Community Vitality Update

May 2004 Issue No. 7

This newsletter provides community leaders, economic developers, entrepreneurs, and other Iowans interested in community vitality with features on innovative strategies, updates on CVC projects, and info about educational opportunities and networking.

Foundations in Non-Gaming Counties to annually receive $50-60k

Iowa’s new gambling bill was passed near the end of the 2004 General Assembly and recently signed by the Governor. As part of a political compromise, HF2302 will distribute ½ of 1 percent of the state’s gambling revenues to the 85-90 Iowa counties that will not have gambling entities. These funds will be deposited and distributed through Certified Community Foundations and affiliates with countywide missions. Some experts anticipate that each county without gambling will receive $50,000 to $60,000 per year and the amount is expected to growth with gambling revenues over time. Up to 75% may be allocated to charities for current projects. However, at least 25% must be allocated to permanent endowments.

This bill represents a unique opportunity for community leaders to create new mechanisms to generate local philanthropic initiatives and efforts to foster new engines of community growth and vitality. CVC encourages community leaders to conduct a countywide process that is open to diverse interests and to consider using some of the resources to improve philanthropy and community entrepreneurial development initiatives to help sustain and grow Iowa’s communities. For example, one use of some of the $5 million in annual funds could be to create hometown legacy campaigns that attract more of Iowa’s $5 billion in probated wealth transfer to be reinvested local projects. If all of the new funds are distributed based on past allocation patterns, a great opportunity to support a few new community growth and vitality ventures and to help sustain the community will have been lost. For specific language on HF2302 go here, then click on “HF2302 Excerpts on Gaming Revenue Distributions.”

Rural Business Incubation one of many NBIA topics

The topic of business incubators continues to come up in conversations with Iowa’s economic developers. Several ideas from the National Business Incubation Association (NBIA) meetings in Atlanta on April 25-28 are relevant for Iowa leaders to contemplate.

First, a national panel on “Business Incubation in Rural Areas” that included Burt Chojnowski, Fairfield Entrepreneurs Association President and rural incubator directors from Maine and Georgia concluded that people, programs, and entrepreneurial networks are more important determinants of business incubator success in nonmetro areas than are the incubator facilities. Many rural communities already have vacant facilities that with modification can be used for entrepreneurial projects, but the critical need is the incubator’s staff, program services, and mentor networks that provide advisors and help solve startup problems. Unfortunately, funding is often easier to obtain for facilities than for people, programs, and networks.

Second, Don Macke, Co-Director of the National Rural Entrepreneurship Center, Lincoln, NE highlighted three different kinds of entrepreneurs each with different needs. Macke says there are (1) people who are interested in starting a business, (2) people who are in the process of starting a business, and (3) people who run companies that have potential for second stage growth. Those who are thinking about starting a business may need legal and accounting advice and basic training on business management, marketing, and finance to develop a business plan. Macke suggested that entrepreneurs already in the process of starting a business may need something different and suggested that they be asked about their needs. He cited one university survey of this group that found this group needed 24 parking, all-night food service, and access to marriage counseling to balance their business and personal lives. Depending on the industry, the startups may need shared reception and secretarial services, shared equipment and computers, access to revolving loan programs, and creative access to legal, accounting, and marketing services. The final group includes second stage growth entrepreneurs. Such businesses are already established and may have been around for years, but have never progressed beyond a small family business. Here the challenge is to assist the company through incremental adjustments to grow the business, delegate authority, manage people, develop financial systems, and expand to regional, national, and international markets.

Finally, "Incubating in Rural Areas," was the title of a study of nonmetro business incubators conducted by NBIA. This study analyzed several rural business incubators and divided them into two groups successful and others. The a successful non metro incubator typically has a staff of 3 people with specialized expertise in management, finance, and marketing; an annual budget of $170,000 with only about $20,000 coming from public sources; serves an area of 100,000 in population; and has 65,000 square foot of space for about 25 clients. One successful incubator in NE Mississippi achieves this capacity by serving a multi-county area with three facility locations. "Incubating in Rural Areas", “Best Practices in Action,” and other titles may be found at the NBIA bookstore.

Charles City and Manning Recognized at Rural America Symposium

Charles City and Manning recently received the “Capital Communities Award” from the Federal Home Bank of Des Moines at the Capitalizing on Rural America Symposium recently held in Des Moines on April 15 & 16th. Two communities were selected from each of the Federal Home Bank’s five states: Iowa, Minnesota, North Dakota, South Dakota, and Nebraska. Each community chosen received a cash award of $7500.00 to further advance local economic development. Leaders from the award winning communities exhibited information on projects, programs, and accomplishments and answered questions about the achievements that contributed to their local success. Over 500 people attended the symposium co-hosted by Iowa Senators Tom Harkin and Charles Grassley. Congratulations from the CVC staff to Mayor Jim Erb of Charles City and Joan Phillips of Manning, both members of the Community Vitality Center Governance Board, on having your communities selected as Iowa Capital Communities.

Entrepreneurial Training Listed on SBDC Web Site

The Iowa Small Business Development Centers are now attempting to list all of the entrepreneurial training events that are occurring across Iowa on a monthly basis. For those who are interested in specific entrepreneurial topics and training sessions, find the ones that are nearest you by visiting the SBDC web site.