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Private Money for Public Needs

by Gail Robinson, Sep 22, 2003
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Mayor Bloomberg and Caroline Kennedy ask for charity.
Gossip columnist Liz Smith claimed to desire just one thing for her 80th birthday earlier this year: She wanted people to help New York City. "I'm not expecting gifts. I have enough," she wrote. "But what about the gifts we all owe this great city?... If the schoolchildren of the nation once saved their pennies to build a foundation for the Statue of Liberty, surely we can begin saving New York by sending our dollars to Mayor Mike Bloomberg."

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Smith's campaign raised more than $200,000, which went to provide parks, jobs for young people and to train the new parent coordinators for the Department of Education.

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With the city budget tight but demand for services high, the Bloomberg administration hopes individuals, organizations and corporations will, like Smith and her readers, write checks to New York City. Leading the donors -– and urging others to follow his example -- is Mayor Michael Bloomberg. The billionaire "anonymously" gave $10 million to city cultural institutions suffering the effects of budget cuts and $5 million to help restore Gracie Mansion, the official mayoral home where he decided not to live.

But the mayor's efforts go beyond his personal largesse. He has put an unprecedented amount of effort into bringing private funds into city coffers, creating a revamped Mayor's Fund to Advance New York City, exploring corporate sponsorships and naming an official to market the city (see box). Earlier this month, he announced that the city had signed a five-year $166 million dollar deal with Snapple making its juices, ice teas, water and other drinks "official" beverages of New York City.

"Not in my lifetime has there been this level of concentrated expectation that the private sector will help basic city services," Kathryn Wylde, president of the Partnership for New York, a network of business leaders, told the New York Times.

Despite the obvious appeal of having millionaire corporate magnates pick up the tab for services that we all would otherwise have to pay for through higher taxes, some see pitfalls. Private money can come with strings attached and can vanish when the donor moves on to other interests. Further, since corporations and individuals tend to fund projects where they are located, private money may not be evenly distributed throughout the city.

In light of all this, warns Bonnie Brower, executive director of the City Project, a liberal public policy group, the move to private funding is "very, very much a two-edged sword, if not a dagger to our heart."

LOOKING TO THE PRIVATE SECTOR

As big government has fallen increasingly out of favor since the 1970s, politicians, policy experts and officials have sought alternative ways to deliver services. Many have turned previously public enterprises over to private corporations or non-profit organizations. So, for example, many homeless shelters in the city are run by private organizations, and the city contracts with private agencies to care for foster children. Former Schools Chancellor Harold Levy sought -- unsuccessfully - to have a private for-profit company take over some of the city's most troubled public schools, and former Mayor Rudolph Giuliani failed in his efforts to transfer some public hospitals and the Off Track Betting to private hands.

While Giuliani pursued such efforts, known as "privatization," Bloomberg has focused on the reverse: He wants private individuals and businesses to give money to public enterprises.

This is not a new phenomenon. One only has to look at name plaques on many facilities in city parks and at the City University to recognize that private philanthropy has long played a role in shaping public New York. The city sponsors Business Improvement Districts, in which money from businesses supplement city services such as cleaning streets. And libraries and parks actively seek contributions.

"New Yorkers have a great sense of philanthropy," says Rowena Daly of New Yorkers for Parks. In fact, many New Yorkers who grumble about paying taxes are then more than willing to pay an equal or greater amount in voluntary contributions to a city parks group or their local school parents association.

But Bloomberg has sought to take this to a new level, reflecting a combination of his own conviction, his personal record of giving, and the city's economic slump.

Encouraging private donation is "a big thing" for the mayor, says Mark Davies, executive director of the city Conflict of Interest Board. "It's something he is very interested in."

Other Ways To Raise Funds

Sponsorships:

The mayor has suggested that parks be named for companies that give money to sponsor them. The goal, said parks department spokeswoman Jane Rudolph last year, "is not to make Central Park change its name. The goal is to take specific facilities or a special garden like the Heather Garden in Fort Tryon Park and possibly give it a sponsorship."

But the plan has met with criticism from those who see it as another sign of creeping commercialism. "These parks exist to give people a respite from the aggressive hawking of products and huckstering that we are all subject to on a minute-to-minute basis in our society," said Gary Ruskin, the executive director of Commercial Alert, a non-profit organization founded by Ralph Nader. "Naming rights defeats that worthy purpose."

So far the idea has not moved beyond the talking stage.

Marketing the City:

Bloomberg wants the city to seek out sponsorship, merchandising and other revenue-generating opportunities such as creating a line of New York City licensed products and working with corporations interested in becoming official sponsors of the city.

"New York is the best-known city on the planet," Bloomberg said in his State of the City address in January. "Yet, as a city, we've never taken direct, coordinated custody of our image."

The administration has likened this effort to the National Football League and National Basketball Association's businesses of licensing and distributing team trademarks. And in April Bloomberg named Joseph Perello as the city's first chief marketing officer. Perello previously was president of Perello and Company -- a marketing firm whose clients included the NFL. Perrello's main accomplishment so far has been in negotiating the $166-million deal that made Snapple an official drink of New York City.

In line with this, Bloomberg has renamed Public Private Initiatives, a city controlled nonprofit started by former Mayor Rudolph Giuliani. It is now the Mayor's Fund to Advance New York. Between January 2002, when Bloomberg took office, and this April, the fund raised $14 million; in the seven years between 1994 and 2001 it had brought in only $11 million, not counting contributions for World Trade Center victims. Liz Smith's money was channeled through the fund.

The most touted city fundraising effort has come in the public schools. Last year, Schools Chancellor Joel Klein named Caroline Kennedy Schlossberg to head the Fund for Public Schools, part of the Department of Education's new Office of Strategic Partnerships. Kennedy is supposed to drum up financial support and other help for the public school system and work to make sure private resources are used wisely. Shortly after her appointment, Klein said that the school system needed to harness the energy of the business and philanthropic communities and to make sure their contributions were put to good use. "Who can better accomplish this than Caroline Kennedy by her willingness to say, 'Yes I am behind this effort, I believe we can get an education for every child in New York, not just for some children'?" Klein said.

Since its highly publicized debut, the office has kept a low profile, but it played a role in organizing the September 24 Dave Matthews Band Concert in Central Park, which is expected to raise at least $2 million for city schools, including $1 million from America Online. And the office developed a partnership with The History Channel, in which, according to the New York Times, the cable channel will donate $1 million in scholarships, materials and staff hours. According to the New York Post, Kennedy has also "helped reel in" commitments totaling $49 million to fund a training academy for school principals.

Last week, Bill Gates announced the Bill and Melinda Gates Foundation would donate $51.2 million to open 67 new small public high schools in the city. That money, however, will go not directly to the school system but to non-profit groups that will help create the schools.

(See related article on grassroots efforts to raise money for public schools.)

PARKS, LIBRARIES AND SECURITY

City Council has also taken up the private money cause.

In August, the council passed a bill to create an Adopt-A-Park program. Picking up on the success of private groups in raising money for Central Park, Prospect Park and other prominent parks, the measure would allow companies, organizations and individuals to adopt all or part of more modest neighborhood parks and playgrounds. Taking cognizance of a controversial proposal to allow corporations to get naming rights to a facility in exchange for supporting it (see box), the bill notes that "the program is not intended to rename any park property or structure, but to provide another mechanism whereby individuals, community groups, businesses and corporations can help the city preserve its precious land and recreational programs."

Parks advocates say they must resort to private funding because parks have been particularly vulnerable to budget cutters. "Over the past two decades, parks have been repeatedly cut in good times and bad," says Daly of New Yorkers for Parks. And certainly in this climate, she says, "we're not going to get more tax dollars for parks."

Some critics worry that parks in affluent areas will be quickly adopted, while those in poorer neighborhoods will be neglected. City Councilmember Joseph Addabbo, Jr., chair of the parks committee and a sponsor of the bill, says he hopes this can be avoided. "The real focus is to help outer borough parks," says Addabbo, who is from Queens. He hopes city officials will approach corporations and organizations to urge them to help parks in less affluent communities. And, a provision that allows groups to provide labor to help their park -- a kind of "sweat equity program -- could also help parks in these areas. Finally, Addabbo says, if a disproportionate amount of contributions reach parks in rich areas, it could free up city funds for those in poorer places.

Like parks, libraries have proved particularly vulnerable to budget cutters and so have long sought private money. But this year, the libraries have stepped up their efforts, launching an Emergency Campaign for the Library that will try to raise $18 million over the next three years, including $4 million a year for the branch libraries in all five boroughs.

The fund drive will include what the library is calling a "take out, give back" campaign. As part of that, the New York Library will begin offering addressed envelopes at branch libraries for people to mail in contributions.

Even services almost all New Yorkers consider essential seek voluntary contributions. The New York City Police Foundation is soliciting money to improve police department technology.

But apparently there are limits. When the city announced plans to close firehouses last winter, efforts were launched to raise private funds to keep the companies operating. The mayor rejected the idea, and the fund-raising effort was abandoned.

PROS AND CONS

Many proponents of private funding do not claim it is an ideal solution, although some do see benefits in it. Getting funds from the police foundation is "just an easier, quicker way for us to fund things that we need," Police Commissioner Ray Kelly has said.

And others see private funding as a way to build community, to give New Yorkers a stake in the services they use -- whether it is the local park or the neighborhood school.

But generally, fund-raising campaigns for libraries, parks and schools argue that city money simply is not available, begging the question of whether, in a better world, it would be.

"It's a sign of the times," says Addabbo, noting that virtually every state in the country is suffering a budget crunch. When there is a sluggish national economy, he says, "these ideas...come about."

People are already highly taxed -– New Yorkers have seen sales, property and income taxes rise in the past 10 months -- but still want services: clean safe parks, art and music programs in schools, museums that are open and affordable, the latest best seller on the branch library shelf.

By paying for some of these things, private fund-raising, says Brower of the City Project, provides a "mechanism to avoid raising the most fundamental question, which is what does it cost to run the city of New York the way we want and need to have it run."

Brower sees a number of problems with increased reliance on private money. "It raises questions of distributing resources not by need but by salability or sexiness." And, she adds, "These gifts always have strings attached." In funding city services, corporations are buying access, if not outright control.

In an effort to make sure private fund-raising does not produce an ethnical quagmire, the Conflict of Interest Board has written an advisory opinion on solicitation of private funds by the city and by city affiliated not-for-profit organizations such as the Central Park Conservancy. This opinion, says executive director Mark Davies, attempts to strike a balance between not discouraging private contributions, while making sure that public access is not restricted and that public officials are not somehow coerced by the private sector. For example, it says that when officials solicit contributions, they must "make clear that the donor will receive no special access to city officials or preferential treatment as a result of a donation."

Another issue is whether the drive for private money will work. Ken Sherrill, a professor of political science at Hunter College, thinks that in the long run, it will not. "Private contributions are not going to provide adequate levels of these things" such as higher education, he said. "At some point, enough voters will become dissatisfied with the level of public services" to demand change.

And it is not just proponents of bigger government who see problems with private funding. By simply contributing to the current system, Sol Stern wrote in City Journal in 1999, business people and others help perpetuate a failing system. "Businessmen shouldn't be embarrassed to judge the schools by the same standards that make them successful in their own companies," Stern wrote. "If they don't, if they continue to insist that they are not 'in the business of reform,' they will become increasingly irrelevant to the 1.1 million children who presently have no choice but to rely on the public schools as they are."

For now, few in city government seem to be heeding such arguments from either the left or the right. They simply want the money. The New York Post recently reported that city officials had reached an agreement with corporate sponsors to pay the $75,000 bill for illuminating the decorative lights on the East River crossings. The city had flipped the off switch this summer, extinguishing the necklace lights that had twinkled on the city skyline since the 1970s. Getting them turned back on, one official told the Post, was "something City Hall worked very hard to do."

Additional reporting by Anne Sachs.




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