The Goverenment and Industry Partnership VS the Motivation for the Non-Profit Organization

A few years ago I read two books:

The Free Agent Nation by Daniel H. Pink

The Non-Profit Economy by Burton Allen Weisbrod

The Free Agent Nation now seems like a relic from our distant past, while the principles in The Non-Profit Economy, which lays out the distinctions and roles that separate the private economy, government, and the non-profit economy, cry for public review.

While I was searching for The Nonprofit Economy, I came upon this paper, which expands upon the work of Weisbrod, published in Munich by Giovanni Cerulli


The redistributive role of non-profit organizations


ABSTRACT

By starting from the consideration that non-profit organizations cover a significant re-distributive function beside that of governmental agencies, the paper questions why government prefers to finance via transfers private entities likewise lucrative and non-lucrative entities rather than produce these goods directly.

By generalizing the Hansmann (1996) theory, we propose a “make or buy” approach in which the choice among three different ownership regimes (governmental, non-profit and for-profit) providing services in public benefit oriented sectors is affected not only by costs reduction (X-efficiency) but also by the level of transfers (degree of “redistribution”) decided at a political level.

QUOTE:


Nonetheless, as suggested by Borzaga (2001), two elements seem to be overlooked by this literature. The first relies on a scarce attention devoted to the internal structure of the non-profit institution that still remains an unexplored black box; the second refers to the fact that this literature has quite completely overlooked the evident fact that non-profit organizations also hold a relevant “redistributive function”, that is, they are set up for and operate with the explicit goal of modifying the distribution of income when the current one is considered as not consistent with social preferences (Borzaga, 2003, p. 39). This aim is particularly distinctive for non-profit organizations working within public benefit oriented sectors where, as we will see, beside the need for efficiency society considers also the need for equity. The paper aims to analyze this second issue by deepening the first one.

The Expansion of the "do-Gooodism" Class

When the government funds a private investment company on a yearly and ongoing basis to the tune of 10% of their investment capital, - but that 10% is not issued in stock, then that 10% is socialized risk - without any gain attached. The other 90 % - private investors in “high growth “ businesses is the privatized gain. The Maine taxpayers are giving grants to investors in high growth capitalism, even as there is a large state budget deficit.


Why do the taxpayers do this? Because the high growth capitalists are designators “do-gooders” under the government ordained “do-goodism” policy, which in it’s own language merges government and commercial enterprises.

It is my understanding the United States is founded on the Christian belief in the goodness of all men- “all men are created equal”- so why do we now have special classes of people that are designated as the “do gooders “class? Why is money being extracted from the only capitalization available to small and modest growth businesses- their self generated profits, and being used to finance high growth capitalist investors?

This law was created prior to the current administration, when our governor was an independent. Our current governor is a disciple of Richard Florida’s “creative class” – a rage that has taken over other states as well. So not only do we have a “do-gooders” class of people” but we also have a “creative class” of people, who deserve to be rewarded more than others. The “creative economy” movement is really a wealth redistribution movement. It has never directly benefited jobs for the voters of Maine, but instead aims to attract wealth to the state in the form of “the creative class’ of which one attribute is that they are a moneyed class of people.

When “do-goodism” was allocated to non-profits, the law required a publically accessible annual report. I can find not such information at the Small Business Growth Fund. I cannot find any mention of what the taxpayer gets in return for the money put into this high growth investment group. Therefore I am lead to the obvious conclusion. The people get nothing in return. The "grant" is justified solely on the basis that this group are the government-designated “do-gooders” of society- a designation that they share with non-profit organizations. What does that make those on the outside of this special class of businesses- the “do-badders”? It seems the bad reputation that high growth capitalism used to have has now been cleansed by:”do-goodism” and transferred to small and modest growth capitalism- who are under the Obama world view a group of greedy capitalists who should have their profits extracted to the benefit of the designated do-gooders society, if they make a profit of $250,0000.00 which is peanuts to “high- growth investors”.

When I went to the “Juice Confewrence” , I saw many badges that said “Art=Jobs” and I though, yea- right! How many jobs? The artists in Maine are being used as pawns in a game- It’s the age old wisdom that artist have the power to bring about the gentrification of communities- after which the communities that the artists gentrified become neighborhoods too expensive for most artists and the artist community is forced to leave. The artists are not creating a significant number of jobs, they are perceived as a lure to attract a moneyed class of people- and that is the goal of the “creative economy” movement. Small businesses are defined according to the number of jobs they provide, not by the amount of wealth they generate. So a small business employing 2 people and generating billions of dollars of wealth is still just a small business- a “high growth” small business.

Following the Money

I have been following links found at The Department of Innovation and compiling them in one document for the purpose of understanding what is actually going on with our tax dollars. Without further comment I am posting them here.

The Office of Innovation was established in 2004 by the Maine Legislature (5MRSA §13105) to "encourage and coordinate the State's research and development activities to foster collaboration among the State's higher education and nonprofit research institutes and the business community."


What is EPSCoR? Since its origin in 1978 the Experimental Program to Stimulate Competitive Research (EPSCoR) has grown and evolved to the point where it is a highly regarded, government-wide research and development effort.

Established by the National Science Foundation (NSF), EPSCoR identifies, develops, and utilizes a state's academic science and technology resources in a way that supports wealth creation and a more productive and fulfilling way of life for its citizens. EPSCoR benefits states like Maine that have traditionally received small amounts of Federal R&D funding

· DOE's Office of Science is part of the bipartisan competitiveness/innovation initiative and its funding is expected to double over the next few years. The National Academies' study, "Rising Above the Gathering Storm", was highly supportive of this increase in DOE Office of Science funding.

· DOE provides more than 40% of all federal funding for the physical sciences. It also makes substantial contributions to research in computer science, biological and environmental science and energy areas, including biofuels, magnetic fusion, hydrogen fuel cells and clean coal technologies.

DOD DEPSCoR
DOD research accounts for more than one-third of all funding for engineering research and provides 70% of all federal funding for mechanical engineering, 60% for electrical engineering, 42% for materials engineering, 29% for computer sciences and 28 percent for oceans sciences. It also provides funding for research on infectious diseases and injuries associated with battlefield conditions.

DEPSCoR supports research in areas identified by the Air Force Office of Scientific Research (AFOSR), Army Research Office (ARO) and Office of Naval Research (ONR).

National Institute of Health's Institutional Development Award: NIH IDeA

· This important program increases our nation's biomedical research capability by improving research in states that have historically been less successful in obtaining biomedical research funds. IDeA funds only merit-based, peer-reviewed research that meets NIH research objectives in the 24 IDeA states.

· NIH IDeA is comprised of two initiatives: Centers of Biomedical Research Excellence (COBRE) and IDEA Networks of Biomedical Research Excellence (INBRE). COBRE and INBRE programs are flagship examples of successful programs supported by IDeA.

· The COBRE program is designed to increase the pool of well-trained investigators in the IDeA states by expanding research facilities, equipping laboratories with the latest research equipment, providing mentoring for promising candidates, and developing research faculty through support of a multi-disciplinary center, led by an established, senior investigator with expertise in the research focus area of the center.

· INBRE increases the pipeline of outstanding students and enhances the quality of science faculty in the IDeA states by networking research intensive and undergraduate institutions. The INBRE program prepares students for graduate and professional schools as well as careers in the biomedical sciences, supports research and mentoring of young investigators, and enhances research infrastructure at participating institutions.

National Science Foundation: NSF EPSCoR

The NSC EPSCoR goals are: a) to provide strategic programs and opportunities for EPSCoR participants that stimulate sustainable improvements in their R&D capacity and competitiveness; and b) to advance science and engineering capabilities in EPSCoR jurisdictions for discovery, innovation and overall knowledge-based prosperity.

OBJECTIVES

To catalyze key research themes and related activities within and among EPSCoR jurisdictions that empower knowledge generation, dissemination and application;

to activate effective jurisdictional and regional collaborations among academic, government and private sector stakeholders that advance scientific research, promote innovation and provide multiple societal benefits;

to broaden participation in science and engineering by institutions, organizations and people within and among EPSCoR jurisdictions;

to use EPSCoR for development, implementation and evaluation of future programmatic experiments that motivate positive change and progression.

What does EPSCoR mean for Maine? EPSCoR funds are used to establish partnerships with leaders of state government, higher education and industry to effect lasting improvements in a state's research infrastructure and its national R&D competitiveness. In addition to research competitiveness, the EPSCoR programs stimulate human resources, technology transfer and economic development. By enhancing science and engineering research, education and technology capabilities, this Federal-State partnership is balancing the distribution of valuable Federal research dollars. These partnerships are designed to stimulate local action that will result in lasting improvements to the state's academic research infrastructure and increased national R&D competitiveness.

Maine has been awarded more than $59,000,000 from EPSCoR funds since FY2000:

The Department of Defense (DoD) SBIR and STTR programs fund a billion dollars each year in early-stage R&D projects at small technology companies -- projects that serve a DoD need and have commercial applications.

· The SBIR Program provides up to $850,000 in early-stage R&D funding directly to small technology companies (or individual entrepreneurs who form a company).

· The STTR Program provides up to $850,000 in early-stage R&D funding directly to small companies working cooperatively with researchers at universities and other research institutions.

· Small companies retain the intellectual property rights to technologies they develop under these programs.

· Funding is awarded competitively, but the process is streamlined and user-friendly.

· Learn more by going to Overview and other sections. Also visit our Resource Center at www.dodsbir.net

DoD's SBIR and STTR Programs

The purpose of DoD's SBIR and STTR programs is to harness the innovative talents of our nation's small technology companies for U.S. military and economic strength.

The Small Business Innovation Research program funds early-stage R&D at small technology companies and is designed to:

· stimulate technological innovation

· increase private sector commercialization of federal R&D

· increase small business participation in federally funded R&D

· foster participation by minority and disadvantaged firms in technological innovation

About EPSCoR

to activate effective jurisdictional and regional collaborations among academic, government and private sector stakeholders that advance scientific research, promote innovation and provide multiple societal benefits;

· Co-Funding of Disciplinary and Multidisciplinary Research:

EPSCoR co-invests with NSF Directorates and Offices in the support of meritorious proposals from individual investigators, groups, and centers in EPSCoR jurisdictions that are submitted to the Foundation’s research and education programs, and crosscutting initiatives. These proposals have been merit reviewed and recommended for award, but could not be funded without the combined, leveraged support of EPSCoR and the Research and Education Directorates. Co-funding leverages EPSCoR investment and facilitates participation of EPSCoR scientists and engineers in Foundation-wide programs and initiatives

Sec. 1. 5 MRSA §13105, sub-§2, C, as amended by PL 2005, c. 19, §2, is further amended to read:

C. The development of new commercial products and the fabrication of such products in the State through the Maine Technology Institute under section 15302 and the technology centers under section 15321; and

Sec. 4. Transfer of duties. The Commissioner of Environmental Protection and the Commissioner of Economic and Community Development shall coordinate to ensure that the duties, functions and responsibilities of the Department of Environmental Protection, Office of Innovation and Assistance are transferred in a timely manner to the Department of Economic and Community Development, Office of Innovation. The Department of Economic and Community Development, Office of Innovation shall assume the duties, functions and responsibilities transferred to it in this Act within existing budgeted resources.



He said at you can't socialize the risk and privatize the gain. This rings a chord with what I suspect is the case with the taxpayer's role in The Small Business Growth Fund - which is a high growth capitalistic investment group created by the Maine State Legislature in 1995 "for public good" (like the non-profits). From what I am reading in the legislation, there seems to be a lot of merging with commercial interests and "the public good' which would set the legal parameters for taking tax payer money and investing it in a private investing firm.



I heard about SBGF at the Juice conference where we were told that the government puts in one dollar to every nine dollars of private investment money.



I immediately wanted to know what the taxpayer got out of it but this was not said. At first I assumed that the taxpayer would be a 10% investor but I have yet to find that stated anywhere. If the taxpayer is not a stockholder, then our state government gave this group of private investors in "high growth businesses” a grant and that would make it exactly what Eliot Spitzer articulated- socializing the risk and privatizing the gain- as we know that the private investors expect to see a profit from the money they put in- where as if the government gave this firm a grant, then the tax payers do not get a share of the investment - only a share of the risk.



I am researching information found at the Department of Innovation and will post it on The Main Street Economy. I generally do not have anyone reading my blogs, but this seems so important and I hope that some others will pay attention.

I am clicking on the links to the legislation, which of course says that if you want it interpreted, get a lawyer-, which I am not- But I do know the English language and so I'll go with that.

Be interesting to get other's input on the meaning of the legislation, some of which was only passed this year.

Maine Taxpayers Fund High Growth Capitalism But What Are Taxpayers Receiving in Return??

Letter to the Editor of the Boothbay Register

Dear Senator Trahan and representative Bruce McDonald,

I wrote to you couple of days ago about The Small Business Growth Fund.

This fund was created in 1995 and appears to be a state government investment in private entrepreneurship for high growth companies doing "public good" (which raises the question who decides what is for the "public good"-does the taxpayer have a voice in this or just the fund managers?)

I asked what does the taxpayer get out of it? I would think that if taxpayers have invested in a private investment company that this information would be readily available and assessable to the general public but I cannot find it.

I would assume that if every dollar the taxpayer puts in were matched by nine dollars of private investment, that the taxpayer is a 10% shareholder in the company- But as I have never seen this stated, it remains only an assumption.

On the basis of that assumption, it leads to the question- why is our state government in so much debt? I saw pitches at the Juice Conference that speculated profits in the billions. If this is the sort of "high growth" that SBGF invests in, then, why haven't the taxpayers, like the good citizens of Alaska, under the governorship of Sarah Palin, received dividends in the mail?

Is it because of the even higher costs of our state entitlement programs?

Entitlements help, especially when people do not have jobs- but even slaves have entitlements. Entitlements are an investment that slave owners have to make to maintain their assets.

Where are the "opportunity" programs for the small scale and modest growth sector of the micro-economy-, which is clearly excluded from investment by the taxpayer-, funded Small Business Growth Fund?

We need a new category for the small business sector that is not classifiable as "high -growth" capitalism or non-profit organizations. This is truly the private sector micro-economy- those small businesses on "Main Street", that we heard so much about when our Federal government was selling TARP to the public. We haven't heard anything about Main Street since then but the credit freeze is still alive and well on Main Street whose primary source of capital investment is self-generated profit, which, with many small businesses filing as S-corporations, (profit reported on individual returns) will be taxed heavily if self-generated profit exceeds $250,000.00. Then the private citizen will be taxed to an increased degree in order to fund our ever-expanding federal government and to pay the interest on our federal government's rapidly escalating debt.

Where are the "opportunity programs" for the people? The United States is transforming from the land of opportunity into the land of entitlements. If there were a growth in opportunity, there would not be such a large need for entitlements. When the House was first formulating the "Stimulus Bill" they called the small business sector " the engine of new job creation" and then allocated 200 billion dollars for food stamps and $450 million for loans for small businesses, which includes the "high growth" businesses that are exclusively favored by Maine's Small Business Growth Fund. Add to that continual extensions in unemployment and a federal administration that only recently got the idea that maybe it should focus on job creation- this after months of promoting the citizens of this country to "volunteer" service. Once the citizenry is programmed to accept that they MUST volunteer service, the dots can be connected between receiving entitlements and "mandatory" volunteer service- and there you have it- the people of the United States squarely become the slaves of concentrated power and wealth.

The Small Business Growth Fund was created by our state legislature in 1995. Times have changed. Where is the Small Business growth fund for small scale and modest growth companies, which are the foundational basis of a flourishing middle class? My family business was started in 1952 with the philosophy of creating a hand made product affordable to the middle class. In those days the middle class was flourishing and the distribution of wealth took the form of a bell curve, with the greatest amount of wealth distributed among the greatest number of people.

Both sides of the political divide agree that we need to move back to a more equitable distribution of wealth- but all the solutions for doing so are targeted at funding and stimulating growth at the top. This is not working! When is someone in government going to get the revolutionary idea of stimulating growth at the bottom to middle sector of the economy? Where is the Main Street Economy Growth Fund? It is in our self-generated profits, capped at $250,000.00 before being heavily taxed to fund the hegemony of concentrated power and wealth that is the new face of government.