How does SPARK measure its business development successes?
Company growth projects, new investment commitments, and announced jobs are industry standard ways of measuring business development success. We track these data points throughout the year and include them within annual report both fiscal-year successes and cumulative data. These data are also reported on a monthly basis to the finance committee and executive committee of SPARK’s board of directors.
How does SPARK report the results of its MEDC-funded business accelerator activities?
As part of its funding obligations for the business accelerator programs that are funded by the MEDC’s 21st Century Jobs Fund, Ann Arbor SPARK is required to report data back to MEDC on a regular basis. The MEDC requires different reports and reporting requirements for each of the programs:
- Michigan Pre-Seed Capital Fund
- SPARK East Innovation Center
The information reported to the state is specified by MEDC, and SPARK has provided all data on time and as required.
How does Ann Arbor SPARK validate its entrepreneurial services jobs figures that it reports to LDFA?
In 2017, the Ann Arbor/Ypsilanti SmartZone Local Development Finance Authority (LDFA) contracted Stevens Kirinovic & Tucer P.C. (SK&T) to assist them in evaluating the job creation reporting of Ann Arbor SPARK. SK&T’s evaluation included interviewing and observing SPARK’s management and operational personnel to determine how the information is gathered and reported, and also included direct confirmation of the information provided by SPARK with the companies it reported having served.
Where can I find Ann Arbor SPARK’s federal tax returns?
As a non-profit organization, Ann Arbor SPARK complies with specific legal reporting requirements under federal and Michigan law and has done so faithfully since its inception in 2006. One such requirement is the public posting of SPARK’s federal tax returns which are available here.
Can you provide more details about your non-profit status?
Ann Arbor SPARK is a 501(c)(6), which qualifies it as a business league devoted to improving common-interest business conditions and does not benefit a single individual or shareholder. The organization also manages the Ann Arbor SPARK Foundation which is a 501(c)(3) charitable organization. It is a very common arrangement for organizations to have both designations. For example, the Ann Arbor / Ypsilanti Regional Chamber has both as well. Because the organization maintains the two designations, we file two tax returns.
How do the purposes of Ann Arbor SPARK and the Foundation differ?
Most of our programs are through Ann Arbor SPARK. These include our business acceleration and incubation work with startups, business development services for established businesses, funding programs (the Michigan Pre-Seed Capital Fund, Ann Arbor/ Ypsilanti LDFA microloans and Eastern Washtenaw microloans), talent services, and marketing the region.
The mission of the Foundation is to provide funding and support for the activities of Ann Arbor SPARK, for the encouragement, promotion and support of area development, re-development, and renewal. Examples of programs that the Ann Arbor SPARK Foundation has supported include the management of the Accelerate Michigan Innovation Competition, developing support for the American Center for Mobility, and community education about Angel investing.
How is Ann Arbor SPARK funded?
The SPARK operating budget is funded through three sources: public (including grants and government and municipal funding); academic (University of Michigan, Eastern Michigan University, and Washtenaw Community College); and private (corporate contributions, foundation grants, and sponsorships).
A portion of the public funding is provided by the State of Michigan through an annual contract with the Ann Arbor/Ypsilanti SmartZone (LDFA) for support of startups, and general fund allocation for business development activities, specifically, attracting and helping established businesses grow in this region. SPARK also receives funding from the state through the Michigan Economic Development Corporation (MEDC), and Michigan Works! Southeast.
Washtenaw County also provides public funding from the general fund to support business development.
Ann Arbor SPARK operates its SPARK Central Innovation Center under contract with the LDFA. The SPARK East Innovation Center is also supported by the LDFA, and by a grant from the MEDC. MEDC funds are to administer the Michigan Pre-Seed Capital Fund, additional funding for the SPARK East Innovation Center, support for the Greater Ann Arbor regional marketing efforts, and support of regional talent attraction efforts.
What is a SmartZone / LDFA?
In 2001, the Michigan Economic Development Corporation (MEDC) created 11 SmartZones throughout the state, including Ann Arbor/Ypsilanti. While SmartZone is the programmatic name given by the Michigan Economic Development Corporation (MEDC), the district is technically called the Local Development Finance Authority (LDFA).
In August 2017, the Michigan Department of Treasury awarded a 15-year funding extension to the SmartZone designated to support entrepreneurial activity in Ann Arbor and Ypsilanti. The Ann Arbor/Ypsilanti SmartZone was one of only three in Michigan whose funding was renewed for a 15-year period.
The state provides money to the LDFA specifically for economic development, for the purpose of creating new companies and diversifying the economy. This funding is made available from a tax increment financing (TIF) district that captures a small amount of incremental property tax increases.
The Ann Arbor/ Ypsilanti SmartZone is funded by tax revenue collected within the geographic boundaries of the Ann Arbor DDA. The tax capture is based on the increase in taxable value due to new development and appreciation above the base year of 2002. So in effect, the state funds the LDFA which then provides SmartZone funding. The Ann Arbor / Ypsilanti SmartZone (LDFA) received approximately $2 million of revenue in FY2014.
Per Ann Arbor SPARK’s LDFA contract, SPARK is required to report to the LDFA every quarter on our results, including specific metrics such as the number of companies that received services that were funded through the LDFA funds. Here is the most recent annual report.
Why does the city of Ann Arbor provide Ann Arbor SPARK $75,000?
The City of Ann Arbor chose to outsource economic development to Ann Arbor SPARK at a rate of $75,000 per year rather than staff it internally or not have it covered at all. This aligns with economic development best practices, consolidating resources to ensure the most efficient and effective use of funds. These funds support efforts related to business expansion and attraction plus marketing the city as a great place to locate a business. Ann Arbor SPARK reports out as part of the city council’s annual budget process, detailing how the funding received from the city was used.
As the economic development engine for the region, many other municipalities within Washtenaw County also provide funding to SPARK.
Throughout the state, it is customary for other municipalities to contract out for economic development services. For example, Livingston County (population 182,000) through its Economic Development Council has chosen to contract SPARK for economic development services, at an annual amount of $367,028 during the most recent year.
Do other municipalities provide financial support to SPARK?
Yes, the following spreadsheet summarizes that support by jurisdiction and the projects, capital investment and projected jobs that have been impacted by SPARK activity in each community.