As Town Budgets Tighten, Economic Development Faces Pressure | Development offices nearing the end of grants as they know them
Last month, Donald Lowe, director of the community and economic development office in Clinton, suggested to town officials that they should consider gradually moving to pay for his office, which is now funded mostly by grants, out of town coffers.
It could be a slow transition, he said, reaching 100 percent local funding — about $122,000 — in 2014. Lowe said the reaction wasn’t terrible, but “it wasn’t the warmest response I would have hoped for.”
Since making the proposal, Lowe has accepted a new job as Bolton’s town administrator, but he insists that decision had nothing to do with anything that happened in Clinton.
It’s no surprise that municipal leaders wouldn’t be thrilled at the idea of eventually adding an extra $20,000 to the annual budget each year, but Lowe and others say they may not have much of a choice if they want to keep the office in place. Fewer and fewer grants will pay for general administrative expenses like Lowe’s salary. And that’s an issue not just for Clinton but for just about any community that has a development office.
No Grants For Salaries
In past years, Lowe said, he could expect that the grants his office received would allow 10 percent of the money to be used on salaries and other administrative expenses. That’s no longer the case.
“The trend more and more is that grants being awarded are meant to be 100 percent for the purpose of the grant,” he said.
Jennifer Wiley-Cordone of the Mount Wachusett Institute for Nonprofit Development said the pattern of grantors refusing to pay for administrative costs has been on the rise for the past 10 years. Donors and governments don’t want to pay over and over just to keep an organization’s infrastructure alive.
“If you put yourself in the shoes of the grant-maker or the donor, they really want to look at what their impact is going to be,” she said.
To some, the idea that development offices would have to get their funding from the local government may raise the question of whether it’s worthwhile to keep the offices around. But to many, they are an important way of making communities friendly to businesses.
Al Cotton, spokesman for Clinton-based plastics manufacturer Nypro, said the Clinton development office has stepped in on his company’s behalf at critical times. A few years ago, he said, a town water line burst, flooding one of Nypro’s clean rooms.
“That really threatened our ability to stay here, because it made it impossible for us to function,” he said.
But Cotton said the development office quickly went to the state and got grant funding to install new pipes in the area.
Lowe said that grant provided $770,000 for water line replacement and sidewalk repairs. And, he said, the state was impressed enough by the way the town used the money that it let them apply for another invitation-only grant two years later to replace more pipes. That netted the town another $986,000.
Go-Between
More generally, Cotton said, the development office acts as a liaison between the local government and businesses.
“They’re able to make sure that the town departments are business friendly,” he said. “From the inside they’re able to work with all of the departments, and I think that they do a very good job helping those departments work with businesses to keep those businesses here.”
Kevin Haley, chairman of Clinton’s Board of Selectmen, said he considers the development office “vital” to the town because of the grant money it brings in.
Since the board hasn’t taken a vote on Lowe’s proposal, he said he doesn’t know exactly how the rest of its members stand, but he said he would support funding the office directly if other avenues fail.
Still, Haley said, it would be difficult to divert money to the office any time soon, especially in the current economic climate. Putting funds into a department that is doing fine on grant money for now when the fire department and council on aging are clamoring for their share of the budget would be a tough proposition, he said.
To Lowe, the idea that the town might not start putting money into the office immediately isn’t the end of the world.
Currently, he said, Clinton pays just $7,000 of the department’s budget. More than $100,000 comes from outside money, largely from existing grant funds that will slowly dry up.
As that happens, the need for local funding will become greater and greater. If it never shows up, Lowe said, there’s no doubt the office will eventually close.
That may be a common occurrence for local development offices in the coming years. One logical response to that likelihood is for several towns to get together and create a regional office. Haley said he suspects that may happen in many places, though Clinton officials haven’t discussed the idea yet.
Wiley-Cordone said that’s a common idea for nonprofits too. Besides increased restrictions on grants, general tightening of funds during the economic downturn is leading many to consider various forms of consolidation.
That kind of creative thinking could ultimately improve the way organizations are managed.
“It’s definitely a critical moment,” she said.
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