10/24/2018
By supporting a modest tax increase, companies in San Francisco can help end the city’s homelessness crisis.
By Marc Benioff
Mr. Benioff is the chairman and a co-C.E.O. of Salesforce.
Back when I was in business school in the 1980s, I was taught — as were generations of aspiring entrepreneurs and executives — that the business of business is business. “There is one and only one social responsibility of business,†the economist Milton Friedman famously wrote in “Capitalism and Freedomâ€: “to increase its profits.†In an essay for this newspaper in 1970, Dr. Friedman went further, arguing that executives who claim that companies have “responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords†of the day are guilty of “undermining the basis of a free society.â€
Unfortunately, some C.E.O.s still embrace this myopic view and believe that they have a duty to shareholders alone, with little or no responsibility to the communities in which they operate. I contend that business must have a purpose beyond profits, and that such purpose can, over time, benefit both stockholders and stakeholders.
I’ve seen this in my hometown, San Francisco, and the surrounding Bay Area, which has the third-highest number of billionaires on the planet. Some high-net-worth individuals, including some who work in the tech sector, have been extraordinarily generous in supporting our public schools, hospitals and communities. Others, however, have given little or nothing, and they seem content to let local government bear the burden of enormous local challenges alone.
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The city of San Francisco, where one-bedroom apartments rent for an average of $3,300 and the median home price is a record $1.6 million, is experiencing a full-blown homelessness crisis. I’m a fourth-generation San Franciscan, and while there has always been homelessness, I have never seen it this bad. Families with children are living in cars and are packed into homeless shelters. There are tent encampments in city parks. The sidewalks are strewn with heroin needles and covered in human feces. A visiting official from the United Nations said she was “completely shocked.†An infectious-disease expert from the University of California, Berkeley, found that parts of the city are more unsanitary than the slums of some developing countries.
To their credit, city officials, businesses and community groups have stepped up. Innovative public-private partnerships have helped to bring some families off the streets. Mayor London Breed calls ending homelessness one of her “top priorities†and has proposed additional funding, beds and services. Yet given the scale of this crisis, current efforts are simply not enough. According to the most recent count, a shocking 7,500 individuals in San Francisco are homeless. There are 1,200 families — including about one in 30 children in public schools — who are homeless in San Francisco. Every night, more than 1,000 people are on wait lists for emergency shelter.
This tragedy is not unique to San Francisco. The nation’s homeless population is growing, as the high cost of housing pushes more people onto the streets. In New York City, about one in every 10 students in public schools are now homeless, a record high.
This is a humanitarian emergency and it demands an emergency response. San Francisco’s epidemic of homelessness is solvable, but only if we devote the resources that are necessary.
That’s why I — and the company I founded, Salesforce — are part of a broad coalition of San Francisco citizens, business leaders, elected officials, teachers and community activists who are supporting Proposition C on the November ballot. Proposition C would impose a small tax — half of 1 percent — on San Francisco’s wealthiest businesses (on annual gross receipts over $50 million generated in the city). In other words, if a business brings in $55 million in San Francisco, only $5 million would be subjected to the tax. Large retailers would pay an even smaller tax: just 0.175 percent of gross receipts over $50 million.
This would raise up to $300 million a year to address homelessness, roughly double what San Francisco spends now. Yes, we are a business that supports a tax on our business — because we are a part of our community and our community is in crisis.
Under a comprehensive plan developed by experts in the field, this new funding would address this crisis from every angle. It would provide more bathrooms, so that people wouldn’t have to relieve themselves on city streets. More than 1,000 new shelter beds. Up to $75 million to treat the severely mentally ill. Up to $150 million for 4,000 additional units of housing, including for youth and families with children. And assistance or subsidies to help thousands of residents stay in their homes — to help prevent San Franciscans from becoming homeless in the first place.
Opponents of Proposition C — including some business leaders — have raised objections that do not stand up to closer scrutiny. They claim that this tax will drive away business and jobs, but of the tens of thousands of businesses in San Francisco, fewer than 400 will meet the $50 million threshold — small and medium-size businesses are effectively exempt. The city’s own Office of Economic Analysis has concluded that any impact on the local economy would be “small†— a mere 0.1 percent over 20 years.
As our residents are forced onto the streets, many large companies — some of which have benefited from tax breaks given to them by the city — are also reaping a windfall from recent cuts to corporate taxes. It’s absurd to believe that these businesses can’t afford one half of 1 percent of gross receipts to help address the most important problem facing our community. Salesforce, for instance, is the city’s largest private employer. Proposition C could increase our annual tax by about $10 million; we expect revenues this year of $13 billion. Even with Proposition C, we’ll be just fine.
In fact, the real threat to business comes from the homeless crisis itself. A major medical association recently pulled its convention out of the city, saying that its members no longer feel safe on our streets. Hotels and restaurant owners are increasingly worried that tourists will stay away. If employees can’t walk safely to work, companies might think twice about locating in the city.
It’s also time to put to rest the claim that more generous support for the homeless will only attract more homeless people to our community. The city’s own analysis found “no research†that expanding homeless services increases homelessness. An overwhelming majority of homeless people in San Francisco are from San Francisco. They are our neighbors and they desperately need our help.
Finally, although critics are correct that money alone cannot solve homelessness, it’s also true that all effective solutions require money. Over more than a decade, the city’s Homeward Bound program has reunited some 10,000 homeless individuals in San Francisco with their families across the country, with a 90 percent retention rate. The Heading Home campaign, an innovative public-private partnership between the city, businesses and nonprofits, has raised $37 million to help find homes for 800 families — with more than 350 families already in their own home or in the process of finding one.
This crisis reminds us that business does not exist in a bubble. Companies can truly thrive only when our communities succeed as well: when our public schools prepare our children for a digital economy; when people are treated equally, regardless of race, gender, sexual orientation or gender identity; when we protect our environment from pollution and climate change; when our residents are no longer forced out of their homes and onto the streets.
In this sense, Proposition C is a referendum on the role of business in our communities and, by extension, our country. The business of business is no longer merely business. Our obligation is not just to increase profits for shareholders. We must also hold ourselves accountable to a broader set of stakeholders: to our customers, our employees, the environment and the communities in which we work and live. It’s time for the wealthiest businesses and business owners to step up and give back to the most vulnerable among us.
Marc Benioff is the chairman and a co-C.E.O. of Salesforce.
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