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The federal government: a new funding source.

Many CPAs' clients might benefit from government grants available for emerging technologies. Robert W. Eimers, CPA, manager of operations, Cato Research, Durham, North Carolina, offers details.

During turbulent economic times, traditional financing sources become difficult to find and obtain, especially for ideas that require extended development time. Clients often look to practitioners for assistance in obtaining financing. As business advisers, practitioners should be aware of both traditional and new financing sources. Without access to traditional sources of capital, America's technological advantage could decline significantly.

THE ATP

In 1988, Congress established a program aimed at supporting and stimulating investment in advanced technologies. Although many believe government intervention normally is a poison pill,. this program offers a legitimate solution to a complex problem. It solicits proposals from industry for technology development, evaluates the proposals and awards grants for industry-led projects that would yield great benefits to the U.S. economy if successful but are considered too risky from a technical standpoint to attract private capital. The Advanced Technology Program (ATP) is administered by the National Institute of Standards and Technology (NIST), an arm of the Commerce Department. In its first two competitions in 1991 and 1992, the program committed about $140 million in grants, matched by over $150 million from industry.

The program assists businesses in developing precompetitive and genetic technologies. "Precompetitive" means the technology is far from the commercialization stage, while "genetic" means it precedes specific application and relates to a range of products and applications that could be affected by a new technology. As a result, the technologies selected

* Are not attractive venture capital investments.

* Underlie a wide range of applications.

Projects are conceived, led and partly paid for by industry. The proposing organization can be a business, a for-profit research institute or a joint venture. Universities and government organizations can be joint venture members or subcontractors but cannot lead projects.

The maximum award for single applicants is $2 million over up to three years. Funding is limited to the direct costs of research and development.

There is no specified maximum award amount for joint ventures, and projects can run for as long as five years. Joint ventures must provide matching funds.

In order to receive an award, an organization must

* Respond to an ATP proposal request, which is announced in the Federal Register and the Commerce Business Daily. (The most recent request appeared in late May 1992. )

* Furnish information outlined in proposer kits available from NIST; call (301) 975-2636.

* Satisfy criteria, including

1. Scientific and technical innovation.

2. Potential economic benefits.

3. Organizational experience and qualifications.

4. Intent and ability to carry through on commercialization.

5. Level of commitment and appropriate organizational structure.

THE IMPORTANCE OF BUSINESS PLANS

Not all applicants receive funding. Proposals that rate high in terms of technical and scientific merit are evaluated on the strength of their business plans, which are a major component of the proposal. Many organizations fall to receive awards because their business plans are inadequate, a problem that business advisers can help remedy.

While an important competitive factor in the awards process, the business information that is requested in the proposal is also crucial for start-up organizations. The proposal process raises many questions that probably have yet to be addressed. Regardless of the award, the process is an excellent developmental tool.

A BENEFICIAL PROCESS

Simply becoming involved with the ATP is very worthwhile. The proposal process provides tangible rewards and the award, if granted, provides significant cost-free financing. CPAs can introduce clients to the ATP and help them prepare competitive proposals, analyze business plans that weren't accepted and create workable new ones.

EXECUTIVE SUMMARY

* DURING DIFFICULT economic times, traditional financing sources are hard to find and obtain, especially for ideas that require extended development. Clients often look to practitioners for help in obtaining financing.

* A COMMERCE department program solicits proposals from industry for technology development, evaluates the proposals and awards grants for industry-led projects that might yield great benefits but might not attract private capital.

* AMONG ITS OTHER benefits, the proposal process forces an organization to craft a workable business plan, which is a major component of the proposal.
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Title Annotation:government grants
Author:Eimers, Robert W.
Publication:Journal of Accountancy
Date:Apr 1, 1993
Words:688
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