The Involvement of Business Elites in the Management of Homelessness: Towards a Privatization of Service Provision for Homeless People?

Business Elites, the Supporters of a Punitive City?

As most major cities are engaged in a competition to attract capital and the middle classes, many scholars have described the rise and spread of neoliberal urban governance based on entrepreneurialism (Harvey 1989) and market-oriented policies (Lobao, Adua, and Hooks 2014). Within this context, homeless people have become perceived as “undesirables” whose visible presence prevents the development of the image of a successful city and one that is attractive to the middle classes and to investors. Thus, along with the implementation of social policies, the governance of homelessness ¹ has long been aimed at reducing the visibility of homeless people in the prime spaces of the city. A well-established literature has highlighted the ways in which the homeless have become the target of punitive policies (Smith 1996; Mitchell 1997; 2020) through the rise of the criminalization of poverty (Amster 2003; Robinson 2019), interdictory spaces (Flusty 2001), surveillance (Stuart 2016), and privatization and commodification of public space (Zukin 1995). This punitive management of poverty, which is a defining characteristic of the revanchist city (Smith 1996), has transformed public spaces into inhospitable and hostile places for the homeless. This leads to the effective banishment (Beckett and Herbert 2009) of homeless people from the city and makes it more difficult for them to survive (Mitchell 2003).

Within this “punitive” theoretical framework, the role of the private sector has been extensively documented. Many scholars have emphasized the role played by private individuals and organizations in the design of public space and the ways in which it contributes to the removal of homeless people from public spaces. For example, Smithsimon (2008) describes the bonus plazas in New York which are conceived by private builders and unused. In his inquiry, he argues that they are “intentionally made uninviting” and inaccessible, which drastically reduces the opportunities for use and especially the gathering of homeless people. That echoes the “pseudo public spaces” that Mitchell and Staeheli (2006, p. 153) describe as “spaces that are formally owned by the state, by the public, but that are subject to control and regulation by private interests”. Beyond the influence of private developers on public space design, which restricts its access and possible uses, Business Improvement Districts (BIDs) and business owners have a role in the punitive management of homelessness in public spaces (Vindevogel 2005). BIDs, as entities representing the business community, often use their resources to support anti-homeless ordinances and policing practices which remove homeless people from public space (Lippert and Sleiman 2012; Policy Advocacy Clinic 2018; Robinson 2019). Some scholars also describe the use of private security companies by the BIDS as a means to secure the environment and persuade their “target audience to move back to the city” but also to “mask” the homeless population (Marquardt and Füller 2012). Recent works however tend to emphasize the alternative approaches to homelessness which have arisen amongst the BIDs, whether these emphasize providing services to meet the needs of the homeless or advocacy for supporting a Housing First approach (Lee 2018).

As the “punitive” perspective on homelessness management has been extensively rolled-out in urban research, some scholars have called for a more nuanced analysis. In their view, the management of homelessness cannot be reduced to a set of punitive policies (Cloke, Johnsen, and May 2007; Deverteuil, May, and Von Mahs 2009; May and Cloke 2014), especially in view of the increasing development of outreach services for the homeless in urban spaces (food banks, shelters, etc.). Whether it reduces the impact of revanchism (Laurenson and Collins 2007) or intertwines with punitive practices (Stuart 2016; Hennigan and Speer 2019), this growth of homeless services must be taken into account for a thorough understanding of homelessness management. From that perspective, several scholars propose a post-revanchist analysis of homelessness management that pays attention to the spaces of care which appear in the interstices of the revanchist city (Murphy 2009; DeVerteuil 2019). In this theoretical framework, the role of private sector and business elites has been little studied and the landscape of care is mainly analyzed with regard to state sector responses. However, with regard to the powerlessness of local government institutions to end homelessness, local business elites are getting involved more and more in the development of social programs, and they often make available their financial resources and skills ² . In order to understand the implications of this development, consideration must be given to the role of private organizations in the management of poverty.

Toward a “Nonprofitization” of Homeless Services Provision?

In the western world, the welfare state has been developed as a means to provide social well-being to its citizens. Through the development of redistributive mechanisms, it aimed at preventing people from falling into poverty and at improving the lives of the most vulnerable. Since the 1970s and the shift from Fordism to post-Fordism, the decline and dismantling of the welfare state have been regularly highlighted both by the proponents and by the opponents of this evolution ³ . In the United States, the efforts to reduce the size and influence of the federal government resulted in two policy directives: privatization and devolution, which reshaped deeply the face of social provision (Marwell 2004). While the part of social incomes directly transferred from the state to the poorest citizens has largely decreased since the 1980s, the public spending on services has become a substantial part of the welfare budget (Allard 2009). According to Marwell and Gullickson (2013), it represents approximately 17 percent of the federal social welfare spending. Compared to income transfers that “come directly to individuals in the form of automatic payments”, the accessibility of publicly funded services depends “not only on individual eligibility but also on the location of service providers and the ease of finding providers” (Marwell and Gullickson 2013, p. 323). Then, the location of these social services “intersects with other aspects of individuals’ lives, affecting the extent to which clients (and potential clients) benefit from services” (Ibid: 324).

For three decades, a large part of these publicly funded services has been provided by private actors, essentially nonprofit organizations under contract with the government (Salamon 1995; Marwell and Gullickson 2013). In this process, nonprofit organizations (and other private organizations) are invited by the state to compete to get the opportunity to deliver services, which brings these organizations to reduce their costs to be more attractive. This « nonprofitization » of the management of poverty (Bonnet 2019) is part of the privatization of the welfare state (Marwell 2004; Hasenfeld et Garrow 2012) and gives the opportunity to the state to reduce its social services spending ⁴ . This reconfiguration of the ways in which publicly funded services are provided to the poor transforms the relation between the state and private actors as it creates a situation of co-dependency (Lamotte 2016). Local governments indeed need the nonprofit organizations to implement their services delivery program while nonprofit organizations need the state to be funded. Beyond this partnership between government and nonprofits (Salamon 1995), this process testifies to the integration of market-driven rationales in the management of welfare services and the transformation of nonprofit organizations into profitable companies, transforming poverty into a cost-effective source of profit (Lamotte 2016). In the specific case of homeless service provision, some scholars have confirmed this evolution, as Beck and Twiss (2019) who recently argued that homelessness has become part of the fabric of society through a homelessness industry that perpetuates the problem. In a similar vein, in The Value of Homelessness, Willse argues that: “contrary to rhetoric that associates ‘the homeless’ with waste and cost, housing insecurity and deprivation prove to be sites of economic productivity” (Willse 2015, p. 167). That gave rise to a “nonprofit industrial complex” that would “sustain rather than challenge the neoliberal economies that produce housing insecurity and deprivation” (Ibid: 168). However, beyond the role taken by nonprofits, one can notice that business elites are also getting more and more involved in social services delivery by making available their financial resources and their competencies. As business elites have been left out of the scientific literature about the privatization of welfare services, there is a need to focus on their action, as a means of achieving a better understanding of the changes at work in the provision of homeless services. In this perspective, I focus on the downtown Business Improvement District's support of homeless outreach programs and the funding of two homeless shelters by real estate developers and philanthropists.

Study Context

In 2019, before the Covid-19 pandemic, more than 4,000 people were counted as homeless in Multnomah County (OR) ⁵ , including 2,000 individuals sleeping outside every night (City of Portland 2019). The housing crisis which has persisted in Portland for a decade is exacerbated by the continued increase in rents. Indeed, the city had the highest rent increases in the United States between 2006 and 2015, with the average rent climbing 63 percent while tenants’ incomes rose only 39 percent. Combined with federal cuts for housing and a shortage of 25,000 affordable housing units within Multnomah County, this development has led to many households ending up on the street. This creates a scarcity of available beds in shelters, so that encampments have sprung up in public spaces in most of the neighborhoods in Portland. These campsites, usually consisting of tents made from canvas tarpaulin and poles, are occupied by anything from one individual to several dozen people, and reveal the scale of the crisis. As a way to address this issue, the City of Portland declared in 2015 a State of Emergency on Housing and Homelessness. It aimed at expanding financial capacities and at removing existing barriers to the development of alternative modes of homelessness management. In the wake of the State of Emergency, the City created the Joint Office of Homeless Services (JOHS) which made it possible to merge homeless services and to bring together the City of Portland and the county's financial resources. Then, the 2021 budget for the JOHS is $75 million.

The JOHS has contributed to the development of partnerships between different stakeholders and services, the main priority being to increase the number of shelter beds, which explains the recent expansion of mass shelters, often equipped with more than 100 beds. It also emphasizes increasing outreach services towards homeless individuals as a means of making more effective the transition from the street to shelter or housing. In this perspective, the JOHS contracts out the provision of these services with more than 40 nonprofit organizations (City of Portland 2021). In 2020, 96 percent of the JOHS budget was allocated to these contracts (interview with the JOHS manager, 2020). In addition to this state sector governance of homelessness, several outreach programs and homeless services are funded and promoted by local business elites. These programs are not the result of a request by public authorities but they are directly implemented by these elites as a means to end the housing crisis. Three examples of this involvement are used as cases for my study. They are detailed below, and discussed in the last part of the article.

The Blurring of the Line Between Public Authorities and Business Elites in the Management of Homelessness: A Forced-March Cooperation?

The examples discussed above highlight the blurring of the line between public authorities and business elites in the management of homelessness. Regarding the homelessness crisis unfolding on the streets of Portland and the urgent need for action, economic stakeholders emphasize the imperative need for private-public cooperation to address this issue. The sufferings of the unhoused whom they encounter every day on the streets would be a moral pressure for action. As summarized by the co-founder of Oregon Harbor of Hope:

The city, county and state are working hard to address our crisis, but they cannot solve this problem alone. The private sector must get involved to help turn this problem around. This is our city. This is our home. These are our homeless. We can make a huge impact and give people hope. They need our help ⁸

A manager of the ESD made similar comments when explaining the role of his organization: “A part of this is totally unforgettable, it is letting people who are addicted to drugs or people who have mentally illness just lying on the streets […] I think we have the obligation to do something about [homelessness]” (manager of the Clean and Safe program, Enhanced Services District). Business stakeholders often use the issue of compassion to justify their involvement in the management of homelessness. This compassion is often associated with a claimed dissatisfaction with public policies and a reminder of the resources they can provide to end homelessness. In that sense, the willingness of the business elites to take part in the management of homelessness is not about profitability - in operating public services - but rather aims at balancing out public policies which are perceived as inefficient for ending homelessness.

However, unlike traditional philanthropy in the United States, the business elites’ action is not about unconditional charity and generous donations that could be spent as the beneficiaries choose. The participation of these elites is, instead, moving towards a more targeted action (Hay and Muller 2014). The ESD funds outreach workers and a back-to-work program (Clean Start) while the development and funding of shelters by local business elites and philanthropists aim at providing efficient solutions, inspired by examples from elsewhere, to bring services and assistance to the most vulnerable and to provide them with the supportive and care services they need to get off the street. With regard to these experiences, other business elites-led projects have been announced, which illustrate a willingness to get fully involved in the management of homelessness in the city. Oregon Harbor of Hope has revealed, for example, a plan to build 153 units of affordable housing apartments. This 39-million-dollar project has been described as “privately financed affordable housing, rare in today's construction market” (Monahan 2020). Such a budget, which represents half of the annual JOHS budget, illustrates how the private sector is tending to expand the scope of its involvement in the management of homelessness.

Beyond funding services for homeless people, this involvement highlights the ambition of the business elites to steer public policies in a specific direction, which can potentially create some tension with public authorities. As the manager of the JOHS told me, relations with property and business owners are often dissonant because the latter often complain about homelessness and its public management. His perspective was that they claim that it could be managed in a more efficient way, but they do not take into account the experience of the city's outreach workers and homeless services providers who have gained an overall and subtle understanding of the situation over the years. Furthermore, recurring criticism of public policies and work by business stakeholders may be counter-productive as it makes it difficult for the public and private sectors to come together and achieve a shared view of the problem and its solutions, or to make efficient use of their financial resources.

Furthermore, as argued by Ducharme and Lesemann (2011), philanthropists usually base their initiatives on criteria which are different from those used by the people involved on the ground. As mentioned above, despite their commitment to ending homelessness, public authorities were initially reluctant to support the Navigation Center and Bybee Lakes Hope Center projects and a trial of strength in the media between private stakeholders and public authorities highlighted these differences of views on the approach to be taken. That is obvious in the case of the Bybee Lakes Hope Center which, beyond the criticisms from public authorities and politicians, was also rejected by the public homeless service providers (Transition Projects) and by many nonprofit organizations. The project was perceived as the wrong answer to the needs they observed daily on the ground, as described by Street Roots, a homeless advocacy group and weekly street newspaper:

In recent years, our Street Roots editorial board has raised a number of concerns around this issue, including the isolation of Wapato from stores, services and bus lines; a concern about motivations to warehouse folks out of sight; and the transformation of a jail into a shelter for people who often are already dealing with trauma […] It is difficult to imagine a place less suited to those needs – one farther away from core services and located in a more desolate plot of land – than the Wapato jail (Sands 2018; Street Roots Editorial 2018)

These differences of views concerning the Bybee Lakes Hope Center focused in particular on the skills that are required for managing such a shelter, which cannot be improvised. These differences would lead to a skewed perception of the real costs of operating a shelter by the philanthropists: “they are going to propose a budget, maybe they gonna talk about capital costs but they are not really taking care about operating costs. So, at some point, it is gonna get to shut down on public sector” (manager of a homeless advocacy group). A likelihood that the public sector will finally have no choice other than to substitute for (and support) private stakeholders in the long-term operation of their projects was often mentioned by the interviewed public stakeholders and homeless services providers. Running a ‘low barrier’ shelter efficiently needs proven expertize, and requires skills that business stakeholders do not have. That is one of the reasons why the City of Portland decided finally to assign to its own services providers (Transition Projects) the task of operating the Navigation Center. Several interviewees from the public sector were concerned about the ways in which private stakeholders manage to oblige public authorities to endorse and fund their projects: “they put forward ideas and very loud about them… and they essentially put the public sector on the hook for their ideas” (manager of a homeless advocacy group). Beyond differences of opinion on the action to be taken, there is the concern that private stakeholders manage to “use public funds according to what they deem important for society, according to their values and their visions while citizens and grassroots organizations are unable to have their needs recognized” (Ducharme and Lesemann 2011, p. 208).

The Participation of the Business Elites in Homelessness Management: A new way to Provide Homeless Services or a Means to Invisibilize Poverty?

Beyond the compassion that underlies the role taken by private individuals and organizations in the management of homelessness and their support to several outreach programs, a will to produce a “good business climate” (Harvey 1989) downtown is noticeable. Although these business elites put forward the danger that being unhoused represents for homeless individuals themselves, their visibility is also mentioned as a barrier to the economic development and attractiveness of the city. Interviewed about his proposal to transform the Wapato jail into a shelter (Bybee Lakes Hope Center), Schnitzer argues that the injustice of the housing crisis affects homeless individuals as much as businesses that are impacted by the presence of the homeless:

I mean, how fair is it for downtown merchants to have homeless people sleeping on their doorsteps? How fair is it that the symphony now has a number of people canceling their subscriptions because they’re afraid to come downtown and be hassled by what's getting to be very aggressive homeless people? How fair is it that people in neighborhoods have houses across the road from tent camps that bring down the value of their property? I think there's a balance of what's fair (Schnitzer, interviewed in Del Savio 2018b).

In a press conference, he explicitly supported the tenants occupying his own properties who have to see people sleeping every day on their doorsteps (Zielinski 2018):

It's not right for those who live in the city to have to deal with sometimes very aggressive folks who are causing people to not want to go downtown […] Our heart goes out to the people in need and our heart goes out to the people who can't have use of their buildings and apartments (cited in Del Savio 2018a).

In that sense, the shelter's function is to help the homeless as much as to protect property and business owners from the homeless. The location of the Bybee Lakes Hope Center, 11 miles away from the city's core in a very low-density area, must be understood with regard to these comments about the impact of homeless on businesses.

That echoes what an Enhanced Services Districts manager told me: “they [homeless people] are everywhere, they are in front of businesses, they are coming into the businesses, a lot of them are mentally ill, and they might walk into a little shop where they sell clothes and plug down on the ground”. These comments illustrate how much the private stakeholders are concerned by the visibility of homeless people which is supposed to reduce the economic, cultural and commercial attraction of the city. With that in mind, ESD's Clean Start program aims explicitly at enrolling homeless individuals in the cleaning of public spaces while the financial support to outreach workers aims at enabling a more efficient management of visible homeless people, therefore reducing the frustrations of property and business owners in the center of the city. For example, obstructions of public spaces related to homelessness are often targeted by the Clean Start program (funded by the ESD): “and there are some businesses, you know, they call every day because they need a clean-up so that they can open their doors. We know where they are” (manager, Clean Start, CCC nonprofit organization). The willingness of the ESD to further develop this sort of program is then clearly related to this issue of homelessness visibility: “we are standing on this issue because it affects business” (manager of the Clean and Safe program, Enhanced Services District).

That coincides with the philanthropic funding of the Navigation Center which is promoted as a ‘low barrier’ shelter. This shelter model makes it possible to bring in those homeless people who usually refuse to move into shelters because of the related constraints. The opportunity to access a shelter as a couple or with friends and to bring pet animals, as well as the possibility of staying for weeks rather than having to leave the following day, are supposed to remove the barriers, especially for those who are officially targeted as chronically homeless. These people are also the most visible (Willse 2015), as a result of the length of time they have lived outside, the possessions they own and the pet animals that accompany them, and they are often the subject of complaints by business owners and residents. It is therefore not a surprise that the Navigation Center's developer, who has often criticized in the media the visibility of homelessness downtown, especially by standing up against an encampment located near a hotel he was developing (Mesh 2013), opted for this low-barrier model in the conception of this shelter. The Navigation Center makes it possible to bring resources to the homeless as well as to remove poverty from visible public spaces. That strengthens the hypothesis on the function of low-barrier shelters as spaces of seclusion (Herring 2019) and “compassionate invisibilization” (Margier 2021). This goal of removing homelessness out of public view is confirmed by the Oregon Harbor of Hope's director who lauds the type and operation of the shelter as a means to avoid the aggregation of homeless individuals in public spaces:

I think one of the most positive attributes of that facility — besides what's happening inside, which is most important — the pre-registration process has meant that there are not lines of people standing outside waiting to get in […] That's been important in terms of making sure there aren't lines of people waiting on the street. It's just ordinary pedestrian and auto traffic and a beautiful facility (Don Mazziotti, Director and co-founder of Oregon Harbor of Hope, cited in McCurdy 2020).

These examples highlight the ways in which the local business elites’ involvement in the management of homelessness is versatile as it aims both at providing supportive and outreach services which meet the homeless people's needs and at invisibilizing poverty in the city. There is nothing new about the latter as business elites have been involved in urban governance for several decades (Harvey 1989; Ward 2007), generating a revanchist urbanism (Smith 1996) aimed at bringing the middle classes back to the city center and removing the homeless from the streets. What these examples highlight is the way that business and property owners are getting involved, not only in surveillance, policing and evictions, but also in homeless outreach as another means to protect business interests downtown. These examples also point out a shift in the provision of services for the homeless. Unlike nonprofit organizations which compete for providing publicly funded services, business elites in Portland initiate their own service delivery programs and engage in outreach work.