While having a discussion about economic development incentives, someone asked “what is one of the BIGGEST issues that cause a breakdown in the incentives process? After thinking about it for a minute, I recognized that lack of communication may be one of the biggest factors that negatively affects the incentives process.
My reasoning behind this statement is based on past experiences working with economic incentive projects like QTI (Qualified Target Industry Tax Refund Program). Over the years, I've noticed that after a business' management is approved for an incentive project, it celebrates and assigns a staff to manage the project. Unfortunately, since the project administrator has not been involved earlier, he/she may not be knowledgeable enough to successfully manage the project.
Fast forward one year later and its time to qualify for the incentive payment. After receiving the notification, questions like, “What is this project about?”; or “How did the State come up with our commitment?” are asked. If the project administrator was involved from the beginning, he/she would know about the project and itscommitments.
Failure to communicate about an incentive project prior to the reporting deadline may be detrimental. If you do not track your compliance goals, you may learn too late that you do not qualify to receive your incentive payment. Alternatively, you may find that you qualify for your incentive payment, but the stress of reporting at the last minute may prove to be an overwhelming task.
What Should Happen: Management is responsible for providing enough information to allow the project administrator to successfully manage the incentive project. The project administrator should then set up a system to periodically monitor compliance goals to keep track of the commitments. When the reporting deadline approaches, the project manager would be in a better position to effectively prove that the company achieved its commitments to qualify for the incentive payment.
Of course, if this process seems to be too much for the project administrator, I'd suggest communicating the need to hire an Incentives Consultant to assist with managing the project early on.
As you can see, communication does play a significant role in determining the success or failure of an incentive project. I recently worked with a client who was overwhelmed with the QTI reporting process. She was unsure of what was required, but her manager insisted that she figure it out on her own. Eventually, I was able to help her through the process. As a result, her company was able to secure the full refund.
If you would like to have someone hold your hand through your economic incentives reporting process, give us a call at (850) 727-0293.