Transcript foodinnovation.rutgers.edu

State and Federal Funding for your Incubator
or Community Development Program
Margaret Brennan-Tonetta
Director, Economic Development
New Jersey Agricultural Experiment Station
Rutgers University
FoodBIN 2008
Community Food Security Coalition Conference
Cherry Hill, NJ
October 7, 2008
Overview
• Deciding who you are and what you will do
• Identifying appropriate funding sources
• Funding case study: Rutgers Food Innovation
Center
• Conclusions
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Deciding who you are and what you will do
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Deciding Who You Are and What You Will Do:
Points to Consider
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What are your goals and mission?
Is your funding source pre-determining your mission?
Who are your target clientele?
What is the size of your clientele base?
What are their needs?
What services will you offer?
What type of staffing and infrastructure are needed?
What regulations do you need to comply with?
What is your operating strategy?
What is your growth strategy?
How much will it cost to develop the operation?
How much will it cost to maintain the operation?
Who are your strategic partners?
What is your time horizon?
How will you market?
What are your measures of success?
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Steps to Answering the Questions
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Identify and quantify the needs of target region
Develop a program that “fits” the regional assets & fulfills needs
Begin with a program, NOT a building
Begin strategic planning process with the end in mind
Create strong partnerships from the beginning
Identify and fit with the economic development goals of your community
Have a well-developed business and financial plan
Develop benchmarks and impact assessment tools at the start
Characteristics of Successful Programs
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Well defined program
Well established, committed partnerships
Strong stakeholder involvement
Program leader with vision
Cross-disciplinary and committed team
Diversified funding portfolio
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Identifying appropriate funding sources
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Developing a Funding Strategy
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Developing a funding strategy for your incubator is similar to
developing a funding strategy for your clients.
Questions to Answer:
 What stage of development are you in?
 Who is your competition?
 Will there be enough demand for your services?
 What menu of services will you be able to offer?
 What services will be provided in-house vs. outsourced?
 What will be your revenue mix?
 What sources of state and federal funding are a best “fit”?
 Develop financial projections and analysis
Realistic Funding Strategy
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Funding Sources
Examples
• Grants
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Federal USDA
Regional SARE
Federal EDA
Foundations – Kellogg, Kauffman
• Government Loans
– Federal USDA
– Federal SBA
– Federal, state and community economic development programs
• Strategic Partners
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Sustainable Agriculture Research & Education
Programs (SARE)
• “Grants and outreach to advance sustainable innovations to the
whole of American agriculture”
• Four SARE regions: North Central, Northeast, Southern, and
Western
• Over 80 programs
• About 75% applicable to farmers
• Most require matching funds
• Funding levels vary – from $5000 to hundreds of thousands
• For more information: www.sare.org
ATTRA – National Sustainable Agriculture Information
Service
(formerly known as the Appropriate Technology Transfer for Rural
Areas)
For more information: www.attra.org
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Upcoming NE SARE Funding Opportunities
• Farmer grants - for commercial farmers who want to test a new practice or
idea, Projects can explore a wide range of topics from pest management to
value added products and marketing. Funds can be used to pay for the
farmer's time and for materials specific to the project. Awards are capped at
$10,000 and the deadline is December 16.
• Partnership grants - for Cooperative Extension, NRCS, and other
agricultural service providers who work directly with farmers. These
support on-farm research and demonstration projects that address a wide
range of topics in sustainable agriculture. Awards are capped at $10,000 and
the deadline is December 9.
• Sustainable Community grants - for projects that connect farming and
economic development. Projects can address issues like finance, marketing,
enterprise development, and adding value to farm products. Applicants
must be affiliated with an organization such as a community nonprofit,
Cooperative Extension, local government, an educational institution, a
planning board, a farming cooperative, or an incorporated citizens group.
Awards are capped at $25,000 and the deadline is December 2.
• For more information go to: www.uvm.edu/~nesare
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US Economic Development Administration –
Dept. of Commerce
• Grants for Public Works and Economic Development
Facilities Program
– Targets funding for projects that increase prosperity by
advancing comprehensive, entrepreneurial, and
innovation-based economic development efforts to
enhance the competitiveness of regional businesses.
– Limit up to about 20% of project cost
– For more information go to:
www.eda.gov/AboutEDA/Programs.xml
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State and Local Programs
• State and local agencies often offer grant incentives.
Sources of grant funding may be available in your state
through:
– Department of Commerce
– Economic Development Authorities
– Department of Agriculture
– Urban Enterprise Zones
– Commission on Science and Technology
– Department of Labor
– State - Community Investment Programs (i.e. CRDA)
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State Programs
Examples of programs available in New Jersey:
NJ Dept. of Commerce: Business Employment Incentive Program
Rewards job creation with a percentage of the total amount of state
income taxes withheld from newly created jobs
NJ Department of Labor: Work Force Training Grants:
Provides matching grant dollars to employers for classroom-based
and on-the-job training
NJ Commission on Science and Technology: Incubator Grants:
Provides $130,000 annually for each of the states 12 incubators
Casino Reinvestment Development Authority: Funded through
percentage of revenues returned from NJ casinos. Supports economic
development projects throughout the state.
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Funding Case Study:
Rutgers Food Innovation Center
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Program Development Strategy
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Conducted a feasibility study and needs assessment
Obtained consensus on a mission
Developed strategic plan with quantifiable objectives
Secured stakeholder support
Structured for financial sustainability
Recruited well qualified staff
Built an effective board of advisors
Developed a comprehensive resource network
Developed and tested program first before constructing
building
• Stressed service that results in company success and wealth
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• Integrated program into the fabric of the community and its
Mission
To stimulate and support sustainable economic growth and prosperity to the food and
agricultural industries in the New Jersey region by providing businesses with
innovative research, customized practical solutions, resources for business
incubation and a trusted source for information and guidance
Clientele
Farmers and Cooperatives
Startup food companies
Existing small and mid-sized food companies
Retail and Food Service Establishments
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Business Development
Marketing and Sales Support
Product and Process Development
Quality Assurance and Food Safety
Regulations and Compliance
Workforce Development and Training
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FIC Food Business Incubator Facility
23,000 s.f. Facility Completed: Grand Opening Oct. 17, 2008!
Enabling Product Design, Development, Analysis,
Commercialization, and Ongoing Manufacture of Products
for Sale to Retail and Foodservice Markets
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Self-Sustaining Financial Model
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Facility has been designed to provide an integrated level of
processing support and business and technology services to
clients that will result in maximum economic impacts to our
clients, and enable the Center to be operationally selfsustaining
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Considerable strategic input has gone into the identification
and implementation of support services that benefit FIC
clients, which also serve as revenue sources that contribute
towards offsetting the Center’s cost of operations
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Five year financial Proforma has been developed that
identifies Operating Revenue Sources derived from
incubator operation and grant funding
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27 Grants Totaling over $11 Million
Have Funded Capital and Operating Needs
• Capital Costs of $7.65 Million for 23,000 s.f. Incubator
• Tremendous and Broad Support for Project led to grants from
Federal, State and Community Partners, with no Debt
• Rutgers contribution of $750K, or 10%, is from Rutgers NJAES
• Operations Costs for Program Increasing from about $1MM to
>$2MM beginning in FY2009
• NJAES has Consistently Supported 4 lines at $300K+
• 4 existing staff and five additional staff to be added shortly are all
grant funded
• Significant operating costs will be required during initial years,
after which point program will become financially self-sustaining
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Major Capital & Operating Funding Sources to Date
Federal
• United States Department of Agriculture - $2,206,509
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$1,000,000 FY 2005 (AIC Grant -operations)
$497,000 FY 2005 (DLT Grant - operations)
$300,000 CY 2006 (RCDG Grant - operations)
$90,000 FY 2008 (RBEG Grant – Incubator Construction - equipment)
$119,509 CY 2008 (RCDG Grant - operations)
$200,00 CY 2009 (RBOG – Equipment)
• United States EDA - $2,000,000
• Cumberland Empowerment Zone - $1,411,090
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$56,250 – FY 2002 operations
$120,000 – FY 2003 operations
$150,000 – FY 2004 operations
$500,000 – Incubator Construction (building)
$334,840 – Incubator Construction (sitework)
$250,000 – Incubator Construction (equipment)
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Major Capital & Operating Funding Sources to Date
State
• State of New Jersey - $3,150,000
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$250,000 – FY 2002 (State Appropriation)
$1,800,000 – Incubator Construction
$500,000 – FY 2007 (NJ State Treasury Grant)
$300,000 – FY 2008 (Line Item)
$300,000 – FY 2009 (State Appropriation)
• NJ Casino Reinvestment Development Authoriry$1,945,000
• NJ Commission on Science & Technology - $250,000
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$40,000 – FY 2001 operations
$80,000 – FY 2006 operations
$130,000 – CY 2007 operations
$130,000 – CY 2008 operations
• NJ Department of Agriculture - $120,000
– $50,000 – FY 2008 Atlantic City Farmer’s Market Grant – Operations
– $70,000 - FY 2008 Statewide Farmer’s Market Grant - Operations
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Incubator Operating Revenue Sources
Will enable financial self-sustainability
1. Processing Space &
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Equipment Rental, and
Co-Packing Fees
Business Mentoring
Storage Rental
Office and Conference
Room Rental and
Associated Fees
Education Seminars
Training Revenue
Product, Process and
Package Development
8. Consumer Research &
Focus Groups
9. Sensory Analysis
10. Nutrition Labeling
11. Microbiology Testing
12. Analytical Chemistry
and Physical Testing
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Balance Sheet Projections
Grant Support, O &M Re covery & Incubator
De rived Income
$ 5, 000, 000
$ 4, 000, 000
Inc uba t or De r i ve d Inc ome
$ 3, 000, 000
Ope r a t i ons &M a i nt . (O&M )
$ 2, 000, 000
Gr a nt Suppor t
$ 1, 000, 000
$Y ear 1
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Conclusions
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Lessons Learned
• Learn from other models and structures for financial
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sustainability
Develop a strategic plan containing quantifiable objectives
Link to the work of the project partners.
Develop broad stakeholder and community support
Recruit well qualified staff with appropriate experience
Continually broaden services offered to clients
Establish an extensive network of programs
Prioritize to provide greatest emphasis on client assistance
Diversify funding sources
Conduct ongoing program evaluation
Integrate the incubator program and activities into the fabric of
the community and its broader economic development strategies.
• PLAN, PLAN, PLAN!!!
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