non profit organization case study
CAPCOR
Archibald Poole sank into his chair. In just the last hour, he had seen his hopes for a $30,000 grant CAPCOR needed to expand its services into the international export arena smashed.
He wondered if all of his work over the past summer had been in vain. The proposal was already in the hands of the Regional Strategic Initiative Committee, but two important players had just withdrawn their support after a round of heated negotiations.
Poole leaned back, setting his glasses on his desk. Perhaps the proposal could still be saved, he thought. He did not have much time, and the support he had just seen slip away was essential to the proposal’s acceptance.
***
CAPCOR is a private, nonprofit corporation1 chartered for economic development in Capital City and the surrounding counties. Capital City, the state capital, has a population of 132,000. Like the rest of the region, it is growing rapidly. While the local economy was once dominated by timber and agriculture, high technology firms are fast becoming a new economic base.
As a private organization, CAPCOR is funded by membership dues paid by local businesses, as well as money from the state’s lottery. This arrangement is unique among economic development entities in the Capital City area and throughout the state. Other agencies are maintained by state and federal tax dollars, as well as user’s fees. CAPCOR is independent from these organizations, but necessarily works with them to provide services to client firms.
Russell Bowman is the current president of CAPCOR. Other than the administrative duties his position entails, his focus is primarily on attracting new businesses to the state. For many years, this was CAPCOR’s only mission to bring companies to Capital City and the surrounding counties. To this end, Bowman travels extensively to trade shows throughout the Pacific Rim, and meets with representatives of firms considering sites in the area.
Archibald Poole came to CAPCOR four years ago to fill a new position: director of business expansion and retention. CAPCOR’s board of directors decided that it needed to focus not only on attracting new businesses, but also on helping firms already operating in Capital City to survive and grow. Poole’s job is to establish contact with companies in CAPCOR’s service area and determine what economic development services, if any, they may be able to use. CAPCOR does not itself make business loans, provide employee training or render other services to clients. Instead, Poole acts as a clearinghouse, connecting businesses with the services that are available from state agencies.
1 As a service organization, CAPCOR falls under Part 501c(4) of the Federal tax code.
Sherman – CAPCOR Page 2
Sarah Rand is CAPCOR’s office manager and receptionist. She is responsible for all day-to- day financial operations — accounts payable, accounts receivable and bookkeeping. From her desk near the front door of the CAPCOR office, she also answers telephones, greets visitors and clients and prepares correspondence. She was hired two years ago.
Thomas Floyd was hired just recently as CAPCOR’s public relations director. His position entails the production of CAPCOR’s monthly newsletter, annual Capital City Information Packet (CCIP), membership directory as well as miscellaneous flyers, brochures and business forms. He also recruits new members, prepares press releases, and organizes CAPCOR’s monthy breakfast seminars, semi-annual banquets and other activities. Floyd’s predecessor departed suddenly and quite unexpectedly. She left the CCIP unfinished, and it was released several months late as a result.
During the past several months, Poole has been working with an intern from Capital University’s graduate program in management named Hal Chandra. Chandra recently completed the “CAPCOR Business Resource Guide,” a compendium of the economic development services CAPCOR helps its clients access. The guide has been well-received in the local business community.
Poole, Rand and Floyd all report directly to Bowman. Poole was given responsibility for supervising Chandra, although Chandra worked on projects for both Bowman and Poole in the course of his internship. In addition to Chandra, CAPCOR occasionally employs the services of an outside graphic designer and an outside accountant, but its regular, full-time staff consists of just four people: Bowman, Poole, Rand and Floyd. A copy of the CAPCOR organization chart appears below:
CAPCOR Organizational Chart
Russel Bowman
President, CAPCOR
Archibald Poole Director of Business
Expansion and Retention
Sarah Rand
Office Manager
Thomas Floyd Public Relations Director
Hal Chandra
Management Intern
Sherman – CAPCOR Page 3
***
In its most recent session, the Republican-dominated legislature instituted a change in the state’s delivery of economic development resources. Previously, the State Economic Development Department (SEDD), had been given virtually all tax funds allocated for economic development to administer programs statewide. Seeking to foster the development of projects to meet the specific needs of different regions of the state, the legislature cut SEDD’s budget and established a Regional Strategic Initiative Committee (RSIC) in each region to disperse the economic development money. CAPCOR’s funding was not directly affected by this shift.
The Capital City-area RSIC is composed of unpaid volunteers from the local business community. The Council Of Governments (COG) coordinates the RSIC’s activities and provides support staff and meeting locations. The RSIC disperses funds through a grant process. Interested parties submit a detailed grant proposal, which is subject to a two-stage review.
First, the grant proposal is reviewed by one of the RSIC’s three sub-committees: either Forest Products, Agriculture, or High Technology, depending on which of the region’s three key industries will be most affected by its implementation. If the sub-committee approves the proposal, it is subsequently presented to the full committee. The full committee can either support the project and provide funding, or reject the project.
The Capital City-area RSIC was formed in January, but was not set to receive funding from the state legislature until September. In May, Bowman suggested to Poole that perhaps CAPCOR should seek funding to enhance its Business Expansion and Retention program. Poole agreed, and began to investigate the possibility.
Poole telephoned William Kirk, the COG staffer overseeing the RSIC. Kirk told Poole that the RSIC had established June 1 as the deadline for all grant proposals. With less than one month remaining, Poole asked Kirk if he could turn in a preliminary proposal on June 1, then provide additional materials later. After a moment, Kirk agreed to Poole’s request.
Poole hastily prepared one-page outlines for two separate grants. The first would fund the “CAPCOR Business Consulting Program” and the other would create the “CAPCOR Export Assistance Center.” The time pressure Poole was facing prevented him from thinking at any length about how these would integrate into the existing Business Expansion and Retention Program, or what challenges or objections outside agencies might have to their approval.
The CAPCOR Business Consulting Program was modeled after a SEDD program that had lost much of its funding during the past year — the Business Support Service (BSS). The BSS provided professional business consultants to troubled firms throughout the state, then paid the consultant’s fee. The firm was then required to repay the consultant’s fee within two years, interest-free. CAPCOR had enjoyed great success using the BSS over the past several years. With the BSS facing significant budget cuts, Poole crafted the CAPCOR Business Consulting Program to fill the void it would leave in his local economic development work. He requested funding in the amount of $50,000 for the program.
Sherman – CAPCOR Page 4
The CAPCOR Export Assistance Center sprang into Poole’s mind as the result of a chance meeting a few weeks earlier with a representative of Thule-Monroe, the reknown international trade consulting firm. Thule-Monroe had created a program to help local economic development agencies acquire the skills and resources necessary to aid firms interested in exporting. Poole was impressed by the program, and thought he and other members of the CAPCOR staff could benefit from the training Thule-Monroe could provide. The training program cost $12,000. Poole requested $30,000 in grant proposal to cover the cost of the training, along with a new computer and telephone line to access the National Trade Database and miscellaneous expenses.
***
Poole submitted his one-page proposals to Kirk on time. However, the RSIC was only slowly preparing to consider grants. Formal presentations, it now seemed, were at least one month away. Furthermore, state funding of the RSIC would be held up until October. With the time pressure abated, Poole’s focus returned to his regular CAPCOR duties.
CAPCOR hired Chandra on June 15, and he began work on the Business Resource Guide. Impressed with the quality of his initial work, Poole realized Chandra could re-write the grant proposals for him. At Poole’s request, Chandra accepted the new project and started working.
After contacting the COG for details about the form of the proposal, Chandra returned to Poole with several interesting pieces of information. First, the date for formal presentations to begin had been pushed back yet again, to July or August. Second, the Chairman of the RSIC, Duke Heywood, was one of Chandra’s professors at Capital University, with whom he enjoyed a cordial relationship.
Chandra finished re-writing the proposals on July 1. In the interim, Poole had spoken with Nigel Remington, director of the BSS. Remington agreed to cooperate fully with CAPCOR, and pledged administrative support for the Business Consultant Program. BSS support was important for the success of the program, because the BSS had a well-developed stable of consultants and considerable experience in the program’s financial administration. Remington drafted a Memorandum of Understanding that he and Poole signed. Chandra appended a copy to the grant proposal.
Poole made an appointment with Kirk at the COG to discuss the revised grant proposals. Poole knew that while the RSIC would make the final decision regarding the grants, the COG staff would have considerable influence on that decision. Having Kirk’s support would be a definate advantage. Getting that support, however, was not a forgone conclusion. Kirk and Bowman, CAPCOR’s president, had been at odds last year over the representation of a recently zoned parcel of industrial land in a nearby town. Bowman had won the argument, but relations between the two organizations remained strained. Poole had played no part in the dispute.
On July 12, Poole and Chandra walked four blocks to the COG office. The secretary led them to a small conference room, which Kirk entered a few minutes later. Kirk read the abstract on the title page of each proposal, then made a general comment regarding both proposals: “Archie, I’m wondering why CAPCOR doesn’t write a grant to bring new businesses here to Capital City. That is CAPCOR’s primary mission, isn’t it? I think the RSIC would look favorably on any such proposal.”
Sherman – CAPCOR Page 5
Poole explained that over the past few years, helping businesses already located in Capital City had become an important component of CAPCOR’s mission. Kirk seemed to accept that answer, then went on to comment about the Export Assistance Center grant specifically: “There are a lot of agencies in this state that focus on import-export right now. Wouldn’t this center you propose be redundant?”
Poole responded, “Not really, Bill. The CAPCOR center would focus on outreach to businesses in the community. I’m familiar with the programs you’re talking about. Most of them rely on the businesses themselves to come to them with questions and problems. CAPCOR takes a more proactive stance — we go out and meet the companies on site, so we can assess their needs directly.”
Kirk looked unconvinced. He said: “I think you and Russ Bowman should get together a meeting of economic development people interested in international trade, and lets run this idea past them. If they support it, then I’ll take it to the RSIC.”
Poole agreed to his terms. Kirk said he would look over the proposals in detail, and send any suggestions he had via fascimilie. When the meeting ended, Poole and Chandra shook hands with Kirk and walked back to the CAPCOR office.
Two days later, a fax arrived at CAPCOR from Kirk. Along with a page of suggestions regarding the details of the grant proposals, there was a note indicating that the formal presentations had been pushed back to the fall — September or October. Funds were now supposed to be made available by the state in December. Poole gave Chandra the list of suggestions, which he used to revise the proposals.
***
By mid-August, Poole was beginning to favor the Business Consulting Program grant. Its successful predecessor, the BSS, made it easy to sell, and interest was building. The Export Assistance Center, on the other hand, was starting to meet resistance. Letters to trade groups in the timber, agriculture and high technology industries had failed to net even one letter of support. Worse, Chester Murdock, director of the statewide Small Business Export Consulting Center (SBECC) had written Poole a letter saying he was strongly opposed to the proposal in its current form. Likewise, Lance Nifelheim, who headed the local Small Business Assistance Center (SBAC), made very clear that he did not support the proposal.
Poole considered dropping the Export Assistance Center proposal. Bowman, however, had become enthusiastic about expanding CAPCOR’s service to include international trade counseling. In an effort to build support, Bowman called a meeting with representatives from each economic development organization with an interest in international trade, as Kirk had suggested. On August 28, they gathered in the CAPCOR conference room. In attendance were:
•Hummel Bixby, regional development officer for SEDD, the state-funded economic development agency.
Sherman – CAPCOR Page 6
•Vincent Foss, a representative from the State Department of Agriculture (SDA), which is wholly funded by the state, separate from other economic development agencies.
•Chester Murdock, director of the SBECC, which receives funding from both the state and from the Small Business Administration (SBA), a department of the federal government.
•Lance Nifelheim, assistant director of the Capital City SBAC, which also receives funding from both the state and from the SBA.The director of the Capital City SBAC, Winston Argyle, sits on CAPCOR’s board of directors.
•Gary Shire, manager of the State MarketPlace (SMP), a private nonprofit corporation that seeks out-of-state and international buyers for local products. SMP is funded by the lottery and commissions on sales.
•Alvin Tucker, a representative from the COG, standing in for William Kirk, who was unable to attend the meeting.
CAPCOR was represented by Bowman, Poole and Chandra. Murdock began the meeting by airing his objections to the proposal: “This state just doesn’t need another international trade outfit. What we need to do is fund the Regional Trade Councils, which are already in place. I know the Capital City RTC hasn’t done much, but that is only because my office doesn’t have enough money to put on elaborate programs down here. If I can get some money behind it, I know it will work.”
Poole was familiar with the Regional Trade Council (RTC). In fact, he sat on the Capital City RTC’s board as a representative of CAPCOR. Even if the RTC received funding, which was unlikely given the cutbacks, it would only do what was already being done elsewhere: seminars and classes, with no outreach effort.
Nifelheim spoke next: “I don’t think forming a ‘center’ here at CAPCOR is a good idea. The Small Business Assistance Center is the place where people should take their questions. If everybody tries to get into the same business, we are going to confuse people — they will start getting lost in the cracks.”
Poole replied: “We don’t want to get into anybody’s business but our own, which is outreach. The fact is that we maintain contact with over 500 local companies, and we meet with at least fifteen new ones each and every month. Lance, that is something neither you or Chester are doing, because it’s not what you’re set up to do. We’re on site, talking to the companies about their opportunities and problems. International trade is a part of that, so it makes sense that we should really understand it.”
Murdock and Nifelheim looked unconvinced.
Foss spoke up, “I think you’ve got a good point there, Archie. Outreach is something we just can’t do. I had a guy growing herbs about 10 miles up the valley. I found a buyer in the Far East for this guy’s herbs — willing to pay top dollar. All this guy had to do was pick up the phone and make the call, but he never did. Over at the SDA, we don’t have time to ride guys like that, but I know CAPCOR will if that’s what it takes to get the job done.”
Sherman – CAPCOR Page 7
Bixby and Shire spoke next, also voicing their support for the Export Assistance Center. After a few minutes, Murdock and Nifelheim seemed less ready to object. Tucker, the COG representative, seemed satisfied that all parties present had reached a consensus. Bowman rose to his feet and spoke in a loud, firm voice: “It’s decided, then. CAPCOR will pursue this proposal, and if the RSIC makes the grant, we will establish the Export Assistance Center as described. Good day, gentlemen.”
Bowman left the conference room and the meeting was ajourned. Murdock and Nifelheim looked uneasy. They stopped by the door on their way out to and shook hands with Poole. Nifelheim said: “Let’s get together at my office some time and work through the details, okay Archie?”
Poole agreed.
***
On September 1, Chandra returned to school full time. CAPCOR offered him a part-time position while he was in school, so he could wrap up the projects he was still working on and keep the Business Resource Guide up to date. Kirk had informed Poole that formal presentations probably would not be held before November, and that funds would only be available after the first of the year. He also indicated that he had talked to several members of the RSIC informally, and they felt that the Business Consulting Program had merrit and would eventually be approved.
Poole talked with Bowman in the interim about his options in the upcoming meeting with Murdock and Nifelheim. Bowman and Poole agreed that the pair might seek concessions in exchange for their continued support. Bowman told Poole that he would be willing to support the SBECC and SBAC through joint efforts, but not with direct payments. He also told Poole that he was unwilling to yield the “center” concept.
On September 12, Chandra arrived at the CAPCOR office at noon. After a liesurely lunch, Poole and he walked to their meeting with Murdock and Nifelheim.
The meeting began on a cordial note in the subdued light of Nifelheim’s office. Poole suggested that a member of Nifelheim’s staff could participate in the Thule-Monroe training program. Nifelheim replied that he might volunteer himself, and said he though some type of joint venture would benefit both parties. Murdock spoke of how he was looking forward to receiving “support” from CAPCOR once the grant was approved.
After several minutes, Poole asked Murdock precisely what type of support he was expecting.
Murdock replied: “Funding, I should expect. I would like to be able to hire another person to work for me part time, so that I can get the Regional Trade Councils off the ground.”
Poole told him: “Russ only talked about support ‘in kind’ for your operation, Chester. He didn’t make any mention of money.”
Sherman – CAPCOR Page 8
Murdock said: “I’m not sure I can support this proposal unless the SBECC gets a share of the grant money.”
Nifelheim jumped in, saying: “Since we’re talking about money, Archie, I think you should consider letting the SBAC administer this grant if it is awarded. We’ll be sure you get the training you need.”
Poole’s temper flared. Poole replied: “We’re not going to do that, Lance.”
Nifelheim: “Archie, the state has never given money for economic development to any outside agency other than the SBACs.”
Poole: “This isn’t state money, Lance — its RSIC money.”
Nifelheim: “It’s the same thing, Archie — and it isn’t going to happen.”
Poole: “Are you saying you’re withdrawing your support, Lance?”
Nifelheim: “No, Archie, I’m just saying it isn’t going to happen, that’s all.”
Poole: “Well, we’ll just see about that...”
Murdock interrupted, saying: “Let’s not get all worked up about this. We’re not going to decide it today one way or the other. Archie, why don’t you go back and talk to Russ? Lance and I will take a deep breath and think some more about it from our end. Next time I’m down this way, we’ll get back together and talk again, okay?”
Everyone agreed. Poole and Chandra stood up and shook hands with Murdock and Nifelheim, then left the office.
After walking back to the CAPCOR office with Poole, Chandra drove back to school. Poole sat down at his desk to consider what had just happened and what he should do next. With Murdock and Nifelheim supporting the proposal, it stood a good chance when it eventually reached the RSIC. With both of them against it, he was not nearly as certain. He was worried that this conflict would spill over into the Business Consulting Program proposal, and hurt its chances as well.
Sherman – CAPCOR Page 9
APPENDIX
[The following document is a copy of the revised CAPCOR Export Assistance Center grant proposal that Archibald Poole submitted to the Regional Strategic Initiative Committee.]
A Grant Proposal to The Regional Strategic Initiative Committee
for the CAPCOR Export Assistance Center
Abstract:
If funded, the proposed export assistance program would provide export outreach assistance to key industry firms in Capital City and the tri-county area. Six individuals from local development organizations would be trained, and would serve on a rotating basis. The center would be located in the CAPCOR office.
Sherman – CAPCOR Page 10
PROPOSAL: Establish an export outreach capability to better coordinate the delivery of export assistance services to key industry firms in Capital City and the tri-county area.
BACKGROUND: Export growth fuels the economy. Over the past ten years, more than 85 percent of the yearly increase in the U.S. Gross National Product was a direct result of export growth. For every $22,000 of exports, one U.S. job is saved or created. These are good jobs, paying an average of $3,500 more annually than non-export related work.
The Business Journal ranks exporting as the top small business opportunity in the market today. The reasons given for this include:
- The rapidly changing global economy - The relative ease of export market entry for small companies - The voracious global appetite for American goods - Trade agreements such as NAFTA and GATT
There is strong interest in export among firms in Capital City and the tri-county area. This has been established by CAPCOR’s Business Expansion and Retention Program, which maintains contact with over 500 local businesses.
The Export Assistance Center would serve to supplement resources that are already available to the community. For example, the U.S. Department of Commerce provides a formidable database of export information that is updated monthly. However, companies just getting started in exporting often lack the ability to use it effectively. One mission of the export assistance program would be to close this knowledge gap.
Another service that would be complemented by the export assistance program is the Small Business Export Consulting Center (SBECC). Created in 1986 and working out of the World Trade Center in Lang, SBECC offers a variety of seminars covering all aspects of the export market. The Export Assistance Center, which would operate in by CAPCOR’s Capital City office, would fill a different niche and act to supplement existing trade programs.
Recently, the State Economic Development Department conducted a series of International Round Tables to discuss the availability of international trade services. These frank discussions among community members, economic development professionals, private businesspeople, and others pointed out the need for a program such as the CAPCOR Export Assistance Center.
Specific comments included the following:
“[The} State Economic Development Department should focus on outreach programs. The Department does a good job on seminars, classes, and luncheons, but outreach happens too little.”
“The Department needs more face-to-face contact/outreach/personal connections.”
Sherman – CAPCOR Page 12
Outreach with individual companies is CAPCOR’s strength. Its Business Expansion and Retention Program makes it uniquely qualified to take a proactive approach with regards to trade in the field. The export assistance program will allow one-on-one counseling to address the specific questions of individual businesses, along with referrals to existing services that the client might otherwise not contact. Taken in combination with the SBECC and other trade organizations, the Export Assistance Center would make complete wraparound service available to companies trying to break into international trade.
“We need someone locally who can provide information and assistance…”
“There is a misperception that entering the international market is hard, scary, time consuming, and expensive. We need someone local with information at their fingertips so we limit the number of people a company has to contact for assistance…”
“We need ease of access for quality, specific information about how to get into another market.”
“[We] need to know whom to call for answers to specific questions. Companies are willing to pay but need to know where to go.”
“Service providers should be more proactive in providing trade information and encoragement for companies throughout the state.”
The CAPCOR export assistance program can provide the specific information companies need in the proactive manner they want.
APPROACH: Thule-Monroe, an international consulting firm, has organized an Export Counselor Training Program, and has trained export counselors in the United States and Canada. The export assistance program will be built around a cadre of six local economic development professionals, trained by Thule Monroe.
Through its Business Expansion and Retention Program and its participation in the Capital City Regional Trade Council, CAPCOR will identify key industry firms interested in exporting. Once trained, the counselors will contact these firms and help them to overcome the barriers that often discourage firms from competing globally. Specifically, companies will learn:
- The mechanics of international trade and financing, including the ability to identify emerging markets
- Problem-solving techniques in international trade, which includes dealing with changing regulatory environments
- To access trade databases and distill raw information into useful knowledge - To develop export marketing plans
In addition to one-on-one consultations, CAPCOR will provide additional support in the form of referrals to other agencies and programs. CAPCOR cannot build the expertise or knowledge base of the SBECC or other state-sponsored programs. Rather, CAPCOR’s aim is to become a knowledgeable facilitator of these services, bringing them to the local business community.
Sherman – CAPCOR Page 13
Thule-Monroe will keep counselors abreast of changes in the dynamic world of international trade through bulletins and advanced training courses and will track the effectiveness of the export assistance program by monitoring and recording the results of counseling efforts, as well as sales and jobs generated by participating companies. These findings will be reported in the form of cost/benefit analyses along with Thule-Monroe’s recommendations for continuous improvements. Alongside these efforts, SEDCOR will perform its own evaluations, interviewing the management of firms who have been in contact with the export assistance program to determine its effectiveness.
CAPCOR selected Thule-Monroe because of its history of success in establishing export assistance programs throughout the United States and Canada. Many of these operate in conjunction with local export services. Thule-Monroe maintains 1,100 offices located in 131 countries, and offers unparalleled access to markets around the world.
The six individuals selected for training are recognized economic development professionals in the local community. They are:
Hummel Bixby, SEDD Russell Bowman, CAPCOR Frank Caligary, Small Business Assistance Center George Fellows, Capital City Regional Trade Council Newton Magar, Rural Economic Development League Archibald Poole, CAPCOR
COST: A $30,000 grant would allow CAPCOR to establish an Export Assistance Center at its office in Capital City. The grant would be spent as indicated below:
ITEM COST Professional training by Thule-Monroe $10,500 Computer equipped with fax/modem and dedicated phone line $4,500 Database access and software $1,500 Facilities and miscellaneous training fixtures $1,500 Ongoing training and support $10,000 TOTAL $30,000
The support of the Regional Strategic Initiative Committee will mean the commitment of additional resources from other agencies. First, the time of the personnel listed above has already been volunteered by their respective agencies. Also, CAPCOR will cover all program overhead. No external administrative or staff support will be required.
TIME LINE: Assuming that the Regional Strategic Initiative Committee decides to support the Export Assistance Center, and that funds are made available on January 1, CAPCOR anticipates the center will be fully operational by April 1. During this 120 day period, the following would be accomplished:
Sherman – CAPCOR Page 14
- Staff training by Thule-Monroe - Organization and staffing of the company outreach program - Purchase and setup of dedicated database-access computer - Establishment of procedures and controls to manage the program
While operating, the Export Assistance Center will focus on rendering quick, goal-oriented services tailored to the needs of the client firm. This approach has been selected to prevent counselors from becoming quagmired in the problems of any one firm.
RESULTS: The six trained export counselors, working with key industry firms in Capital City and the tri-county area, will seek to help them develop their export potential. In 1991, this state’s international exports totaled 1.1 billion dollars. Since each $22,000 in export sales translates into one job saved or created, in 1991, 50,000 jobs were the result of international trade.
Through a study conducted by the Capital University, 75 firms interested in export assistance have already been identified. CAPCOR would provide consultations to at least 36 of them in the first year the export assistance program is in operation.
As exports grow, the demand for export assistance grows. The Regional Strategic Initative Committee can help CAPCOR meet this demand among key industries by giving its support to the Export Assistance Center. Through their work in the business community, the trained economic development professionals who will form the core of this program can bring about a significant increase in export activity, and the attendant increase in job creation.