 Cultural Interest 198 2.31 Historic 85 0.99 Museum 53 0.62 Intercultural Relations 18 0.21 Patriotic 14 0.16 Health Medical Research, Other 131 1.53 Hospital Auxiliary Organizations 123 1.44 Hospitals And Clinics 81 0.95 Services To Patients 69 0.81 Medical Education 56 0.65 Mental Health 56 0.65 Public Health 49 0.57 Cancer 46 0.54 Heart 26 0.30 Other Medical 24 0.28 Blindness, Eye Care 21 0.25 Crippled And Handicapped 19 0.22 Dentistry 17 0.20 Deafness 13 0.15 Financial Aid To Patients 13 0.15 TB And Pulmonary Diseases 10 0.12 Cerebral Palsy 8 0.09 62 TABLE 4-~continued Diabetes 8 0.09 Alcohol ism 4 0.05 Arthritis And Rheumatism 4 0.05 Epilepsy 4 0.05 Cystic Fibrosis 3 0.04 Muscular Dystrophy 3 0.04 Retarded Children 2 0.02 Birth Defects And Sudden Deaths 1 0.01 Religion Religious Purposes, Other Than Below 164 1.92 Support Of Designated Church 64 0.75 Religious Education And Training 41 0.48 Domestic Missionary Activities, General 16 0.19 Foreign Missions & Overseas Activ, Gen 6 0.07 Domestic Missionary Activities, Groups 5 0.06 Religious Buildings And Equipment 3 0.04 Foreign Missions & Overseas Activ, Educ 2 0.02 Theological Seminaries 2 0.02 International Activities Peace And International Cooperation 37 0.43 Welfare, Including Relief & Refugees 33 0.39 Cultural Relations 25 0.29 Other International Activities 14 0.16 Health And Medicine 12 0.14 Education In Other Countries 9 0.11 Aid To Foreign Students In US Colleges 7 0.08 Exchange Of Students And Other Persons 5 0.06 Technical Assistance 1 0.01 TOTALS 8560 63 Charitable Trusts. The Registry collects information on qualified organizations that either operate or are headquartered within California. Registrants file Form; "CT-2" the Periodic Report to the Attorney General of California*® and Form 990 (Return of Organization Exempt From Income Tax) required by the Internal Revenue Service** (for examples of these forms see Appendix B, Form CT-2 and Appendix C, Form 990). Information collected from Form 990 filings was used primarily in this analysis to facilitate data comparisons with preceding studies. However, in those instances where additional information was available. Form CT-2 was used to supplement the 990 data. The quality of the California data file is generallyj quite good on account of the tax compliance auditing conducted by both the State and the Internal Revenue Service. As a consequence, the data base that was developed for metropolitan Los Angeles uses the most complete and best available data for this, purpose. Even Legislative authority for this requirement is contained in section 12586, California Government code. These' reports are filed under the following conditions: "Underj penalties of perjury, I declare that I have examined this report, including accompanying documents, schedules and statements, and to the best of my knowledge it is' true, correct and complete." Form 990 is filed under the same requirements for completeness and accuracy as is California Form CT-2. 64 so, the data do have certain limitations (U.S. Government Accounting Office, 1984) in terms of how financial and organizational activities are reported by the agencies. Forms are not always completely filled in and often there are differences of opinion as to how group activities should be classified. However, these problems did not affect this analysis because attention was only directed towards the financial information on these forms which has been subjected to a far greater degree of scrutiny than the contextual information provided therein. The information reported here is for tax year 1983 and represents the most comprehensive data file available on the voluntary sector for any one specific metropolitan region in the nation. There are 8,560 organizations in the sample that were drawn from a population of 41,497 registrants who filed information returns with the State of California. In order to improve the quality of the sample data an algorithm was developed to detect possible reporting and coding errors.** This procedure compared the total dollars reported with the sum of the component lines for each section of the form and noted the difference between the expected value and what was reported. A manual check was then made to note the reason if a discrepancy appeared. Where appropriate reconciliation was made between the two values. In those instances where there was a significant disparity between these two values the case was dropped from the sample. Where only a section total was reported the component lines were recoded to show missing values. 65 Adjustments were made to cases flagged by this procedure only when the exact nature of the disparity could be clearly determined and verified. The overwhelming majority of these changes was to correct prior keypunching errors. In any event, less than five percent of the sample fell into this category with usually only one section of the form requiring special examination. Therefore, the figures presented here should not be considered absolutely precise, but rather as very reliable indicators of the financial positions of Los Angeles voluntary organizations. 3.2 VOLUNTARISM IN METROPOLITAN LOS ANGELES In this chapter a profile of the Los Angeles voluntary sector is developed which: identifies the magnitude of the sector's political and economic resources, measured by numbers of organizations, their activities and asset base; evaluates the voluntary sector resource distribution; reviews the sources of group revenues; examines the spending patterns of these organizations; and investigates the composition of group asset holdings. In Chapter Two it was shown that the resources controlled by an organization represent its political assets. These assets allow an organization to provide goods and services to members or clients or to accomplish 66 political objectives either directly or indirectly. There is also strength in numbers, and, correspondingly, the number of groups active in a community is a significant factor in the setting and resolution of the public agenda. This is significant because a larger base of organizations allows for mutual reinforcement of group initiatives and in instances of group conflict increases local government's awareness of their positions and resources. 3.2.1 Group Purpose And Activity Sector Size Table 5 presents the frequency distribution for the seven aggregated categories of group action. Social welfare and community service organizations are by far the largest single component with nearly forty-one percent of the sample; followed by education, general charitable, arts and cultural groups, health, religious, and international activities. Associations^ revenues, expenditures, and assets are elemental resources that form the basis of group viability and political influence. Organizational assets accomplish this by providing the foundation for the continued existence of the group. From this underpinning groups engage in essential fundraising and membership recruitment for obtaining current revenues that both replenish the 67 TABLE 5 Number and Percentage Of Voluntary Organizations By Activity Sector ACTIVITY SECTOR N % Religion 303 3.54 Education 1947 22.75 International Activities 143 1.67 Health 791 9.24 General Charitable 1087 12.70 Arts & Cultural 806 9.42 Social Welfare & Community Services 3483 40.69 TOTAL 8560 asset base and fund group expenditures. Group expenditures offer groups their greatest political benefits while demonstrating the basis of group resource command. As Table 6 shows, when group size is measured by asset holdings, the typical organization is small. Over half of the sample organizations had less than $10,000 in assets with over three-fourths of the sample possessing less than $100,000 in assets. In contrast, seven percent of the sample had assets $1,000,000 or greater. Clearly, in Los Angeles not all voluntary organizations remain equal even if they are created that way. When the value of these assets is considered this segmentation becomes even more striking. The value of the asset holdings of the seventy-eight percent of the sample with less than $100,000 68 in assets was one percent of the total. By way of comparison, the value of the asset holdings of the seven percent of the sample with $1,000,000 or greater in assets was ninety-three percent of the total. This is a remarkable degree of concentration. Moreover, it is an unsettling degree of inequity because the distribution of aggregate revenues, expenditures, and assets throughout the sector has a direct impact on group resource command and opportunities for political success. TABLE 6 Distribution Of Voluntary Sector Wealth, 1983 TOTAL ASSETS SIZE OF TOTAL ASSETS f $ UNDER $10,000 4,552 10,258,957 $10,000-$24,999 919 14,831,078 $25,000-$49,999 629 22,894,938 $50,000-$99,999 556 39,825,850 $100,000-$249,999 625 99,590,174 $250,000-$499,999 390 140,990,013 $500,000-$999,999 298 208,605,158 $l,000,000-$4,999,999 401 949,136,449 $5,000,000-$9,999,999 86 605,177,180 $10,000,000-$49,999,999 81 1,544,876,402 $50,000,000-$99,999,999 15 1,025,450,234 $100,000,000 AND OVER 8 3,075,074,420 AVERAGE SIZE 2 16 36 71 159 361 700 2,366 7,036 19,072 68,363 384,384 ,254 ,138 ,399 ,629 ,344 ,513 ,017 ,924 ,944 ,548 ,349 ,303 0.13 0.19 0.30 0.51 1.29 1.82 2.70 12.27 7.82 19.97 13.25 39.75 ASSET TOTALS 8,560 7,736,710,853 903,821 69 Table 7 shows the aggregate distribution of revenues for the sample and Table 8 presents this information for total group expenditures. The general pattern of marked segmentation that was observed with the asset distribution remains; although the level of the differentials has declined somewhat for the revenue and expenditure distributions. Here the smallest organizations received nine percent of total revenues and the largest organizations seventy-seven percent. With expenditures, eleven percent were made by groups under $100,000 in assets in comparison with the seventy-two percent made by groups with $1,000,000 or greater in assets. It is difficult to say what the impact of these resource distributions will have on the political prospects of the groups involved. The fact that a group exists and is meeting member or client demands has the potential to be an active and possibly successful participant in the political arena. However, it is unlikely that, with the pattern of stratified resource endowments observed here, it is reasonable to expect each group to have an equal impact on decisionmakers. Therefore, it is unlikely that smaller community based organizations will be able to compete effectively with the largest private and corporate foundations or some of the other large institutions in the 70 TABLE 7 Distribution Of Total Revenue By Asset Class TOTAL REVENUE SIZE OF TOTAL ASSETS $ AVERAGE SIZE % UNDER $10,000 104,263,169 22,905 3.47 $10,000-$24,999 43,123,632 46,925 1.44 $25,000-$49,999 46,675,854 74,206 1.55 $50,000-$99,999 74,630,703 134,228 2.49 $100,000-$249,999 131,693,916 210,710 4.39 $250,000-$499,999 130,567,414 334,788 4.35 $500,000-$999,999 152,654,162 512,262 5.08 $l,000,000-$4,999,999 583,190,530 1,454,340 19.42 $5,000,000-$9,999,999 275,076,894 3,198,569 9.16 $10,000,000-$49,999,999 774,143,311 9,557,325 25.78 $50,000,000-$99,999,999 221,297,128 14,753,142 7.37 $100,000,000 AND OVER 465,668,818 58,208,602 15.51 RECEIPT TOTALS 3,002,985,531 350,816 sample on all issues. However, the possibility does exist that a group may be able to make up with desire and highly motivated action what they lack in other resources. 71 TABLE 8 Distribution Of Total Expenditures By Asset Class TOTAL FUNCTIONAL EXPENSES SIZE OF TOTAL ASSETS $ AVERAGE SIZE % UNDER $10,000 104 ,159,353 22,882 4.50 $10,000-$24,999 42,283,755 46,011 1.82 $25,000-$49,999 44,253,035 70,355 1.91 $50,000-$99,999 73,408,613 132,030 3.17 $100,000-$249,999 123 ,924,798 198,280 5.35 $250,000-$499,999 120 ,757,152 309,634 5.21 $500,000-$999,999 140 ,037,388 469,924 6.04 $l,000,000-$4,999,999 531 ,399,231 1,325,185 22.93 $5,000,000-$9,999,999 215 ,604,767 2,507,032 9.30 $10,000,000-$49,999,999 642 ,565,111 7,932,903 27.73 $50,000,000-$99,999,999 149 ,647,804 9,976,520 6.46 $100,000,000 AND OVER 129 ,084,574 16,135,572 5.57 EXPENDITURE TOTALS 2,317 ,125,581 270,692 3.2.2 Voluntary Sector Resource Distribution When the information presented in Table 9 is contrasted with the sectoral frequency distributions in Table 5 several interesting patterns emerge. The largest sub-component of the sample, social welfare and education related organizations (sixty-four percent): raised forty-two percent of the revenues; made fifty percent of the expenditures; while possessing only twenty-six percent of the assets. The remainder of the sample raised a greater amount of revenues, made a nearly equivalent amount 72 of expenditures, and did so with nearly three times as many assets or roughly twice its proportionate size in the sample. At first glance, one might conclude that for thJ 1983 tax reporting year, the largest component of thej sample was able to do more with less and as such could match expenditures with the smaller wealthier samplJ component. But the issue is more complex. For instance, these ratios should not be confused with greater efficiency in administration or fundraising because significant elements of the revenues in the two largesJ activity sectors are grants and allocations from botJ government and wealthy donor organizations. Thus while the expenditures between these two groupings are somewhat even, organizations representing the largest activity sectors were adding much less to their asset base in terms ofj retained income. Consequently, this mode of operation is likely to reinforce the disparities in resource allocation^ which over time are likely to increase creating an ever more skewed distribution. Moreover, much of this variation can be explained on the basis of differing organizational types and modes of operation in the respective activity sectors. For instance, the financial needs of a community based service organization are not likely to coincide entirely with thosJ 73 o W a < H i2 u < •D C Q "O s S' c o a .n ZZ CO 5 CO S -I w < CO w Si 3 H 3 z w X » CO w 3 Z > CM CO oo O) CO CM oo CO "V o CO C-5 t- CO oo GO o OO CM CO CO OO CO CO C- CO CO CO CO o c— O . CM If) CM CO CO CO oo oo CO CD CO CO o c- o r? C5 o o CO oo ## CO CM m o o CO C* CJi CO CO oo r- CO CD TT t>- m r- C5 CM CM CO CM LO CM CO CO "T C- CM CM r - 4 t r - co O ) If ) o CD o CO CO CO o C M r r CD c - CO t - c - o r rH CO o O O t > - __1 uo CO CO o o r r r r o O ) CO CO C M CO CO o TT If ) O O oo TT CM CO CO CO TT r- TT Tf o oo CO o CO O CO oo o m t>- t>- o o CO CD co 1 —4 CO CO CO m I f ) c< c- ro PQ If) ■4T "«y CO CO co TT CO CO c- oo CO CO oo CM CM o C- ^4 CM 1 —4 CM o CM CO o lO TT OO —4 o uo If) CO If) t- o CO o V CO c- CO r- I f ) I f ) CO CO CO I f ) oo o C— I f ) CM CM CO o o CO CM C- I f ) C- CO O) o CD CO CO I f ) CD CM I f ) CM O 1 —4 lf> oo r- CM CO o t- H rr CM CO c o CO oo o rs O H CJ u CO > 4 Ui o < o o « e a u a "U w a c o mmd a c L. 63 a Ü 2 a 63 5 i m i < o > V o CO CO < H o 74 of a regional art gallery. Many organizations operate solely to produce services, others such as foundations and trusts as well as passthrough agencies raise funds for grantmaking purposes, whereas some groups perform both roles. The general charitable and international activities categories are excellent examples of this phenomenon wherein their highest expenditures, seventy and fifty percent, respectively, were for grants and allocations to other organizations. In comparison, the other five activity groupings received more from outside sources than they gave to others. Several other interpretations accounting for the distinctive two-part segmentation of the local voluntary sector which has led to the observed high concentrations of wealth are: (1) differential benefits from governmental tax incentives for encouraging private giving and for establishing voluntary initiatives; (2) economic effects of economies of scale in fundraising, administration, and service production; (3) differing responses to organizational life-cycle issues; and (4) the different capital/labor ratios associated with the production of the functional activity. First, donor preferences for giving to or for establishing an organization are in many ways directly 75 related to and a consequence of the incentives embodied in taxation and other regulatory codes. As such, all groups are not equally "attractive" to donors which has the likely effect of contributing to increased concentration of wealth and resources in groups favorable to donor preferences. Second, economies of scale associated with increasing size allow an organization to expand its operations at lower per-unit production costs. For example, the mass production technologies for direct mail and other fundraising gives those organizations who can afford it a competitive edge which over time allows for further increases in size. Also, with increasing organizational size it is possible to take advantage of the benefits of high volume operations which results in a more efficient use of fixed capital. Third, the effects of economic downturns, public funding cutbacks, and increasing competition for contributions can force smaller less well endowed organizations into bankrupcy thus making it possible for larger more financially secure groups to take their place. Additionally, a newly group will need several years to develop the support base necessary for its continued existence. In these early years, resources are particularly difficult to obtain which is compounded by the 76 fact newly formed groups do not have the funds to spend on increasing their support base. Consequently, many groups are simply unable to effectively compete with the older well established and better endowed organizations which allows these survivors to expand the scope of their operations unimpeded and which generates increased resource concentrât ion. Finally, there is a different mix between wealth, expenditures, and services provided depending upon the function performed. Museums, housing foundations, and endowed activities in general provide most of their services through their capital holdings (e.g., works of art, buildings, etc.) in contrast to those organizations that are funded out of current 'revenues such as the vast majority of social welfare activities. 3.2.3 Organizational Revenue Sources Where do the financial resources described above come from and what are the relative importance of these various sources? Table 10 provides the answers. The four major jcomponents of voluntary sector revenues were in order of importance : contributions, program service fees, governmental grants, and membership dues. These revenue sources accounted for sixty-two percent of the 77 $3,002,985,531 raised by Los Angeles in 1983 (See Table 11 for detailed revenue information by activity sector). TABLE 10 Revenue Sources Of Voluntary Agencies Within Los Angeles County REVENUE SOURCE $ % Contributions, gifts, bequests, etc. 723,278,662 24.09 Fees and grants from government 361,250,269 12.03 Program service revenue 604,173,285 20.12 Membership dues and assessments 158,891,476 5.29 Interest 139,154,496 4.63 Dividends 246,020,608 8.19 Rents 34,918,213 1.16 Other investment income 5,601,139 0.19 Sales of securities and other assets 177,090,361 5.90 Fundraising income 27,456,071 0.91 Other sales 61,744,517 2.06 Other revenue 463,406,434 15.43 TOTAL REVENUE 3,002,985,531 The distribution of revenues by organizational activity shows that social welfare and community services collected the largest share of local voluntary revenues followed by general charitable, education, and health' agencies. Of the primary revenue categories, international' activities relied on private contributions to the highestj degree receiving fifty-one percent of their revenues from this source. 78 As mentioned previously, the importance of the asset base for influencing group operations should not be underestimated. Arts and cultural organizations which havj the most extensive securities holdings also received thej highest amount of dividend income for any of the sectors. The high aggregate level of program service revenue is an indication that more organizations are seeking to recover lost grant monies and are attempting to improve their cost recovery ratio for the production of group services. 79 C 5 O C O r o 0 s i f t t » O ^ ^ ï " 5 O O U Uh 80 3.2.4 Organizational Expenditure Patterns As shown in Table 12 organizations spent the largest share of their resources, twenty-eight percent, on salaries and related employee costs (benefits, payroll taxes, etc.); followed by other expenses, twenty-five percent; and grants and allocations, twenty-four percent. Table 12 lists a complete breakdown of the $2,317,125,581 spent by organizations in metropolitan Los Angeles for 1983. Detailed expenditure information by activity sector can be found in Table 13. The other expenses category is large because many organizations use different nomenclature for their expenditure definitions and are often unable and somewhat reluctant to make their required filing entirely consistent with the governmental form. Of particular interest are the high levels of donative activity (greater than fifty percent of total) in the general charitable and international categories. The significance here is that the other sectors are primarily oriented towards being recipients and as a consequence are more vulnerable to the strategic behavior, whim, and good fortune of donors for their financial health and well-being. 81 TABLE 12 Expenditures Of Voluntary Agencies Within Los Angeles County EXPENDITURE CATEGORY $ % Grants and allocations 552 520 285 23.85 Specific assistance to individuals 8 240 501 0.36 Benefits paid to or for members 119 630 134 5.16 Compensation of officers 38 161 816 1.65 Other salaries and wages 566 432 046 24.45 Pension plan contributions 13 477 160 0.58 Other employee benefits 45 845 955 1.98 Payroll taxes 33 737 982 1.46 Professional fundraising fees 6 933 734 0.30 Accounting fees 9 272 616 0.40 Legal fees 8 223 686 0.35 Supplies 46 224 384 1.99 Telephone 17 979 233 0.78 Postage and shipping 15 115 660 0.65 Occupancy 67 609 988 2.92 Equipment rental and maintenance 19 897 821 0.86 Printing and publications 26 513 309 1.14 Travel 24 441 545 1.05 Conferences, conventions, and mtgs. 9 817 127 0.42 Interest 47 113 453 2.03 Depreciation, depletion, etc. 53 802 554 2.32 Other expenses 586 134 592 25.30 TOTAL EXPENDITURES 2,317 ,125,581 82 r - } t O ( O t o v u " ) O M v o o c n c r > r — u") c . e g illiiltfll Oc.&,<_3(crc,Ok; 83 3.2.5 Organizational Asset Holdings Overall, the Los Angeles voluntary sector has invested forty-eight percent of its $7,736,710,853 in assets in securities; seventeen percent in real property; and nearly sixteen percent in savings and other cash investments. The remaining nineteen percent is distributed primarily between receivables and inventories. Table 14 lists the complete breakdown of asset holdings for the organizations in the sample. Disaggregated asset information is listed in Table 15. TABLE 14 Assets Of Voluntary Agencies Within Los Angeles County ASSET CATEGORY $ % Cash 128,923,017 1.67 Savings and cash investments 1,097,711,288 14.19 Accounts receivable 186,989,374 2.42 Pledges receivable 146,429,365 1.89 Grants receivable 36,420,844 0.47 Receivables due from officers and staff 1,211,836 0.02 Other notes and loans receivable 238,232,115 3.08 Inventories for sale or use 36,041,212 0.47 Prepaid expenses and deferred charges 14,811,285 0.19 Investments— securities 3,697,918,082 47.80 Investments— land, buildings, equipment 138,461,874 1.79 Investments--other 125,190,887 1.62 Land, buildings, equipment 1,190,695,028 15.39 Other assets 697,674,646 9.02 TOTAL ASSETS 7,736,710,853 84 Securities were the preferred form of investment for every activity sector except for social welfare and community service organizations. These shares ranged from a low of twenty-seven percent for education and research organizations to a high of nearly seventy percent for arts and cultural activities. Savings and cash reserves constituted the largest share for international activities at forty-seven percent of the total with real property being the favored investment for social welfare at forty-five percent of the sectoral total. The dollar amount invested in property was $1,329,156,902 which has a significant impact on the property tax collections of local jurisdictions and on the County of Los Angeles. This impact will be discussed at greater length in the following chapter. However, at the basic one percent county property tax rate this represents revenue foregone in excess of $13,000,000. The amount of tax foregone as a result of tax-exempt activities is actually much greater because many other local organizations with similar tax exempt status are not included in this sample. What all of this represents, in terms of organizational revenues, expenditures, and especially assets is the basic political capital of these groups. This political capital is of sufficient size so that when 85 86 commanded in the pursuit of group political objectives the organizations possessing these resources are very likely to gain the attention of politicians and bureaucrats and in so doing accomplish group desires. 3.3 SUMMARY AND CONCLUSIONS Key dimensions of the organizational resource base have been examined which demonstrates the available wealth! that can be commanded by groups in metropolitan Los Angeles. The analysis also highlights the vulnerability of these groups to changes in the pattern of public assistance, laws, and regulations as they could affect these various resource distributions. Differences between activity sectors in terms of their resource endowments highlights the importance of a thorough evaluation of proposed public policies that advocate increased voluntary sector participation in community service delivery. The analysis also indicates great variation in' resource endowments between activity categories along witJ the significant concentration of wealth in the sector which is likely to make these groups quite sensitive to changes in the public policies affecting them. Consequently, changes in the distribution and types of public incentives assisting group activities should be evaluated carefully as 87 should the inducements for private giving to ensure that the benefits to be derived from these programs reach the groups they were designed for. Additional research needs to be conducted to determine if existing levels of concentration are in fact harmful and what impact this has on opportunities for community based organizations to engage in political endeavors. However, at an intuitive level this concentration of wealth appears to be a significant barrier to equal access to resources which are the foundation of a group’s existence and the basis of its effectiveness both politically and operationally. The analysis also suggests, within the command over resources framework, that the internal composition and interaction patterns of organizations within the sector has the potential to influence the overall level of voluntary activity. Specifically, the number of voluntary groups, their average size, and the degree of competition between them affects aggregate levels of voluntary activity. With over 8,560 organizations in metropolitan Los Angeles along with the 80 local jurisdictions, where these groups operate, it would seem likely there is constant interaction between the two sectors. The following chapter explores this conjecture by investigating how the resources of local 88 government interact with with those of private voluntary agencies to influence expenditure decisions on local services. Chapter IV INTERDEPENDENCE BETWEEN GOVERNMENT AND VOLUNTARY ACTIVITIES IN LOS ANGELES AREA CITIES 4.1 INTRODUCTION The absence of testing of pluralist models, as noted in Chapter One, has been justified by reference to the ambiguous nature of political influence and to the difficulties in its operationalization and measurement. On the one hand interaction is expected between those who govern and the governed in a democracy by definition. On the other, very little is actually known about the direction, magnitude, and content of those patterns of interaction and of the processes responsible for altering the balance between these elements. In this chapter an empirical analysis is conducted of the relationship between voluntary associations and local government in terms of expenditures for services, exploring those factors most likely to influence the nature of linkages between the two sectors. Specifically, the analysis: (1) outlines a theoretical framework that is suitable for a study of the interaction question; (2) 90 presents data on the distribution of organizations and expenditures throughout Los Angeles county (in addition to providing information on local service expenditures and community characteristics); and (3) estimates a model designed to evaluate the existence of interaction in the sample cities between voluntary and local public expenditures. 4.2 THEORETICAL BACKGROUND AND MODEL RATIONALE Evidence to support the concept of institutional interaction has essentially been nonexistent in past studies (March and Olson, 1984). This is due to the fact that while the notion of interaction is embodied in various theories (e.g., economic efficiency claims, public choice frameworks, and pluralist theories; Butler, 1982; Savas, 1982; Weisbrod, 1977; Dahl, 1961; and Polsby, 1980) it is a phenomenon that is quite difficult to operationalize: it covers a very wide scope. Consequently, while the full range of possible interactions is difficult to capture, an important indicator of the scope of mutual interaction is the extent to which the level and mix of local public expenditures are affected by voluntary activities and, conversely, the extent to which voluntary effort is influenced by the nature of municipal service offerings. 91 The methodology applied here is capable of assessing expenditure determinants where interaction is believed present. Expenditures by local government were selected for this purpose under the assumption that they serve as practical and usable proxies for political influence. It is assumed that the various policy constituencies exercise their influence during the formation of budget and allocational policies. Therefore, when an expenditure program is approved it represents an objective measure of the political power of those constituencies. The same logic applies to the expenditure decisions of voluntary agencies. Group expenditures are assumed to be a function of member and client demands as well as a response to public policies and programs previously adopted or pending. The vehicle for the assessment of this interdependence is a simultaneous equation model of local voluntary effort incorporating interaction between that effort and local governmental effort. This requires that suitably accurate information be developed for voluntary activities (a serious problem in past studies) and that the system estimated be theoretically interdependent (appropriate for evaluation by simultaneous equation techniques). Consequently, in order to accurately explain voluntary organizational expenditure patterns it is necessary to model local public expenditures as well. 92 4.2.1 Model Rationale Efforts to explain variations in local public expenditures constitute a major theme in the public finance literature. Starting in 1952 with Fabricant*s study The Trend of Government Activity in the United States Since 1900 a significant amount of effort has been directed towards the development of an appropriate framework for the analysis of local governmental finances. Early work using the Fabricant framework revealed systematic relationships between local expenditures and the economic and demographic characteristics of the community (Gramlich, 1969). Following this early work several researchers detected theoretical problems with the one-equation approach (Pogue and Sgontz, 1968; Broida, 1977). Their critique centered on how causality was addressed in the single equation OLS framework. Since it is possible to empirically verify that interaction is present between local effort and available funding sources, they stated, it became necessary to utilize a simultaneous equation framework, Gramlich (1969), Barr and Davis (1966), Henderson (1968), Bergstrom and Goodman (1973), and Inman (1978) also noted theoretical and empirical difficulties with these first studies. In response to these concerns they, attempted alternative model formulations which contributed 93 to the development of the public choice framework. The public choice model attempts to explain spending on the basis of median voter preferences and demands for local public services. The results of these theoretical refinements were used to produce preliminary estimates of the income and price elasticities for various public services (for a detailed summary see Inman, 1979). The public choice framework proved to be a much more sophisticated and analytically rigorous model of the local expenditure process than was attempted previously. However, the public choice approach is not ideal; its median voter model relies on an overly restrictive and unrealistic portrayal of political behavior due to its excessive emphasis on individual preferences and income (Cox and Nartowicz, 1980). Other attempts to model local expenditure decisions as a function of "dominant party" interactions (Ehrenberg, 1973; Brown and Saks, 1975; and McGuire, 1977) have been tried as well. Unfortunately, these later models also suffer from the difficult problems associated with devising empirical tests for hypotheses underpinning theoretical propositions that are not easily quantified. Broida (1977) offers an alternative approach that employs simultaneous equation techniques for the estimation 94 of governmental revenue and expenditure models. His formulation is based on the relationship of subsidies between levels of government and local actions. These "local actions" consist of the application of local resources (either revenues or expenditures) for specific public goods (e.g., police, fire, education, etc.). He claims that for specific classes of subsidies the appropriate cause and effect relationship between level of subsidy and level of effort can range from being determined in a one-way fashion to being jointly determined. In this formulation, "subsidies" are considered exogenous in the dynamic system. If correct, this formulation suggests thatj non-subsidy variables can be considered exogenous as well if the theoretical rationale for utilizing simultaneous equation modeling of the expenditure process exists and it can be hypothesized that interaction is present. These past studies have provided the theoretical basis for the expenditure determinants study undertaken here. It has been suggested above that simultaneous equation techniques have certain advantages over single equation and public choice frameworks. This type of specification allows for interaction and feedback effects whereas these other approaches do not. Perhaps the most important benefit is that this technique can be adapted to capture 95 the effects of politically active groups on local spending (decisions. Furthermore, with the appropriate data it can provide some insight into the extent to which groups are 'able to influence the budgetary process. To use the technique with California data, however, presents an interesting complication for an expenditure determinant study. In 1978, with the passage of Proposition 13 that limited the collection of property taxes in the state, the revenue generation options of local governments were severely restricted. The policy outcome of this vote was that a small minority of voters could effectively thwart new property tax increases due to the two-thirds majority required for passage. As a result, local services have come to be increasingly financed through user charges, fees for services, and from intergovernmental grants. Also, local governments have taken aggressive steps to lower administrative overhead by contracting out for services with the private sector. In the case of Los Angeles county, many cities take advantage of the "Lakewood Plan." They contract with the County for services like law enforcement, fire protection, and other services instead of providing these services locally because of presumed economies of scale from county provision. The remaining methods of revenue generation 96 left to local jurisdictions are tax base expansion through new development, rehabilitation of existing development, annexation of land, additional sales tax collections from new or expanded commercial development, and changes of ownership. Allocational questions have become increasingly more important now that it is no longer possible to readily expand the share of available local funds. Thus, interaction with local government in California is likely to be more intense now because of the higher stakes involved. It is much harder in relative terms to compensate the "losers" in the budgetary struggle because of the problems in securing additional funding at the local level. These arguments underscore the importance of employing an expenditure determination model for California that examines how group and public expenditures are jointly determined. 4.3 A MODEL OF VOLUNTARY AND PUBLIC EXPENDITURE DETERMINATION The logic entailed in the model specification advanced here combines a variant of the expenditure determinant approach with political theory addressing the behavior of groups in the political arena. This model operationalizes 97 political influence by positing that this influence is represented in the expenditure decisions of both government and the groups studied. The model is based on the assumption that acquiring, allocating, and expending resources for political gain is the essence of interest group participation in the system of governance. The explanatory factors considered in the formulation of this model were based on likely voluntary group and local government expenditure determinants which includej community income, social needs, urban structure and ecology, industrial structure, political structure, donation potential, and tax capitalization concerns. These factors are elaborated below and were selected because they are generally regarded in the academic literature as being most influential in determining the expenditure decisions of voluntary groups and local government. 4.3.1 Voluntary Groups The composition and activity levels of community based voluntary groups are hypothesized to be a strong influence on the level and mix of local public spending. This influence is presumed to operate in one of two general directions. As interest groups, these associations can i target their resources to enhance the revenue base at the 98 local level in the form of advocacy for revenue enhancement strategies (e.g. increased tax base expansion, fees, user charges etc.) or at the state and federal levels for alternative funding for service delivery needs. In addition, the service providing activities of these groups can either replace local service expenditures, or stimulate spending through a reallocation of local resources as part of their advocacy activities. Quite possibly, a mix of these behaviors may be evident. If groups are successful in their advocacy activities for increased spending for local services, or when their activities stimulate local spending then, a positive relationship between group and governmental expenditures is expected. A negative relationship is to be expected if group expenditures substitute for public provision. 4.3.2 Community Income Personal income and marginal tax rates are typically identified as determinants of voluntary revenue pools at the national level. The econometric evidence on charitable contributions suggests that when the effects of population characteristics are controlled, donations increase with increasing income. Elasticities are generally estimated to be around unity (Feldstein, 1974; Reese, 1979). Moreover, 99 the price of giving declines with rising income because of the income tax's progressive rate structure. To the extent that donated funds stay within the city of origin, voluntary resources are likely to rise with increasing community income levels. It is also expected that the level of per-capita expenditures varies directly with the amount of community based funding available for those expenditures. This is represented by the composition of the local tax base in terms of property values and income levels which represent both tastes for service provision and needs for those services. 4.3.3 Social Needs I Just as public resources are often targeted to those in need of material or financial assistance, voluntary resources are also often targeted towards alleviating community social service needs. These resources are also used for raising the standard of living of those at the bottom of the social welfare scale. This is particularly! true if the utilities of residents in a community are interdependent (Hochman and Rogers, 1973). Although the empirical evidence on the relationship between social needs and donative behavior is mixed (see Reese, 1979) the 100 explicit purpose of many voluntary organizations is to address and reduce social needs. Consequently, it is reasonable to expect social need levels to influence donations from local residents as well as from outside sources who view a poorer nearby community as deserving of their beneficence (i.e., high local needs lead to increased voluntary effort). The variables--percentàge minority population, percentage elderly population, and unemployment rate— are used here as indicators of social needs and the level of local expenditures. If government and voluntary sector expenditures are targeted towards alleviating social needs levels, then we would expect a positive relationship between these variables and the expenditures made by government and private voluntary groups. The alternate interpretation, however, is that in areas of high social need there are less available resources for both the public and private sectors to expend in terms of taxes and voluntary sector revenues and, as such, these factors could be negatively related to expenditures. 101 4.3.4 Urban Structure and Ecology Lincoln (1978), suggested that the ecological structure and dynamics of a city will be important in determining the number of voluntary organizations in a community. Lincoln's model operationalized this proposition by relating numbers of organizations to several urban structure variables. It was hypothesised that older and more stable cities will have more voluntary organizations (because time and stability allow for the development of a dense petwork of social and organizational ties) and more mature organizations capable of the fundraising necessary for survival along with the development of social infrastructure required for inducing new voluntary initiatives. The size and demographic characteristics of the local population are posited here and by Gramlich (1969) to be related to the level and mix of public expenditures. The local electorate both literally and figuratively sets the demand parameters for services including the ability to pay for and the need for specific public services. Variables' 1 representing city age, economic base, and population characteristics are used here to provide some indication of both the growth in demand for public services and the mix of services desired by a particular jurisdiction. 102i 4.3.5 Industrial Structure The industrial structure of communities is related to the voluntary resource base for several reasons. Information on donative behavior has shown that there are differentials in donations rates between occupational categories as well as between corporate givers in different industry sectors (AAFRC, 1980). Also, it is possible that organizations in cities with higher rates of capital investment and value added might be the recipients of donations from local firms wishing to support the community. Furthermore, many nonprofit service clubs are often directly or indirectly connected with local business and, as a consequence, are likely to be more prevalent in cities with a strong economic base. Lastly, firm size plays a substantial role in the corporate giving decision. Larger firms tend to be more generous proportionately in their giving than smaller firms, so that organizations in cities with a larger economic base could be the beneficiary of higher levels of corporate assistance (Wolch and Geiger, 1985). Local industrial composition is also a critical factor for assessing variations in local expenditures due to the fact that industry is one of the major consumers of locally produced services and through its contributions to the tax 103 base accounts for a substantial amount of the revenues used for providing those services. Consequently, cities with large commercial and industrial economic bases receive more revenues for the production of local services but the demands for those services are also greater. It is expected here that these economic descriptors are positively related to overall local expenditure levels and in some instances positively related (on account of corporate philanthropy) to local voluntary expenditures as well. However, even though cities with high levels of economic activity have proportionately more revenue than cities without a similar economic base, it is also possible that local expenditures for services required by industry crowds out spending for human services. If this is true, it is possible that in cities characterized by this pattern of economic development, voluntary organizations could benefit from corporate donations and thus be positively related to economic structure variables. 4.3.6 Political Structure The existence of local voluntary organizations provides the opportunity for increased participation in the decision-making activities of local government. They serve many roles in local communities, such as activists. 104 information sources, consensus builders, and service providers. These groups often serve as a point of exchange between the socio-economic and political elites involved in the conduct of government. Operating as an important locus of community activism, voluntary organizations lobby local government on behalf of their members and clientele, and keep them informed about the actions and policies of local elected officials, hence providing opportunities for increased citizen participation in politics. The interest group function of voluntary organizations is dependent upon the structural characteristics of government and the responsiveness of the public sector to the demands of these groups. The impact of voluntary participation on decision-making is related to the form of governmental organization (e.g., at-large versus district representational systems, form of incorporation, etc.), as well as the credibility placed on the policy positions held by associations and the impact of their activities on the attitudes of local elected or appointed officials. Additionally, the way in which the local public bureaucracy is organized contributes to how services are apportioned and financed thus impacting the level and mix of services provided. Miller (1981) provides evidence that in the case of cities incorporated in Los Angeles county 105 since 1954, most have contracted for their primary services from the County rather than by the creation of a competing local service bureaucracy. Many urban analysts have come to view this system as a desirable mode of service provision that allows for efficiency improvements in the administration of local services within a context of fragmented local government. This type of service production is often praised on the basis of enhanced home rule and improved coordination of local service production that would not be possible without county contracting. The variable form of local incorporation is used here as the governmental structure variable and is expected to have a positive sign because chartered cities have greater discretion over the administration of local affairs in California than do general law cities and, as a consequence, are better able to respond to local issues and special interests. A city age variable is included as well to detect both service needs associated with aging infrastructure but also the current trend towards increasing county contracting for service provision. In fact, the overwhelming number of recently incorporated cities within the county have opted to contract with the county for basic service provision. Since the range of available services is narrower at the county level it is 106: expected that for recently incorporated cities a negative relationship exists between city age and voluntary activities. Older cities have the necessary social infrastructure to support voluntary initiatives and are more likely to be populated by residents desiring increased service output hence the positive relationship with age. This is in contrast to the newly incorporated jurisdictions whose attitudes regarding service delivery issues are posited to be much different. Reasons typically given for incorporating are local resident's desires for greaterj control over service production decisions, as well as enhanced local autonomy. Thus, local public expenditures are also thought to be positively related with age on the basis of differences in needs and attitudes. ! To further test for local attitudes, the proportion of voters who voted for Proposition 13 (the tax limitation initiative) was included as a variable to act as a surrogate for local opinion concerning service deliveryj issues. This variable is expected to be negatively related to local expenditures in that a vote for this initiative would indicate an attitude favoring service expenditure reductions. However, this variable does not entirely indicate an anti-services attitude. It might indicate only an attitude in opposition to the current system of public 107 finance for their production. If true, this would suggest a positive relationship between this indicator and public output if other substitute financing alternatives were available (e.g., the voluntary sector, fees, grants, etc.). 4.3.7 Donation Potential Donors can target their gifts to the organizations of other cities as well as to agencies located within theirj own communities. If potential donations to the organizations within a city are related to non-local donorj I income and to the availability of information to donors concerning local causes, then income potential (geographic access to the metropolitan personal income pool) of a* jurisdiction will be positively related to the size of the local voluntary sector and the extent of its service providing and other activities. 4.3.8 Tax Capitalization McEachern (1981), Gabier and Shannon (1977), and Balk (1971) considered the role of tax capitalization in influencing the locational behavior and property tax implications of tax-exempt institutions, respectively. These findings suggest that it is the sale price of property and not the local property tax burden thaJ 108 influences the locational decisions of nonprofit organizations since they are exempted from having to pay property taxes. If fiscal differentials across jurisdictions are capitalized, then the lowest sale price for otherwise identical properties will be in thJ jurisdiction with the highest property tax rate. They argue that for similar parcels of land, tax-exempt organizations will tend to locate in areas with the highest nominal property tax rates. This situation leads to J condition where nonprofits have an enhanced incentive tOj cluster in high tax cities, which results in an erosion of the local tax base without any corresponding decrease in the demand for services produced from those revenues. As a consequence, location or expansion of nonprofit activity is therefore viewed as being most attractive, when only the sale price of land is considered, in jurisdictions with the least fiscal resources. Percentage of tax-base exempt from taxation was used here to operationalize this concept. This variable is expected to be negatively related to local governmental^ expenditures in recognition of the fact that the proportion of exempt property in a community directly reduces the amount of available property tax revenues for expenditures for local services. 109 4.4 EMPIRICAL ANALYSIS The preceding factors are thought to represent the interdependent relationship between group and governmental actions. To test for this hypothesized relationship a simultaneous equation model was specified and estimated. The results of this modeling exercise provide the empirical basis for evaluating the theory presented in Chapter One as it relates to the interdependent nature of political resource command. The structural equations of the basic interdependent model are shown in Table 16 . TABLE 16 The Interdependent Model Structural Equations (1) V = f(G,Y,U,N,I,D); (2) G = f(V,S,E,F,A,C); Where endogenous variables for jurisdiction i are: V = Voluntary sector effort per-capita G = Local expenditures per-capita and exogenous variables for jurisdiction i are: Y = Median family income Ü = Urban ecological characteristics N = Social needs level I = Industrial structure D = Income-donations potential S = Proportion of local revenues from sales taxes E = Proportion of tax base exempt from taxation F = Proportion of local reveneus from fees A = Local attitudes concerning public services C = City type 110 Several versions of this general specification were tested using city level data on voluntary organizations and a set of financial and demograhpic descriptor variables pertaining to the incorporated cities within the County (see Appendix H for sources). Voluntary effort per-capita was measured by organizational expenditures (total agency expenditures--(Equations One and Four), and total agency program expenditures— (Equations Two and Five) and organizational assets— (Equations Three and Six). Data on voluntary and public sector expenditure patterns were collected for 80 cities in Los Angeles County which was subsequently consolidated into city-wide totals. This aggregation was necessary to match the level of aggregation for the rest of the data because the unit of analysis selected is at the jurisdictional level. Table 17 presents a statistical profile of the sample cities. Table 18 relates the distribution of sample organizations throughout the metropolitan area to the regional share of population for each jurisdiction. Appendices E, F, and G list the distribution of revenues, expenditures, and assets in the same manner. What this information reveals is that the City of Los Angeles dominates the sample in terms of voluntary sector activity associated with revenues, expenditures, and assets although 111 its share of voluntary organizations is only slightly greater than its share of population. This suggests that more of the larger organizations in the sample are headquartered in the City than in the suburbs which is consistent with earlier research on the distribution of voluntary resources in Los Angeles county (Wolch and Geiger, 1983). This study indicated that the vast majority of region serving institutions are located in the City of Los Angeles. While this research dealt with only one of the seven activity sectors investigated herJ (Social Welfare and Community Service's) this pattern of region serving institutions being concentrated in Los Angeles is continued. This, however, is reasonable and should be expected and is comparable to similar distributions for employment, jobs, and housing. 112 TABLE 17 Community Profiles Descriptive Mean Standard Maximum Minimum Variables Deviation Value Value Median family income ($) 11505 3703 23045 6641 Minority Pop. % 23 17 93 4 Elderly Pop. % 9 4 27 3 Median Pop. Age 30 5 44 22 Population Density (persons/sq.mi) 6090 3948 18175 18 Median Home Value ($) 99497.8 44722.8 200100 45900 Owner Occ. Housing % 57 20 98 13 Manufacturing Emp. 44 19 86 7 City Age 51.48 29.21 133 5 Pop. % on Public Asst. 6 7 44 0 Crime Rate 73.8 29.5 192.9 23.9 Infant Mortality Rate 11.8 8.4 48.8 1.0 Number of Voluntary Orgs. 107 486.58 4349 1 Number of Religious Orgs. 3.79 15.80 139 0 Number of Education Orgs. 24.34 116.30 1041 0 Number of Int'l Orgs. 1.79 8.75 77 0 Number of Health Orgs. 9.89 47.73 423 0 Number of GC Orgs. 13.59 73.79 650 0 Number of Arts Orgs 10.08 52.07 465 0 Number of SWCS Orgs. 43.54 173.50 1554 0 See Appendix H for sources. 113 TABLE 18 Organizations By Descending Population N % OF ORGS. % OF POP LOS ANGELES 4349 50.81 45.86 LONG BEACH 427 4.99 5.59 GLENDALE 193 2.26 2.15 TORRANCE 135 1.58 2.03 PASADENA 386 4.51 1.84 INGLEWOOD 85 0.99 1.46 POMONA 85 0.99 1.43 SANTA MONICA 273 3.19 1.37 NORWALK 37 0.43 1.32 BURBANK 121 1.41 1.31 DOWNEY 80 0.94 1.28 COMPTON 63 0.74 1.26 CARSON 42 0.49 1.26 WEST COVINA 49 0.57 1.24 EL MONTE 46 0.54 1.23 LAKEWOOD 26 0.30 1.15 WHITTIER 109 1.27 1.06 SOUTH GATE 24 0.28 1.03 ALHAMBRA 63 0.74 1.00 REDONDO BEACH 53 0.62 0.88 HAWTHORNE 38 0.44 0.87 MONTEREY PARK 58 0.68 0.84 PICO RIVERA 24 0.28 0.83 BELLFLOWER 31 0.36 0.83 MONTEBELLO 47 0.55 0.82 CERRITOS 38 0.44 0.82 BALDWIN PARK 26 0.30 0.78 LYNWOOD 21 0.25 0.75 LANCASTER 55 0.64 0.74 HUNTINGTON PARK 28 0.33 0.71 ARCADIA 83 0.97 0.71 GARDENA 52 0.61 0.70 ROSEMEAD 27 0.32 0.66 LA MIRADA 24 0.28 0.63 GLENDORA 37 0.43 0.60 CULVER CITY- 75 0.88 0.59 PARAMOUNT 14 0.16 0.56 RANCHO PALOS VERDES 31 0.36 0.54 BELL GARDENS 12 0.14 0.53 COVINA 57 0.67 0.52 BEVERLY HILLS 336 3.93 0.50 MANHATTAN BEACH 33 0.39 0.49 114 TABLE 18— continued CLAREMONT 81 0.95 0.48 LA PUENTE 21 0.25 0.48 MONROVIA 37 0.43 0.47 SAN GABRIEL 43 0.50 0.46 AZUZA 29 0.34 0.45 TEMPLE CITY 20 0.23 0.45 BELL 7 0.08 0.39 SAN DIMAS 14 0.16 0.37 LA VERNE 28 0.33 0.36 LAWNDALE 12 0.14 0.36 SOUTH PASADENA 60 0.70 0.35 MAYWOOD 6 0.07 0.34 LA CANADA FLINTRIDGE 36 0.42 0.31 HERMOSA BEACH 18 0.21 0.28 CUDAHY 3 0.04 0.28 SAN FERNANDO 31 0.36 0.27 LOMITA 17 0.20 0.27 DUARTE 15 0.18 0.26 SOUTH EL MONTE 13 0.15 0.26 SANTA FE SPRINGS 20 0.23 0.23 PALOS VERDES ESTATES 47 0.55 0.22 ARTESIA 13 0.15 0.22 EL SEGUNDO 31 0.36 0.21 SAN MARINO 39 0.46 0.21 PALMDALE 20 0.23 0.19 SIERRA MADRE 24 0.28 0.17 HAWAIIAN GARDENS 6 0.07 0.16 COMMERCE 12 0.14 0.16 WALNUT 12 0.14 0.15 ROLLING HILLS ESTATES 20 0.23 0.15 SIGNAL HILL 2 0.02 0.09 LA HABRA HEIGHTS 2 0.02 0.08 ROLLING HILLS 7 0.08 0.03 HIDDEN HILLS 2 0.02 0.03 IRWINDALE 4 ,0.05 0.02 BRADBURY 1 0.01 0.01 INDUSTRY 9 0.11 0.01 VERNON 5 0.06 0.001 115 4.5 REGRESSION ANALYSIS The simultaneous equation model delineated in Table 16 was estimated using multiple regression analysis, using both two-and three-stage least squares techniques. Results obtained were very similar between the two estimation methodologies. However, due to the somewhat high correlation across the models (-0.47 to -0.61) results are reported from the three-stage least squares estimation to eliminate any possible bias in the model parameters. Alternative specifications of the model were also estimated using several different descriptors of voluntary and local government effort in the incorporated cities of the Los Angeles county. The variables used to measure the level of voluntary resources included total agency expenditures per-capita; total agency program expenditures per-capita; total agency assets per-capita; average agency expenditures; average agency program expenditures; and number of voluntary organizations. Ten basic city descriptor variables were specified and tested. Many alternative variables were also examined, however, the majority of those examined were highly intercorrelated with the variables employed in the analysis. For instance, median family income (INCOME) is a measure of community income, and is also strongly 116 correlated with median home value, rent levels, and percentage of dwellings that are owner occupied. The urban écologie descriptors included in the analysis were percentage elderly population (PCTOLD), percentage minority population (PCTMIN), city age (CITY AGE) (1983-Incorporation Date), and population density (persons/square mile) (PDENSITY). Social needs levels were proxied by the crime rate (CRIMES), infant mortality ratJ (INFMORT), and percentage of population receiving public cash assistance (aid to families with dependent children, and general relief) (TOTRCP). Local service finance variables relating to the ability of local governments to I provide services were sales-tax collections per-capita (STAXPC), fee collections per-capita (SERVPC), and percentage of tax-base exempt from taxation (EXMTPCT). Political structure and attitudes were included using the legal form of municipal incorporation (CLASCODE), J dummy variable signifying either a chartered city, (CLASCODE=0) or general law city (CLASC0DE=1). This is an important explanatory factor because cities in California that are incorporated under local charters have a far greater degree of autonomy in the design and operation of local governmental institutions than do cities that have been incorporated under general law statutes specified by 117 the state legislature. Attitudes concerning local service delivery issues and the willingness to pay for suchj services are represented by the proportion of voters that voted for Proposition 13 in 1978 (YESLA13). I n d u s t r i a l s t r u c t u r e i s r e p r e s e n te d by th e p e r c e n ta g e of th e employment base in v o lv e d in m anufacturing (PCTMFG). M anufacturing a c t i v i t y i s c o r r e l a t e d w ith o th er economic d e s c r i p t o r s a s w e ll as w ith l o c a l e x p e n d itu r e s for p u b lic s a f e t y s e r v i c e s ( p o l i c e and fire). In com e-d on ation s p o t e n t i a l i s r e p r e s e n te d by th e i n c l u s i o n of a stan d ard in c o m e -p o t e n tia l m easu re*’ (INCPOTNL) which i s a l s o h ig h ly c o r r e l a t e d w ith c i t y p o p u la tio n . The v a r ia b le m easures l o c a l p o p u la tio n s i z e and th e s p a t i a l placem ent of th J j u r i s d i c t i o n in terms of th e o v e r a l l d i s t r i b u t i o n of m e tr o p o lita n p o p u la tio n and income. I n t e r c o r r e la t io n s | between the in c lu d e d v a r i a b l e s are l i s t e d in Table 19. Income potential was calculated according to the following formula: R Y P O T (i)= I (AGGY(i)/D(i)(i))^ i = 1 I where AGGY(j) is aggregate personal income in jurisdiction(j); D(i)(j) is distance between jurisdictions (i) and (j); and B is a friction of distance exponent and was set at 2. 118' TABLE 19 Intercorrelations Between The Independent Variables INCOME CRIMES INFMORT PCTOLD PCTMIN TOTRCP CITYAGE CRIMES -0.537 INFMORT -0.356 0.356 PCTOLD -0.134 0.383 0.032 PCTMIN -0.569 0.470 0.274 -0.163 TOTRCP -0.510 0.329 0.319 0.041 0.486 CITY AGE -0.258 0.195 0.049 0.383 0.163 0.197 INCPOTNL 0.115 -0.013 0.084 0.180 0.027 0.043 0.264 STAXPC -0.125 0.260 0.159 -0.066 0.230 0.152 -0.100 EXMTPCT 0.155 -0.403 -0.052 0.084 0.106 -0.111 0.031 SERVPC -0.046 0.215 0.153 0.196 -0.115 -0.129 0.494 PDENSITY -0.108 0.004 0.247 -0.010 0.250 0.050 0.243 CLASCODE 0.087 -0.187 -0.121 -0.326 -0.088 -0.043 -0.359 PCTMFG -0.423 0.108 0.219 -0.313 0.392 0.484 -0.215 YESLA13 -0.124 0.115 0.054 0.105 0.104 0.053 0.242 INCPOTNL STAXPC EXMTPCT SERVPC PDNSTY CLASCODE PCTMFG STAXPC -0.055 EXMTPCT 0.073 0.046 SERVPC 0.090 -0.313 -0.070 PDENSITY 0.286 0.226 0.696 -0.130 CLASCODE -0.445 0.013 -0.088 -0.322 -0.101 PCTMFG -0.294 0.176 -0.060 -0.144 -0.240 0.246 YESLA13 0.632 -0.151 0.066 0.211 0.076 -0.299 -0.033 4.6 MODEL RESULTS The majority of the included variables were statistically significant at the five-percent level and greater. The explanatory power of the model equations was excellent with R-Squared ranging from between 0.75 to 0.81. These results lend considerable support to the expected interaction between voluntary and governmental expenditures developed earlier. Additionally, they highlight some behavioral factors that warrant further consideration. 119 Results are presented in double-log form using the following dependent variables: total agency expenditures per-capita (Equation One); total agency program expenditures per-capita (Equation Two); and total agency assets per-capita (Equation Three). A second estimation of each of these three equations was also performed with PCTMFG included (Equations Four through Six respectively). Results obtained from these three estimations are generally consistent, however, there are some minor differences due to the fact that this variable is only available for two-thirds of the sample cities. 4.6,1 The Interdependent System The hypothesized interdependence between private voluntary and local governmental expenditures is demonstrated in each of the model formulations shown in equations one through six. The other included variables performed as anticipated with the expected direction or sign of the coefficients following intuition except for sales taxes per-capita. The negative sign in this case where a positive relationship was theorized is due to the fact that the majority of retailing activities are located in the most populous cities in the County and when normalized by population on a per-capita basis are diluted 120 by comparison. Also, the negative sign suggests that sales tax revenues are increasingly being used as a substitute for other revenue sources that are declining in importance and as such assist jurisdictions in maintaining the status-quo rather than providing the basis for expanding local services. TABLE 20 Selected Regression Results, Equation One Dependent variable Voluntary Expenditures Variable Regression t-Statistic Coefficient Local Expenditures 1.01 (1.93) Income 2.51 (2.29) Crime Rate 1.22 (1.56) Infant Mortality Rate -0.37 (-1.45) Percentage Old 1.92 (3.68) Percentage Minority 0.72 (2.10) Percentage Welfare Recip. -0.01 (-0.03) City Age 0.42 (1.31) Income Potential -0.22 (-0.70) Dependent variable Governmental Expenditures Variable Voluntary Expenditures 0.19 (5.68) Sales Taxes -0.10 (-1.39) Exempt Property -0.58 (-7.83) Fee Collections 0.17 (3.72) Attitudes 0.07 (1.23) City Type -0.16 (-1.43) R-Square 0.78 N 70 1211 ____I TABLE 21 Selected Regression Results, Equation Two Dependent variable Voluntary Expenditures Variable Regression t-Statistic Coefficient Local Expenditures 0.77 (1.69) Income 2.21 (2.29) Crime Rate 0.88 (1.29) Infant Mortality Rate -0.42 (-1.84) Percentage Old 1.65 (3.61) Percentage Minority 0.73 (2.39) Percentage Welfare Recip. 0.01 (0.08) City Age 0.42 (1.46) Income Potential -0.05 (-0.19) Dependent variable Governmental Expenditures Variable Voluntary Expenditures 0.21 (5.36) Sales Taxes -0.09 (-1.30) Exempt Property -0.60 (-8.37) Fee Collections 0.20 (4.62) Attitudes 0.05 (0.84) City Type -0.16 (-1.48) R-Square 0.75 N 70 In the aggregate, voluntary sector expenditures and assets are located in the older, lower to middle income jurisdictions that have slightly higher levels of per-capita public expenditures. The local populations were somewhat older with a slighty higher proportion of minority residents living there than the regional average. Even though these areas had higher crime rates they had low 122 TABLE 22 Selected Regression Results, Equation Three Dependent variable Voluntary Assets Variable Regression t-Statistic Coefficient Local Expenditures 1.12 (2.47) Income 2.38 (2.47) Crime Rate 0.65 (0.95) Infant Mortality Rate -0.51 (-2.19) Percentage Old 2.54 (5.45) Percentage Minority 0.84 (2.70) Percentage Welfare Recip. -0.03 (-0.17) City Age 0.33 (1.15) Income Potential 0.14 (0.51) Dependent variable Governmental Expenditures Variable Voluntary Assets 0.17 (5.55) Sales Taxes -0.09 (-1.40) Exempt Property -0.59 (-8.80) Fee Collections 0.21 (5.04) Attitudes -0.01 (-0.19) City Type -0.20 (-1.90) R-Square 0.79 N 70 infant death rates and few welfare recipients which suggests that these may become communities of transition although this has not happened as yet. Industrial structure was not a significant explanatory factor to account for levels of voluntary sector activity, suggesting that voluntary activities are taking place in largely residential areas. Also, the funding for voluntary 123 agencies in these communities was probably raised from local donors or from other outside sources, as the income potential variable was not significant for any of the estimated equations. Most significantly, local expenditures per-capita were' positively related to voluntary expenditures and assets per-capita which supports the hypothesis that voluntary group actions are a stimulative force on levels of local effort. This finding lends credence to the theory, developed here that voluntary organizations and government' interact and affect each others operations. This significant level of interaction underscores the importance} of the command over resources approach and of the impact of the advocacy activities of these groups on local decisionmaking. Additionally, the notion that voluntary organizations are an effective and viable substitute for governmental provision is not supported. In this sample, instead of providing a substitute for public provision the services provided by these agencies generally supplemented I public output and in so doing contributed to an increase in local public service levels. The governmental structure variable (CLASCODE) performed as hypothesized wherein this variable indicated that there was a significant difference in the relationship 124 TABLE 23 Selected Regression Results, Equation Four Dependent variable Voluntary Expenditures Variable Regression t-Statistic Coef f ic ient Local Expenditures 0.56 (0.98) Income 3.24 (1.57) Crime Rate 1.21 (1.28) Infant Mortality Rate -0.29 (-0.97) Percentage Old 1.61 (2.65) Percentage Minority 0.46 (1.27) Percentage Welfare Recip. 0.19 (0.52) City Age 0.40 (1.10) Income Potential 0.18 (0.56) Percentage Manufacturing 0.46 (1.14) Dependent variable Governmental Expenditures' Variable Voluntary Expenditures 0.27 (5.05) Sales Taxes -0.15 (-1.64) Exempt Property -0.57 (-6.59) Fee Collections 0.16 (2.55) Attitudes -0.01 (-0.11) City Type -0.20 (-1.54) R-Square 0.78 N 50 between local government and the voluntary sector in chartered cities. The political attitude variable was completely insignificant in all of the model estimations.} Also, the regression results indicated that these cities had high levels of property exempt from taxation which illustrates the contradictory nature of voluntarily TABLE 24 Selected Regression Results, Equation Five Dependent variable Voluntary Expenditures Variable Regression t-Statistic Coef f ic ient Local Expenditures 0.43 (0.64) Income 3.43 (1.42) Crime Rate 1.42 (1.28) Infant Mortality Rate -0.37 (-1.05) Percentage Old 1.68 (2.40) Percentage Minority 0.53 (1.26) Percentage Welfare Recip. 0.17 (0.38) City Age 0.47 (1.10) Income Potential 0.22 (0.58) Percentage Manufacturing 0.56 (1.17) Dependent variable Governmental Expenditures Variable Voluntary Expenditures 0.25 (4.76) Sales Taxes -0.17 (-1.76) Exempt Property -0.60 (-6.70) Fee Collections 0.18 (2.64) Attitudes -0.01 (-0.07) City Type -0.20 (-1.45) R-Square 0.75 N 50 produced services. While voluntary groups oftentimes do provide a public benefit from the services they produce,; ! they may also increase expectations for all types of 1 services in the communities where they are located. The paradox arising from this situation is that the property} tax exemptions granted to these agencies reduce the funds 126 _J TABLE 25 Selected Regression Results, Equation Six Dependent variable Voluntary Assets Variable Regression t-Statistic Coefficient Local Expenditures 1.16 (2.04) Income 2.52 (1.25) Crime Rate 0.71 (0.77) Infant Mortality Rate -0.15 (-0.51) Percentage Old 1.62 (2.68) Percentage Minority 0.53 (1.51) Percentage Welfare Recip. 0.16 (0.47) City Age 0.41 (1.15) Income Potential 0.39 (1.21) Percentage Manufacturing 0.18 (0.46) Dependent variable Governmental Expenditures Variable Voluntary Assets 0.25 (5.56) Sales Taxes -0.11 (-1.32) Exempt Property -0.50 (-6.06) Fee Collections 0.16 (2.73) Attitudes -0.06 (-1.03) City Type -0.17 (-1.37) R-Square 0.81 N 50 available to local governments for financing their community services. Finally, these jurisdictions were also characterized by higher fee collections which indicates that these jurisdictions have attempted to exploit all available sources of funding to keep pace with local service demand. 127 In contrast to these patterns, several other city types are interesting to note because of their conspicuous absence from the profile of the active voluntary sector just described. One type is the recently incorporated high income suburb as noted by Miller (1981) that has low levels of social need and a correspondingly low demand for collective service provision. A second type of city is characterized by high levels of welfare recipients, infant deaths, and high crime. Finally, the industrial cities of the county do not have a thriving voluntary sector either, although there are unmet social needs in these jurisdictions. What all of this suggests is that the voluntary sector as presently constituted is likely to be a very poor substitute for public provision. The sector functions best in those communities that have the requisite social infrastructure to support these types of activities. Since this infrastructure is not likely to be uniformly distributed throughout metropolitan regions the efficacy of a policy of voluntary substitution for public provision of collective services is highly questionable. 128 4.7 SUMMARY AND CONCLUSIONS Results of the statistical analysis supported theoretical expectations. Voluntary group resource command strongly affects local governmental expenditures and to a lesser extent vice versa. Cities where this interaction was most pronounced tended to be lower to middle income chartered cities with a greater percentage of elderly and minority population than the regional average. The analysis has serious implications for recent proposals to privatize certain collective services with voluntary effort. First, the voluntary sector as presently constituted is likely to be a very poor substitute fotj publicly provided collective services. Second, it appears that voluntary organizations require the existence of well developed social infrastructure in order to prosper. This is represented in the areas of the metropolitan region with demonstrated need but who are unable to generate a response from the voluntary sector. Last, the effect of voluntary^ expenditures on local governmental effort was stimulative;| however, the mixed effects of lost revenues from property tax exemptions and other inducements for private giving makes it questionable whether the net effect of this public assistance leads to more services produced per dollar spent. 129 The implications of this research underscore the need for continued research in this area. At this point in time, insight into the interrelationships between the voluntary sector and the local public sector needs further elaboration. The simultaneous equation technique was shown to be useful and appropriate for assessing the interaction question. Further studies using this method will generate needed information concerning the exact composition and content of patterns of institutional interdependence. 1301 Chapter V CONCLUSION 5.1 SUMMARY OF RESEARCH The focus of this research has been on the institutional interdependence between voluntary organizations and the institutions of government. A new framework was proposed and evaluated, the command over resources approach that offers a contextual viewpoint for assessing the behavior of actors in the political arena. Data developed as a part of this exercise have demonstrated the dimensions of voluntary sector resource command for the Los Angeles metropolitan region. The intent of the research has been to assess the likelihood of interaction between private interest groups or voluntary agencies and government. Chapters One and Two developed the framework for assessing this question by relating group resource command to political outcomes rather than previous approach of only assessing processes governing resource allocation and distribution to groups. Chapter Three delineated the dimensions of voluntary group 131 resource command for metropolitan Los Angeles. This analysis revealed that the Los Angeles voluntary sector is quite large in terms of its revenues, expenditures, and assets; is extensively differentiated in terms of the functions and activities engaged in; and possesses significant direct and indirect resources that are available to command. A simultaneous equation model to assess the interaction question was developed and tested in Chapter Four. Results of this exercise showed that interaction was indeed present between the expenditure decisions of the voluntary agencies and local governments. The model is based on a combination of basic expenditure determinants ofj local expenditures with theoretical factors believed to| directly determine group expenditures. The model also has wider applicability to other governance questions where it is hypothesized that interaction is indeed present. 5.2 POLICY IMPLICATIONS This research has produced two major findings that have important consequences for public policy. The first is that interaction was shown to exist in an interdependent fashion between group actions and public actions. This finding represents the first objective test of the many 132 ____I theories of pluralism. Even though all of the cities in the metropolitan region did not have a viable voluntary sector, in those that did there was statistically significant interaction between the expenditure decisions of the two sectors. Groups and government should be particularly interested in applying the simultaneous equation framework and certain of the variables suggested here to a wide variety of issues where interaction is believed present. These efforts could lead towards the development of more comprehensive and effective citizen participation mechanisms. With evaluation possible by the use of this technique, studies directed towards improving citizen participation mechanisms would be well worth the effort. The second finding relevant to public policy concerns is the high degree of concentrated wealth in the voluntary sector. Research needs to be conducted to determine what the impacts of this concentration are in terms of lost opportunities for citizen participation and inefficient service production as a result of a lack of competition. A study of this type would provide the basis for assessing the appropriateness of regulations to improve the distribution of wealth in the voluntary sector. An additional and equally important aspect of this type of 133 review would be the opportunity to evaluate how the benefits from public assistance are distributed. Then it would be possible to better ensure that the designated beneficiaries of these programs actually received the benefits supposedly directed to them. 5.3 DIRECTIONS FOR FUTURE RESEARCH First, additional theoretical and empirical work needs to be conducted to determine what the expected distribution of voluntary organizations in metropolitan regions is likely to be. In particular, at this point in time there is no readily agreed upon standard to evaluate these distributions. This issue is particularly important if recently proposed policies to increase voluntarily provided services become more popular. Second, more accurate information on metropolitan voluntary organizations of a type similar to that developed here is needed so that comparative analyses can be conducted for various metropolitan regions. This is a terribly important task because without this information it is impossible to assess the resource command of organizations and as well their political effectiveness. Also, studies should be conducted to accurately determine the incidence of service costs for voluntarily produced 134 services so that the existing programs of tax favoritism and revenue foregone policies can be evaluated in light of the benefits and costs of these programs. Third, the concept of institutional interaction needs further refinement and elaboration as well as the command over resources framework. These are important tasks for improving our understanding of the dynamics behind institutional interaction and how the process can be designed to support (and not distort) democratic values. This exercise could also provide the basis for improving institutional forms so that the practice of politics might be enhanced. Finally, the overall quality of the data in this field needs substantial improvement. 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Williams, L., Moorehead, D.V., "An Analysis of the Federal Tax Distinctions Between Public and Private Charitable Organizations", Foundations, Private Giving and Public Policy ! Report and Recommendations on Foundations and Private Philanthropy, Volume 4; Taxes, Commission on Private Philanthropy and Public Needs, Chair J.H. Filer, US Government Printing Office, Washington, DC, 1977, 2099-2129. Wolch, J., "The Voluntary Sector in Urban Communities", Environment and Planning D: Society and Space 1, 1983, 181-190.----------------- --- -------------- ------ Wolch, J.R., Geiger, R.K., "Corporate Philanthropy: Implications for Urban Research and Public Policy", Environment and Planning C: Government and Policy, volume 3, 1985, (forthcomTngTl Wolch, J.R., Geiger, R.K., "The Distribution of Urban Voluntary Resources: An Exploratory Analysis", Environment and Planning A, volume 15, 1983, 1067-1082. Wolch, J.R., Geiger, R.K., "Urban Restructuring And The Not-For-Profit Sector", working paper. Planning Institute, University of Southern California, Los Angeles, CA, 1985. | 146' Wolpert, J., "Social Income and the Voluntary Sector", Papers of the Regional Science Association 39, 1978, 217-229. Wolpert, J., Reiner, T.A., "Metropolitan Philadelphia Philanthropy Study", unpublished manuscript. Metropolitan Philanthropy Project, University of Pennsylvania, Philadelphia, PA, 1980. 147 Appendix A 1RS TABULATIONS OF EXEMPT ORGANIZATIONS, 1977 501 c-1: Corporations organized under 24 Acts of Congress 501 c-2; Titleholding corporations 5,522 501 c-3: Religious, charitable, scientific, 322,826 educational, etc. 501 c-4: Social welfare organizations 131,578 501 c-5: Labor, agricultural organizations 86,322 501 c-6; Business leagues 51,065 501 c-7: Social and recreational clubs 54,036 501 c-8: Fraternal beneficiary societies 46,549 501 c-9: Voluntary employee's beneficiary 8,703 societies 501 c-10: Domestic fraternal beneficiary 18,570 societies 501 c-11; Teachers retirement funds 13 148 501 c-12: Benevolent life insurance associations 5,071 501 c-13: Cemetery companies 6,290 501 c-14; Credit unions 6,074 501 c-15: Mutual insurance companies 1,073 501 c-16: Corporations to finance crop operation 22 501 c-17: Supplemental unemployment benefit trusts 784 501 c-18; Employee funded pension trusts 3 501 c-19: War veterans' organizations 23,851 501 c-20: Legal service organizations 90 501 c-21: Black lung trusts 9 501 d: Religious and apostolic organizations 68 501 e: Cooperative hospital service 106 organizations 501 f; Cooperative service organizations of --- operating educational organizations 521; Farmers' cooperatives 2,791 Source of data is Independent Sector, 1984, p. 71. 149 Appendix B FORM CT-2 CT-2 A*QMtry ef CAoriiebie lrw«rt P.O. box 13^7 ôocromomo. CA 9SB13^A47 PERIODIC REPORT TO ATTORNEY GENERAL OF CALIFORNIA wcii.n 136*6. f.M T t *0 fit; «IP le c m i b r «w l i t n CUT ot cr* f t f t n momr. «tier m e CIO»* el »oir » c to ira n £ venoi nu T le iir . m me « u a o m n c e el TOtr U i iicR D D on «ne trie «»»*»• ment ol > m n iru n u i ef SZOO. ACCOUNTING PERIOD — For t rie 'C co r b c o i n n i n q . I t abdre»» chonped cneclc nert * ■ end mow tne cnonpe» oeiow I Norn# Ol o#ponixoi«ofi i Corporote or OfpanizoTion No., C *îy or ■own.&totc, ami cooc I s the orponizotion exempt from I I tsc teoerol income Tax? I ^ I I f ’ nc", cnrch esploncTtion. See imtruciions. PART I FillNG REQUIREMENTS: CHECK THE APPROPRIATE BOX. SEE GENERAL AND SPECIFIC INSTRUCTIONS___________ □ This entity is NOT a private ioundation. We nave attached a completed copy ol 1 R S Form 990. and Schedule A (Form 990) and related attachments (even though we may not be required to fiie tnese unitorm lorms with tne 1RS). Complete Part II below. □ This entity is a private foundation. We have attached a completed copy ol 1 R S Form 990-PF and related attachments. Complete Parts II and III below. PART I I STATEMEfVTS REGARDING THIS 0F;GANIZATIDN DURING THE PERIOD OF THIS REPORT ! Tes I hr- 1 Was 5 3* or more ol your total revenue Irom government grants? (Sec line i instructions)........................... It “ yes", attach a schedule showing the agency(s) name, adores:, purpose ol the grant and the amount. List only the lour different government agencies that provide tne laigest amounts. 2 Were you audited by any government agency?.......................................................................................... . If "yes", provios; Name ol agency ano unit ______________________________________________ Address_________________________________________________________ Contact Person______ 1 | _ 2 [ . Teiepnone ( — Year(s) audited. . (II audited oy more Inan one agency, atiacr, scncouic) ■- . Did an independent public accountant issue a report on your financial statements? If “ yes", provide; Name of accountant ______________________________ Address ~ ------- ~ '________________~ .Telephone ( 4 Is any ol your property held in tne name of or commingled with tne property of any other organisation or person?................. II ■ yes", attach explanation, -■ — --------- 5 Did you answer “ yes" to any part ol Form SSD , Schedule A, Part III. Question 2 or Form SSO -PF, Part V, Question 10(a)? . . . (a) If “ yes", attach a detailed explanation and enter here the total amount involved in all such iransactjons . 5a _______________ 6 Did you make any donations'(cash or non-cash) to other than a charitable, tai-exempt organization? . i'.'i' : If “ yes", attach explanation and enter here the fair market vaiue of tne donation........................ 6a________________ — 7 Did this organization regularly solicit salvage, sell salvage in a Ihrrtt store, or was it a party to a contract - ---------------- involving the solicitation or sale of salvage? If “ yes", include amounts on Form SSD, line 10.................................................. S Were you or any ol your officers, directors or trustees a party to any court action in which there was an alleged breach of trust? If “ yes", attach explanation........................... - .................................. -_i. 9 Did you pay or incur income tax, or any tax-related penalty, fine or iudgment?....................................................................... If ".'yes", attach an explanation and specity amounts involved. 10 Did you receive 210.000 or more in direct public support (Form 920. line 1 (a) or included in Form S90 Pf, line I ) ? ............ If “ yes", enter tne following amounts: (a) Direct support trom the general public....................................................................................10a--------------------------- (b) Foundation and trust grants . ..................................................... - .................................... IDb--------------------------- (c) Corporate and other business grants........................................................................................ 10c--------------------------- (d) Bequests ................................................................................................................................ IDd--------------------------- (e) Total direct public support (add lines a through d) . ..........................................................lOe--------------------------- 11 Did you contract with or use the services of an inoependent professional fund raiser? If “ yes", complete Part IV (Form CT-2). 12 Did your invested assets total 250,000 or more? If “ yes", complete Part V (Form CT-2) (See line 12 instructions) . .. . .. (13-15 not cunentiy in use) ■ ■ I___ L - 8 ! i ' H 10 11 12 U n o e r p M o fn e s c : p e r /u r y , i a e c fo re mm i hovr ex omened r k n p m rie c p c a n d b c i i t i , i t is True, C P tn C f o o d e o m p t^ to . I re p o rt, m auom p occom ponying o o c i/m e n n , scneoutes o n d Ttenem^nn, anO T O 2r>e m t t o i m y 6# p m o *w » # ai evmpmeii ah« irimBd m om c 150 p a r t II, A DP:T»0N A. HNgpR^^ATlOK FgpN. PRIVATE FO UN D ATIO N : ONLY kevenue here: 20 Net rental income (atier oeauciing rental exoensss from ime E. 990-PF, Part I ) .......................... 21 income from oiner investments reported on form 930 PF, Part 1 1 1 , lines 12 and 1 3 ................. Experae hems: 22 Professional fund-raising fees .................................................................................................... 23 Accounting fees ........................................................................................................................... 24 Legal fees...................................................................................................................................... 25 Travel expenses ........................................................................................................................... 26 Conference, convention and meeting expenses............................... ■ .......................................... Functional Expense Summary: 27 Total program services including grants (Form 990-PF, Part XIII, lines 2 and 4 (a ).................... 28 Total management and general ................................................................................................. 29 Total fund raising ........................................................................................................................ 3D Total functional expenses (Sum of 27, 28 and 29 snould agree with 990-PF, Part I. line 24(A) Statement: 31 Did you file a Form 4720 with the Internal Revenue Service?...................................................................... If “ yes", attach a copy ol Form 4720 and enter nere tne amount ol total taxes paid with that return (32-39 not currently in use) 20 21 22 23 24 25 26 27 28 29 30 31 31a Ves PART IV PROFESSIONAL FUND-RAISERS (PFR) (SEE QUESTION I t ) EVFN-T r t EVENT t 2 EVENT -2 total 40 Briei Description ol Campaign, ....... ..... . Drive or Event 4) Date or Period Covered 1 ! 42 Name of P FR 1 i 43 Aooress oi P FR 44 Total Public Donation:* 1 1 A4 ' 45 All Payments to P F R 45! 46 All Other Fund-Raising Expenses 461 47 Net Proceecs (Line 44 Less 4o ano 46)1 471 (48-59 not currently in use) ■ * On line do n o t deduct any costs from gross donotions. NOTE: If more tnan three events, cttoch o schedule using the some form at end include amounts in Part IV totals. PART V SUMMARY OF INVESTMENTS TOT AUNG £50,000 OR MORE (SEE QUESTION 12) 60 Securities, beginning oi year at cost (990, line 54(A) or S3D-PF, Part 1 1 1 , line 10(A)) 61 Securities acQuired, at cost or original basis ______ ______ __________ 62 Securities sold, at cast or original oasis (may include sales e xpense:: TTT 63 Securities, end oi year at cost (930, ime 54(B) or r9C*-rF, Part III, line 10(B)) . . . 64 Secunoes. end ol year at market v a l u e --------------- 65 Sum ol all gains bri sates during tne year............................................................. 66 Sum of all losses on sates during the year............................................................... 67 Dividends and interest fiom securities (990, line 5 or 990-PF, Part I, line 5(A))_^. , 58 Total return realized (line 65 less line 55, plus line 67)'T, , T, 7 . 69 Less investment counsel fe e s....................' ................................................................. 70 Net return realized from investments in securities (line 68 less line 69)______ - .............................60 .65 . .66 . .6 7 , .62 . .69 ,70 has this orgarczation engaged in, purchased, sold or held during the year: L 71 investments (any type) which produce no current income? 71 L 72 investments (any type) worth one halt or less ol original basis?............................’..................^ . . . . . . . .. 72 |_ 73 Securities on margin? -.-. . . . , : . .'. r r ; . . . : T F T . . . 73 L 74 Warrants, puts, calls, options, commodity futures, or short sales? 74 j. 75 Stocks rated "Speculative Grade" by Woody's, or ranked "B —" or lower by Standard & P o o r 's ? . ................. 75 1 76 Securities not publicly traded? . ' 76 ^ 77 Tax exempt securities? .................................................... ^ - j_- • • • - 78 Stock in which an officer, director or trustee owns 10^ or more ol the outctanding shares? — - — If o n a n y Une fro m T ^ th ro u g h 7E , a tio c h a fu li e x p ia n a iio n . j'cs 151 Appendix C FORM 990 - 590 Return of O rEaniration Exem pt from income Tax Unocr section 501(c) «sxceot b & a c k iwnp oeneftt truti or on w a v e tounosiion). ot tne iniernai kevenwe Looe or section 44^ / ia )^ % ) trus" Ko'tne csteno?* *e?- 1 U s e 1 R S j M s m e c i o f p a n i z a n * I u»ei. A tmptovcr locniiitcaifon rtumoer msuucnor. L) 1 O t n e r - jwttt, 1 Please 1 p r i n t i o r t v o e A o o r e s s ( n u m o e r a n o s t r e e t ; t s t a r e r e g i s t r a t i o n n u m o e r i s e e i n s n u c l i o . ' . u . C n y o r l o w r . . S i a i e . a n d Z I P c o o e C 1 1 a o o i e s s c n e n g e o . e n e c v n e i f | D C n e c k a o o i i c j o i e 0 C » — t i e m p i u n o e r a e c n o n p - 5 0 1 l c ) ( ) i i n i e r t n u m o e r ) . OK p - _ | l e c i i o n 4 S 4 7 i a ) , ’ l m u s t E A c c o u n i i n r m e t n o c G a s r i ~ A c c ' u f C r t n e r i s o e c i l ' ' ' ► F S e c i i o " X B 4 7 n ) r i I K U S I S I m r i r t n i s i n ' m i n n t u r ‘ F o ' r r , ] ( X L . c n e c v n e r e P - i s e r i n s m j c n p ' . C I O C I x f n i s a g r o u p r e l u r n i » e * i n s i i u c i i o n J l i i i e O t o r a h i i a i e s ? . . . . [ j t e s Z D N o I s t n i s a a e o a r a i p r e i u r n i « e o D V B r r o u n a f f i i i a i f ’ . . . . . . . . . . . . . . . . . . Z ” ' f e ' _ i N - 1 ' " t e > " t o e i i n e . ' , g i v e l o u i - o i g n g i u u a e i e m o n o n n u m o e ( G f l . - i k - Note: to u msv oe feouirea l o use a copy c : ints reiurn ios3J!S iy:>iate feoonmc reoutremeni:>. a o e insuuzuofi i C n e c x n e r e i f p r o i s r e c e i o t s a»e n o r m a t i v n o t m o r e i n a r . 125.000. ( S e e i n s n u c n o n G i l . ) 1 v u a r e n o t r e o u u e a l o c o m p l e t e a n c : « O b u t m a y n a v e t o t n e i t w i t n o n e o r m o r e S t a t e s . C h e c k n e r e l i p r e s s r e c e i s u » » e n n r m a l i y m o r e i n a r . S 2 5 . 0 0 0 a n d l i n e 1 2 i s $ 2 5 . 0 0 0 o r l e s s . C o m o i e t e P a n s I l e i c e o t t i n e s 1 3 1 5 ) n n iv rn » i n O ' c a i e n n a m v « « - , I : v t n ^ T r c m o n M M n r » ^ 2 ? i < m n r f t n ^ n $ 2 5 Oj 'j c n m r n e i * ' t n p r f M » ' ' . l i l . I V r e i u m w n n 1 R S . V I . a n d V U a n d &0itC)f3i pfffaruxattoni ano 4 W 4 / PART I.— S ta ie m e n t o f S u p o o rl. k e v e n u e , a nd Expenses and C nanpes In Fund B alances 1 ConiriDUJions. pms. prenu. ano similar amounts receiveo (a) Direct oublie s u o p o n ....................................................i (b) indirect public support * (c) Government grants (d) Total (add lines Kattnrough l(c))(anacnscnedult— see instructions) 2 Program service revenue (trom Part IV, line CÜ) 3 Membersnio oues ano assessments A interest on savings and lemoorar)' cash investments 5 Divioencs ano interest trom securities 6 (a) Gross rents (b) Minus; Rental expenses (c) Net rental income (loss) 7 Cnner investment income (Liescrioe k - ________________________________) 8 (a) Gross am ourrt tro m sale of assets oinertnan inventory . (b) Minus: cost or otner basis and sates e xp e n s es ......................... (c) Gain (loss) (artacnscneoule) 9 Soecial lunoraising events anc activities lattacn scnedui*— (a) Gross revenue (not incluoing S of contributions reborted on ime 1(a)) (b ) Minus; Direct expenses (c) Net income (line Si'a) minus line 9(b)) ID (a ) Gross sales minus returns and allowances . (b ) Minus: Cost of goods sold (attach scneoule) . (c) Gross profit (loss) 11 Diner revenue (from Part IV. line ( £ ) ) ................................................. G2 Total revenue (add lines 1(d). 2. 3 4 .5 . 6fc). 7. Bfc). 9fc). 10fc).an: ^ E.3 Program services (from line A 4(B )) (see instructions) . . . £ DA Managem ent and genera! (from line a.C(C)) (see instructions) il5 Fundraising (from lin eA 4(D ))(see in stru ctio n s)......................... w DG Payments to affiliates (attach scneduit— see instructions) j . D 7 T c tai expenses (add lines 1Ô and A A ( A ) '................................. ’ . S D8 Excess (o eficlt)fo rtn e year (subtract itn t 17 from line 1 2) . . ? c n.9 Fimd balances cr net worm at beginning of year (trom line 74(A )) 2 0 Other changes in fund balances or net worth (attacn explanation) ^ E l Fund balances O ' net wcrtn ai eno of vear (add line:. IE . i r . and SO' For P ap e rw o rk fie o u c tio n A ct N o tic e , te e page 1 o t tn e in s iru c tio iu . n. 990 I'.SEi) 152 Pw 2 PART ii. -S ia tc m e n i of Functional Lxoenses All organnaiions must comoteie coiumn ia Coiumns fB / C / a n c fG ) are reouire- t o r mosi senior. 5 0 llc lO ia n o , organizations «no 4 W 4 7i2 )(; ) trusts out ontionai t o r otners. ( a e e instructions ) Do nor mciuoe am ounts reoonea on une 6(b) 8 ( t} . 9 (b). 10(b). c l b o f h a rt I.___________ ' I 22 iGrants ano allocations (anacn scneouie) Soecitic assistance to indiviouats I 24 Esenefris oaid to o rfo r mem oers . 25 Comoensalion of officers, directors. 26 Otner salaries ano wages . . . 2 7 Pension oian conrrioutions 28 Otner employee Benefits . . . 29 Payroll ta x e s ................................... 3 0 Professional funoraismg fees . 31 Accounting f e e s ............................. 32 Legal fe e s ........................................ 3 3 S u p p lie s ........................................ 34 l e ie p n on e ........................................ 35 Postage and sflipping . . . . 3 6 Occupancy. ............................. 3 7 Lquipm ent rental and maintenance 3 8 Prim ing and publications . . . 39 T r a v e l.............................................. 4 0 Conferences, conventions ano meetings 41 In te re st.......................................................... 4 2 Depreciation, depletion, etc. (attacfi scfiedule) 4 3 Otner expenses (Itemize): (a) ............................ Way P A R I 111.— S ia te m e n : o f P ro e ra rr. S e rv ic e s R e n o e re d List eacn program service title on lines (a) tnrough (d): tor eacn. loentifytne service outputts; or proouct(s)and repprrtne Quantity provioed. Enter tne total expenses attrioutable to e a cfi program service and tn e am ount of grants anc allocations inciuoed in tn z t total. (See instructions for Part 1 1 1 .) Gxoenftes ( O o t i o n a t 1 e r s o m t erfenizaiiBn»— m s T r u n to n s ) (a ) (Grants anc allocations S ( f a ) (Grants anc allocations S ( c ) (Grants and allocations S (d ) (Grants anc allocations S (e) Otner program service activities (attacn scneouie) (Grants anc allocations S ) 1 (fl Tctal lacQ lines (a itn rcu g n (e))(snouioeoual tine 44(B)'.> 153 WOflMS-l F a * . 3 P A R T IV — P ro g ra m S e rv ic e R e ve n u e a n d OTne- R e ve n u e (S ta te N a tu re i Uttw, rw w arw T (a) f ees Trom povem m eni agencies ( b ) ........... .... (c).... ................................................... ( d )................. ( e ) ............................ (f) Total orogram service reweriue (enter nere ano on line 2) (g> Total otner revenue (enter nere ana on une 13 > . h lin e 1 1 l'a n I. a n o u n e 5:» a re £ 2 £ ) .0 1 j or les P A R T V .*— B a la n c e S h e e ts use tuno accounting, une 73. It line 11 or une _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ i n s t r u c t i o n : _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ you snoutc com me I e oniy une: -e. oc. anc anc. ii vou oo not 59 IS moie man S25.00u, complete me er.iiie Miance snee;. bee Columns (Cl and (D) are ooiional. Coiumns (A)»nû (B) must oe comoietea to me enem aooticaDie Wnere reouireC, ettacned scneoutes snoulO oe tor eno-ot-vear amounts omy. (A) beemning ot vear tn o c vez' (B) Total (C ) U nre stric te d /j (D ) re s tric te d / Exoenoaoie I Nonexoenoaoie 4 5 4 6 4 7 4 8 4 9 5 0 51 5 2 5 3 5 4 5 5 5 6 5 7 5 8 59 Assets Cash— non-inierest bearing....................... Savings and temporary cash investments Accounts receivable ► _______________ m inusallowance tor bouOflul accounts Pieoges receivable ► minus allowance for ooubtful accounts Grants re c e iv a b le .................................. Receivables Due from officers, directors, trustees and key employees (attach s c h e d u le ) ......................................................... Otner notes and loans receivable ► - minus allowance tor ooubtful accounts ► -___________________ Inventories fo r sale or u s e ............................................................... Prepaid expenses and Deferred cnarg es........................................ Investments— securities (attach s c n e d u le )................................... Investments— land, buildinpsand equipm ent; basis»-_________ minus accumulated Dépréciation ► __________ (attach scneouie) investm ents— other (attach schedule) ....................... Land, buildings ano eouipm ent; basis » - ____________________ minus accumuiateo Dépréciation»-____ Otner assets; ______________________ .(attach scnedule) Total assets (add nnes45 tnroucn 583 L ia b ilitie s 6 0 Accounts payable and accrued expenses........................................ 61 Grants payable , ........................................................................... 6 2 Support and revenue designated for future periods (attacfi scnedule) . 63 Loans Trom officers, directors, trustees and key employees (attach s c n e d u le )................................................................................ 64 Mortgages and otner notes payable (attach schedule) . . . 6 5 Otner lia b ilitie s ;_____________________________________ _ _ , 6 6 Total liabilities (add lines 6 0 tnroupn 5 5 3 .............................................. Fund Balances or Net W orth Drganizations th a t use fund accounting, check here »- O and com plete lines 57 tnrough 7 0 and lines 74 and 75. 6 7 Current f u n d s ...................................................................................... 68 Land, buildings and eouipm ent f u n d .............................................. 69 E n o o w m e n tfu n d ................................................................................. 7 0 Otner funds (Describe ► _________________________ ) . . . Organizations th a t do not use tund accounting, cneck here O and complete lines 71 tnrough 75. 71 Capital stock or trust p rin c ip a l.............................................. 7 2 Paid-in or cao.nal surplus . ......................................... ..... 7 3 Retained earnings or accum ulated in c o m e ....................... 7 4 Total fund balances or net worth (see instructions) . . 7 5 Total liabilities and fund palences /net v/crm (see instructions3 154 Fww «>90r’9E3' P AR T V i.- — g is; c i Q tr ic e r i, D ire c io ri,, a n c T ru s te e s ( u s ; e a c n o tlic c ;, o ir e c io ;, a n c tru s te e w n e tn e r c o m o e n s a te o o r n o t.) (S ee in s tr u c tio n s ) t o • I ( C > L e m o o n s e t e e n t o I a c c e o n i # n o e t m # r a*mem otont part Vli,— Ütner intormation 3 es N o 76 77 7B 79 80 81 8 2 83 8 4 8 5 8 5 8 7 88 8 9 Has tne organization engaged in any activities no: previously reooned to tne internal Revenue Service? If ''Y e s,'' attacn a detailed Description of tne activities. Have any changes oeen mace in the organizing or governing docum ents, but not reported to 1 R S ? ........................................ If “ Yes, " attach a conformed copy of tne changes. (a) Did tne organization nave unrelated ousiness gross income of S I.0 00 or more during tne year covered oy this return? (b) If “ Yes." nave you tiieo a tax return on Form 990-T. Exempt Organization business Income Tax R eturn. to r this year? (c) If tne organization nas gross sales or receipts from business activities not reported on Form 99C-T, anacn a statem ent explaining your reason for not reporting them on Form 9 90 T. W astnere a liouioation. dissolution, term ination, or substantial contraction during the year (see instructions)? . . . . If “ Yes," attach a statem ent as described in tne instructions. Is tne organization related (otner tnan by association with a statewide or nationwide organization) tnrough common membership, governing pobies. trustees, officers, etc., to any otner exempt or nonexempt organzation (see instructions)? . . If “ Yes," enter the name of organization p - ........................................................... .................................................................... ............ _____________________________________________________ ano cneck wnetner It is 3 exem pt OR 3 nonexempt. (a) Enter am ount of political expenditures, oirect or indirect, as oescrioed in the instructions . . . !________________ (b) Did you file Form 1 1 2 0 POL. U.S. Income Tax Return for Certain Political Drganizations. fo r this y e a r ? ....................... Did your organization receive Donated services or tne use of materials, eouipm ent or facilities a t no cnarge or at substantially less than fa ir rental v a l u e ? ............................................................................................................................................... If "Y es.” you may indicate the value of these item s here. Do not include this am ount as support in j Part 1 or as an expense in Part II. See instructions fo r reporting in Part I I I .............................................. Section 5 D l(z )(5 ) or (6 ) organazuons.— Did the organization spend any amounts in attem pts to infiuence puoiic opinion about legislative m atters or référendums (see instructions and Regulations section 1 .1 d 2 - 2 0 ( c) ) ? ......................... If “ Yes,” e n te rtn e to ta l am ount spent fo r tnis p u ro o s e .........................................................................................! ________________ Section 5 02(c)!7)organ:zations.— Enter am ount ot; (a) Initiation fees and capital contrioutions inciuoed on line 1 2 ............................................................... (b) Gross receipts, inciuoed in line 12, fo r pubiic use of club facilities (see instructions) . . . . (c) Does tne club's governing instrum ent or any wrm en policy statem ent provioe for discrim ination against any person because of race, color, or religion (see in s tru c tio n s )? ............................................................... ........................................ Section 5 0 2 (z)'12)organrzstions. — Enter am ount ct;. (a) Gross income received trom members or s h a r e h o ld e r s ........................................................................... (b ) Gross income received from other sources (do not net am ounts due or paid to otner sources against am ounts due or received from t n e m ) ............................................................................................ Public interest taw firm s.— KCtzct) inform ation Described in instructions. L istth e States w ith w hich a copy of this reiurn is filed b- ___________________________________________ D uring this tax year dio you m aintain any pa.t of your accounting/tax recoros on a computerized system?. The books are in care of K _____________________ . . . . . . . . . . _____Teiepnone No. ► - . . . . . . . ___ Located a* b- Piezse Sign here U noer K n z iiie » ei iw riu n . I o ttis r e in z ; i tiB»t exam inee tn is le iu rr., in iiu o in r s ;to m t« n y in r scneauiei »na s iz te m e r .- . z n : lo m e o e ii ot my xnowieoge »na oenet n a tiu e , correct, «no c o m o te tt. Uecizrenon o l o ieoarer (otner tn a n le x tw y e i; is ta se o on a ii im o rm a iio n o i w nicn oieparer nas any x n ow ieogt. y S irr.z’ .u rt o; chice: y Paid Prebarer*s Use Dnij' Preparer'; signature y I em ojove? F irm » nam e <er yom. n anp S 00rC £5 y 2i“ code x,u.s.GPO:teej-o.3w>Q56 -wiu-atateitiM 155 Appendix D LIST OF CITIES IN SAMPLE Alhambra Hawaiian Gardens Palos Verdes Estates Arcadia Hawthorne Paramount Artesia Hermosa Beach Pasadena Azusa Hidden Hills Pico Rivera Baldwin Park Huntington Park Pomona Bell Industry Rancho Palos Verdes Bellflower Inglewood Redondo Beach Bell Gardens Irwindale Rolling Hills Beverly Hills La Canada Flintridge Rolling Hills Estates Bradbury La Habra Heights Rosemead Burbank Lakewood San Dimas Carson La Mirada San Fernando Cerritos Lancaster San Gabriel Claremont La Puente San Marino Commerce La Verne Santa Fe Springs Compton Lawndale Santa Monica Covina Lomita Sierra Madre Cudahy Long Beach Signal Hill Culver City Los Angeles South El Monte Downey Lynwood South Gate 1561 Duarte El Monte El Segundo Gardena Glendale Glendora Manhattan Beach Maywood Monrovia Montebello Monterey Park Norwalk Palmdale South Pasadena Temple City Torrance Vernon Walnut West Covina Whittier 157 Appendix E ORGANIZATIONAL REVENUES BY SIZE OF POPULATION AVERAGE CITY NAME $ RECEIPT SIZE % LOS ANGELES 1998915698 459627 66.56 LONG BEACH 153202718 358789 5.10 GLENDALE 39918287 206831 1.33 TORRANCE 47496070 351823 1.58 PASADENA 103769905 268834 3.46 INGLEWOOD 24246155 285249 0.81 POMONA 27390327 322239 0.91 SANTA MONICA 95524567 349907 3.18 NORWALK 5842604 157908 0.19 BURBANK 14097262 116506 0.47 DOWNEY 11783824 147298 0.39 COMPTON 9692346 153847 0.32 CARSON 4909829 116901 0.16 WEST COVINA 6507663 132809 0.22 EL MONTE 16241113 353068 0.54 LAKEWOOD 416835 16032 0.01Î WHITTIER 16669277 152929 0.56' 158 SOUTH GATE 712404 29684 0.02 ALHAMBRA 30111015 477953 1.00 REDONDO BEACH 2080973 39264 0.07 HAWTHORNE 11510173 302899 0.38 MONTEREY PARK 8321149 143468 0.28 PICO RIVERA 368865 15369 0.01 BELLFLOWER 777556 25082 0.03 MONTEBELLO 6839287 145517 0.23 CERRITOS 1039891 27366 0.03 BALDWIN PARK 2514496 96711 0.08 LYNWOOD 3198109 152291 0.11 LANCASTER 1923008 34964 0.06 HUNTINGTON PARK 1008832 36030 0.03 ARCADIA 11883034 143169 0.40 GARDENA 6410782 123284 0.21 ROSEMEAD 8128896 301070 0.27 LA MIRADA 2244609 93525 0.07 GLENDORA 984565 26610 0.03 CULVER CITY 6077902 81039 0.20 PARAMOUNT 506280 36163 0.02 RANCHO PALOS VERDES 486399 15690 0.02 BELL GARDENS 1103491 91958 0.04 COVINA 18515652 324836 0.62 BEVERLY HILLS 93136848 277193 3.10 MANHATTAN BEACH 1347601 40836 0.04 159 CLAREMONT 7886361 97362 0.26 LA PUENTE 780728 37178 0.03 MONROVIA 110649649 2990531 3.68 SAN GABRIEL 3274188 76144 0.11 AZUZA 849218 29283 0.03 TEMPLE CITY 590126 29506 0.02 BELL 91980 13140 0.00 SAN DIMAS 455381 32527 0.02 LA VERNE 9713640 346916 0.32 LAWNDALE 87636 7303 0.00 SOUTH PASADENA 7110466 118508 0.24 MAYWOOD 97699 16283 0.00 LA CANADA FLINTRIDGE 4221020 117251 0.14 HERMOSA BEACH 1855573 103087 0.06 CUDAHY 2999 1000 0.00 SAN FERNANDO 550493 17758 0.02 LOMITA 403746 23750 0.01 DUARTE 14334858 955657 0.48 SOUTH EL MONTE 1566278 120483 0.05 SANTA FE SPRINGS 731994 36600 0.02 PALOS VERDES ESTATES 1820117 38726 0.06 ARTESIA 2584733 198826 0.09 EL SEGUNDO 6632810 213962 0.22 SAN MARINO 18996457 487089 0.63 PALMDALE 285328 14266 0.01 1 160 SIERRA MADRE HAWAIIAN GARDENS COMMERCE WALNUT ROLLING HILLS ESTATES SIGNAL HILL LA HABRA HEIGHTS ROLLING HILLS HIDDEN HILLS IRWINDALE BRADBURY INDUSTRY VERNON 5117310 105278 422386 424791 2562866 47280 59766 180188 15233 116477 51994 310080 142107 213221 17546 35199 35399 128143 23640 29883 25741 7617 29119 51994 34453 28421 0.17 0.00 0.01 0.01 0.09 0.00 0.00 0.01 0.00 0.00 0.00 0.01 0.00 RECEIPT TOTALS 3002985531 350816 100.00 161 ORGANIZATIONAL Appendix F EXPENDITURES BY SIZE OF POPULATION CITY NAME $ AVERAGE EXPENDITURE % LOS ANGELES 1458513808 335368 62.94 LONG BEACH 124691700 292018 5.38 GLENDALE 37400886 193787 1.61 TORRANCE 44147962 327022 1.91 PASADENA 84621662 219227 3.65 INGLEWOOD 15809659 185996 0.68 POMONA 25021180 294367 1.08 SANTA MONICA 87696552 321233 3.78 NORWALK 5479892 148105 0.24 BURBANK 13099504 108260 0.57 DOWNEY 10811498 135144 0.47 COMPTON 9922759 157504 0.43 CARSON 4925714 117279 0.21 WEST COVINA 6072295 123924 0.26 EL MONTE 16086884 349715 0.69 LAKEWOOD 325970 12537 0.01 WHITTIER 7656414 70242 0.33 162 SOUTH GATE 478684 19945 0.02 ALHAMBRA 29328066 465525 1.27 REDONDO BEACH 1965585 37087 0.08 HAWTHORNE 9336206 245690 0.40 MONTEREY PARK 8078507 139285 0.35 PICO RIVERA 321110 13380 0.01 BELLFLOWER 773835 24962 0.03 MONTEBELLO 7021100 149385 0.30 CERRITOS 1004512 26435 0.04 BALDWIN PARK 2523543 97059 0.11 LYNWOOD 3362026 160096 0.15 LANCASTER 1617085 29402 0.07 HUNTINGTON PARK 936633 33451 0.04 ARCADIA 9428493 113596 0.41 GARDENA 6710175 129042 0.29 ROSEMEAD 6006632 222468 0.26 LA MIRADA 2136063 89003 0.09 GLENDORA 771664 20856 0.03 CULVER CITY 5634892 75132 0.24 PARAMOUNT 473878 33848 0.02 RANCHO PALOS VERDES 505096 16293 0.02 BELL GARDENS 1174377 97865 0.05 COVINA 18045054 316580 0.78 BEVERLY HILLS 56430234 167947 2.44 MANHATTAN BEACH 1196704 36264 0.05 163 CLAREMONT 7132439 88055 0.31 LA PUENTE 758538 36121 0.03 MONROVIA 108928635 2944017 4.70 SAN GABRIEL 2476769 57599 0.11 AZUZA 724355 24978 0.03 TEMPLE CITY 466149 23307 0.02 BELL 42340 6049 0.00 SAN DIMAS 433598 30971 0.02 LA VERNE 10812683 386167 0.47 LAWNDALE 105150 8763 0.00 SOUTH PASADENA 3934249 65571 0.17 MAYWOOD 104185 17364 0.00 LA CANADA FLINTRIDGE 3832178 106449 0.17 HERMOSA BEACH 1815452 100858 0.08 CUDAHY 18 6 0.00 SAN FERNANDO 507785 16380 0.02 LOMITA 262066 15416 0.01 DUARTE 11800748 786717 0.51 SOUTH EL MONTE 1339495 103038 0.06 SANTA FE SPRINGS 539236 26962 0.02 PALOS VERDES ESTATES 1578540 33586 0.07 ARTESIA 2601588 200122 0.11 EL SEGUNDO 6481591 209084 0.28 SAN MARINO 16262515 416988 0.70 PALMDALE 310209 15510 0.01 164 SIERRA MADRE HAWAIIAN GARDENS COMMERCE WALNUT ROLLING HILLS ESTATES SIGNAL HILL LA HABRA HEIGHTS ROLLING HILLS HIDDEN HILLS IRWINDALE BRADBURY INDUSTRY VERNON EXPENDITURE TOTALS 4063033 107081 295339 394515 607174 14813 54251 173418 17912 41668 49653 379056 132664 2317125581 169293 17847 24612 32876 30359 7407 27126 24774 8956 10417 49653 42117 26533 270692 0.18 0.00 0.01 0.02 0.03 0.00 0.00 0.01 0.00 0.00 0.00 0.02 0.01 100.00 165 ORGANIZATIONAL Appendix G ASSETS BY SIZE OF POPULATION CITY NAME $ AVERAGE ASSET SIZE % LOS ANGELES 5841325800 1343142 75.50 LONG BEACH 306250387 717214 3.96 GLENDALE 102575511 531479 1.33 TORRANCE 32098614 237768 0.41 1 PASADENA 455818203 1180876 5.89 INGLEWOOD 28461376 334840 0.37 POMONA 64052731 753562 0.83 SANTA MONICA 98349858 360256 1.27 NORWALK 9199259 248629 0.12 1 BURBANK 35402127 292580 0.46 DOWNEY 17338221 216728 0.22 COMPTON 7815597 124057 0.10 CARSON 1864556 44394 0.02! WEST COVINA 4146623 84625 0.05 EL MONTE 6874396 149443 0.09, LAKEWOOD 1239828 47686 0.02 WHITTIER 26939321 247150 0.35 166; SOUTH GATE 601026 25043 0.01 ALHAMBRA 70033159 1111637 0.91 REDONDO BEACH 8052280 151930 0.10 HAWTHORNE 9049275 238139 0.12 MONTEREY PARK 3210277 55350 0.04 PICO RIVERA 250529 10439 0.00 BELLFLOWER 431762 13928 0.01 MONTEBELLO 4248011 90383 0.05 CERRITOS 1482157 39004 0.02 BALDWIN PARK 3792483 145865 0.05 LYNWOOD 17015584 810266 0.22 LANCASTER 3561133 64748 0.05 HUNTINGTON PARK 1084203 38722 0.01 ARCADIA 15277415 184065 0.20 GARDENA 10657402 204950 0.14 ROSEMEAD 20764484 769055 0.27 LA MIRADA 447903 18663 0.01 GLENDORA 1173380 31713 0.02 CULVER CITY 6394236 85256 0.08 PARAMOUNT 400503 28607 0.01 RANCHO PALOS VERDES 201291 6493 0.00 BELL GARDENS 435126 36261 0.01 COVINA 9581212 168091 0.12 BEVERLY HILLS 265790479 791043 3.44 MANHATTAN BEACH 1147167 34763 0.01 167 CLAREMONT 28192640 348057 0.36 LA PUENTE 556426 26496 0.01 MONROVIA 30944223 836330 0.40 SAN GABRIEL 4395961 102232 0.06 AZUZA 1390291 47941 0.02 TEMPLE CITY 1764840 88242 0.02 BELL 172530 24647 0.00 SAN DIMAS 368497 26321 0.00 LA VERNE 10046532 358805 0.13 LAWNDALE 165947 13829 0.00 SOUTH PASADENA 38641888 644031 0.50 MAYWOOD 84448 14075 0.00 LA CANADA FLINTRIDGE 7573198 210367 0.10 HERMOSA BEACH 312532 17363 0.00 CUDAHY 4259 1420 0.00 SAN FERNANDO 356870 11512 0.00 LOMITA 588594 34623 0.01 DUARTE 13997874 933192 0.18 SOUTH EL MONTE 1741846 133988 0.02 SANTA FE SPRINGS 367131 18357 0.00 PALOS VERDES ESTATES 2461775 52378 0.03 ARTESIA 1176492 90499 0.02 EL SEGUNDO 4812717 155249 0.06 SAN MARINO 64223674 1646761 0.83 PALMDALE 162046 8102 0.00 168 SIERRA MADRE 18022581 750941 0.23 HAWAIIAN GARDENS 29494 4916 0.00 COMMERCE 2689654 224138 0.03 WALNUT 1907209 158934 0.02 ROLLING HILLS ESTATES 3573695 178685 0.05 SIGNAL HILL 131125 65563 0.00 LA HABRA HEIGHTS 111080 55540 0.00 ROLLING HILLS 29300 4186 0.00 HIDDEN HILLS 709 355 0.00 IRWINDALE 321959 80490 0.00 BRADBURY 19507 19507 0.00 INDUSTRY 428109 47568 0.01 VERNON 108315 21663 0.00 ASSET TOTALS 7736710853 903821 100.00 169, Appendix H DATA SOURCES (1) Median family income was calculated from information located in Income Characteristics 1975-76 for the City of; Los Angeles and the State of California. (2) The variables city population, percentage minority and elderly population, population change 1970-80, percentage of dwellings owner occupied, median contract rent, median home value, and median persons per room are from the 1980* Census of Population and Housing. (3) City area in square miles for the population density! variable is from Thomas Brothers Maps, Los Angeles County Popular Street Atlas : Census Tract Edition, Irvine, C^ (1981). (4) Distance information for the income potential variable was obtained from data collected from the Los Angeles Regional Transportation Study. Income data was generated from the Income Characteristics data set. 170 (5) Data on city age was found in the California Roster of Cities, 1980-1981. (6) The crime variable was derived from the FBI Uniform Crime Reports, and represents crimes per one thousand population. (7) Infant mortality rate is from Vital Statistics Los Angeles County, 1979. (8) The variable percentage of local population receiving public cash assistance was calculated from information obtained from a special tabulation of 1979 public assistance cases by the Los Angeles County Department of Public Social Services. (9) The variables percentage of city employment in manufacturing, percentage of city emplyment in service occupations, value added by manufacturing, new manufacturing capital expenditure, and percentage of manufacturing plants with more than 20 employess are from the 1977 US Economic Censuses. (10) The variable total per-capita local expenditures was calculated from data contained in Financial Transactions Concerning Cities of California; Fiscal Year 1983-84. 171
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Geiger, Robert Karl
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Core Title
Institution interdependence and voluntary associations: Interest representation in Los Angeles County
School
Graduate School
Degree
Doctor of Philosophy
Degree Program
Urban and Regional Planning
Degree Conferral Date
1986-12
Defense Date
12/03/1986
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University of Southern California
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