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INDIANAPOLIS – Apparently baseball has replaced golf as the activity of choice for brokering business deals.
At least that is the case for the Indiana Economic Development Foundation – the non-profit arm of the Indiana Economic Development Corporation – that spent more than $50,000 on suites and tickets to ballgames in Chicago, New York and Atlanta since its inception in early 2005.
But this spending is a drop in the bucket for the foundation, which has raised $1.8 million from February 2005 through August of this year.
Almost all of that money – about $1.3 million – has come from utilities throughout the state, such as Vectren, NIPSCO, Duke Energy, Cinergy and AEP.
And almost $1 million of the $1.5 million spent through August has gone toward trade missions to Asia and Europe.
This does not include an estimated $250,000 spent on a September trip to Japan.
Secretary of Commerce and IEDC CEO Nathan Feltman said both the trade missions and trips to various cities around the country for face-to-face meetings with business leaders are invaluable.
“It’s about meeting them, getting their guard down and building a relationship,” he said.
And thanks to the private donations, there are no worries about how to pay for a bottle of wine or tickets to the Indianapolis 500.
In 2005, Gov. Mitch Daniels pushed for the creation of the IEDC – a quasi-governmental agency aimed at improving economic development outside the confines of a normal state bureaucracy. Included in the legislation was the addition of a non-profit foundation as a way to solicit donations from the private sector to help with economic development.
The foundation’s donations and expenditures are public and the group is audited by the State Board of Accounts. The first audit was released in March, and found only two small problems – not using numbered receipts and several checks over $5,000 that were not signed by two officials.
Changes were implemented to fix the issues, but IEDC officials included a statement in their response reminding the auditors that the money used was not taxpayer revenue.
Feltman said he has no problem with the audit and the IEDC will continue to follow the law.
Some legislators say the only way to guard against conflict in donations is to make sure the corporation and related foundation are open for review.
“We should keep an eye on the money and the expenditures in case things get a bit too cozy,” said Sen. David Ford, R-Hartford City.
Most business and economic development officials concede that private sector involvement in economic development is not new – it’s just there is a new state entity to further coordinate and facilitate the relationship.
“Historically there has always been some outside sources used to help on economic development,” said Pat Kiely, president of the Indiana Manufacturers Association. “Like anything in government, there is always a potential conflict whenever you go outside the system, but you have to balance that against the finite resources in government.
“I think the public would prefer that over raising a tax or fee,” Kiely said.
Utilities especially have always been involved, because new investment means new customers for them and new jobs for the state.
Larry Graham, spokesman for NIPSCO, said giving to the foundation is just a realization that the industry can be more effective by partnering both at the state and local level.
NIPSCO has donated more than $200,000 to the foundation.
“We need to get prospects to Indiana so that Indiana has an opportunity to land those projects,” he said. “There’s no conflict at all.”
But Rep. Win Moses, D-Fort Wayne, is wary.
“My general feeling is that outside monies carry great risk. Very few people or companies give money without wanting something in return,” he said. “Certainly there is a correlation of interest. But they also want more – like leniency on rates.
“They will seek favor whenever and wherever they can.”
Feltman disagrees, noting that, “our interests are aligned” and “if we are successful they will be successful.”
He also noted the foundation does not take money from any company or group seeking something in return from the IEDC, such as tax credits or training dollars.
Those contributing can specify which fund they want their money to go to. Some of the options include a general account or those supporting outreach, motorsports, bio-trade, international efforts, advertising or trade missions.
The foundation is a registered 501(c)3 non-profit so donations are eligible for a tax write-off.
The vast majority of the contributions, so far, have gone to pay for annual trade missions – and the success of the trips is hard to debate.
“There are still state tax dollars available for this,” Feltman said, noting that’s how missions were handled by previous administrations. “But if we can raise this money privately, why don’t we?”
He noted the state has had three trade missions to Japan in less than three years. The result is 10 new Japanese businesses moving to Indiana; 18 expansions; $1.3 billion in private investment and 5,500 new jobs.
The foundation does receive some money from local economic development organizations around the state – about $145,000 so far. But they also reciprocate sometimes.
For instance, the Fort Wayne-Allen County Economic Development Alliance received $10,000 each in 2006 and 2007 to sponsor a Japanese Saturday School.
Alliance Director Rob Young explained that this schooling is for children of Japanese executives working in the United States and is a way for them to keep up with the rigorous Japanese education model.
It runs all day on about 40 Saturdays a year.
“It’s a different structure over there,” Young said. “This is just a way to keep those kids in sync when they go back after their assignment in the U.S. ends.”
And the IEDC also reaches out to local communities to be a part of the events throughout the year.
They put together a “partner plan” every year that lists the major events the IEDC will be attending or coordinating and invite others to participate.
Many of the events are held in Chicago, New York, Dallas and Atlanta.
Feltman said these cities were chosen as key for networking because of a high number of companies headquartered there and a proliferation of site consultants in those areas, who are playing an important role in economic development these days.
One example of this scheduled for 2008 is a Dallas trip that will include dinner, daytime appointments with area business leaders and an NBA game between the Dallas Mavericks and the Portland Trailblazers.
Those interested in making the trip are responsible for their own expenses.
IEDC officials also are already fundraising for several major 2008 events, such as a global summit in San Diego in May that has a budget of $10,000 and the BIO International Annual Convention in San Diego in June that has a budget of $250,000.
There are local events too, including the Indianapolis 500, the Indianapolis Tennis Championships and the inaugural motorcycle race at the Indianapolis Motor Speedway.
nkelly@jg.net
