State and Federal Funding for your Incubator or Community Development Program

1. 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

2. Overview • Deciding who you are and what you will do • Identifying appropriate funding sources • Funding case study: Rutgers Food Innovation Center • Conclusions

3. Deciding who you are and what you will do

4. Deciding Who You Are and What You Will Do:Points to Consider • 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?

5. Steps to Answering the Questions • 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 • Well defined program • Well established, committed partnerships • Strong stakeholder involvement • Program leader with vision • Cross-disciplinary and committed team • Diversified funding portfolio

6. Identifying appropriate funding sources

7. Developing a Funding Strategy • 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

8. Funding SourcesExamples • Grants • Federal USDA • Regional SARE • Federal EDA • Foundations – Kellogg, Kauffman • Government Loans • Federal USDA • Federal SBA • Federal, state and community economic development programs • Strategic Partners

9. 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

10. 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

11. 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

12. 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)

13. 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.

14. Funding Case Study: Rutgers Food Innovation Center

15. Program Development Strategy • 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 creation • Integrated program into the fabric of the community and its broader economic development goals • Conduct ongoing program evaluation

16. 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 Services Business Development Marketing and Sales Support Product and Process Development Quality Assurance and Food Safety Regulations and Compliance Workforce Development and Training

17. FIC Food Business Incubator Facility23,000 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

18. Self-Sustaining Financial Model • 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 self-sustaining • 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 • Five year financial Proforma has been developed that identifies Operating Revenue Sources derived from incubator operation and grant funding

19. 27 Grants Totaling over $11 MillionHave 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

20. Major Capital & Operating Funding Sources to DateFederal • United States Department of Agriculture - $2,206,509 • $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 • $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)

21. Major Capital & Operating Funding Sources to DateState • State of New Jersey - $3,150,000 • $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 • $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

22. Processing Space & 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 Consumer Research & Focus Groups Sensory Analysis Nutrition Labeling Microbiology Testing Analytical Chemistry and Physical Testing Incubator Operating Revenue SourcesWill enable financial self-sustainability

23. Balance Sheet Projections

24. Conclusions

25. Lessons Learned • Learn from other models and structures for financial 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!!!