SSTI Digest

Federally funded R&D is a pillar of the U.S. innovation economy, and understanding how that funding is disbursed among the various performers within a state can help regional innovation leaders in developing, designing and implementing investment strategies, programs, and policies. This edition of Useful Stats builds on a previous SSTI analysis of NSF’s recently-updated data on federal R&D funding obligations in 2019, and examines how that funding is distributed within states among industry, universities and colleges, federal agencies, Federally Funded Research and Development Centers (FFRDCs), other nonprofits, and state and local governments.

Nationally in 2019, the majority of the $138.2 billion in federal R&D funds went to industry performers (31.4 percent), followed by federal agencies (27.8 percent), universities and colleges (24 percent), FFRDCs (10.4 percent), other nonprofits (6 percent), and state and local governments (0.4 percent).

The White House released President Joe Biden’s full budget proposal last week. As previewed in the “skinny” budget, the administration is supporting substantial increases for R&D, workforce and broadband. Support for federal programs that support entrepreneurship and the transformation of research, however, are more mixed. Within this context, here are the top things to know about the budget proposal that weren’t already covered in our reporting of the “skinny” budget.

1. Build to Scale would receive $45 million

The budget proposes $45 million for the Build to Scale program at EDA, an increase of $7 million over FY 2021. EDA as a whole would see $383 million (+ $77 million) in programmatic funding, including $84 million for assistance to coal communities (+ $50 million).

2. SBA’s innovation programs increased to $30 million

Building on top of the notion that diversity of industry is central to a region’s entrepreneurial success, recent research has noted that the personalities of people living throughout a region also play an important role in local knowledge spillover and the economic diversity of the area. The report, Entrepreneurship in Cities by Sam Tavassoli, Martin Obschonka, and David B. Audretsch, examines the relationship between a city’s entrepreneurial success and its ability to provide a favorable and connected environment for its residents through urban density and local psychological openness.

Eric Lander was confirmed by the Senate as director of the White House Office of Science and Technology Policy (OSTP). He will serve as the president’s science adviser and, for the first time, the position will also hold a seat in the Cabinet. Lander, 64, was president and founding director of the Broad Institute of MIT and Harvard, and was a co-chair of the President’s Council of Advisors on Science and Technology under former President Barack Obama. In the opening remarks of his nomination hearing, Lander vowed to “make full inclusion and equitable outcomes a high priority” and said he would world to “work to put in place a plan to increase the numbers of women and underrepresented people in the science and technology professions by 50 percent.”

As vaccination rates increase across the country and infections fall, the role of science in combatting the COVID-19 virus is front and center. Last week, we brought you stories about SSTI members’ efforts to help small businesses. In today’s story, we share additional feedback from our members that worked to find ways to fight the virus and others who pivoted to help their students continue to learn in a challenging environment.

This week the Small Business Administration (SBA) released several funding opportunities to support and promote equitable and inclusive economic recovery for entrepreneurs and small businesses. The new Community Navigator Pilot Program will award $100 million to support regional “hub and spoke” networks in providing technical assistance, training, direct financial assistance, and other services to underserved small businesses. The Growth Accelerator Fund Competition (GAFC) and the SBIR Catalyst Prize Competition (SBIR Catalyst) will provide a total of $5.25 million in funding for impactful and inclusive approaches for supporting entrepreneurs in conducting R&D.

Manufacturers in the U.S. have been facing workforce shortages despite nearly six years of recent job gains in the sector. Those gains and more have been wiped out by the Covid-19 pandemic, compounding the labor shortage problem for a sector that has often struggled to keep pace with the changing demands of technology. However, this exacerbated labor shortage shows that robots are not taking all the jobs, only increasing the level of tech skills workers need to do their jobs. A recent report from Deloitte and The Manufacturing Institute identifies several of the challenges facing employers in overcoming the shortfall, including weaknesses in local apprenticeship and job skills training programs, and diversity, equity, and inclusion (DEI) efforts to broaden the workforce.

The level of federal R&D funding within a state can have important implications for local innovation economies. As such, understanding the amount of federal R&D funding and which agencies provide that funding within a state can help regional innovation leaders in designing and implementing programs and policies. This edition of Useful Stats explores NSF’s recently updated data on federal R&D funding obligations in 2019 by state and agency.

Increasing by $12.4 billion over 2018, federal R&D funding reached $138.2 billion in 2019. However, federal R&D spending in states varied widely as seen in the interactive map below. In 2019, the states that had the greatest levels of federal R&D funding were California ($19.2 billion), Maryland ($16.9 billion), Virginia ($8 billion), Massachusetts ($6.8 billion), and the District of Columbia ($6.2 billion). The states with the least amount of federal R&D funding were Vermont ($120 million), South Dakota ($88.9 million), Puerto Rico ($81.8 million), North Dakota ($73 million), and Wyoming ($67.7 million).

Alabama is the latest state that is embracing innovation as a way to grow the state’s economy. On May 19, Alabama Gov. Kay Ivey signed legislation that grew from two top priority measures of the Alabama Innovation Commission — proposals discussed between SSTI and commission members in a meeting earlier this year. House Bill (HB) 540 establishes the Alabama Innovation Corporation, a public-private partnership that will serve as a catalyst for the state’s growing innovation economy, and HB 609 creates the Innovate Alabama Matching Grant Program that will promote research and development in the state. Both measures were passed unanimously in the state’s recently concluded legislative session.

An SSTI data analysis finds that in FY 2020, small businesses were less successful in obtaining Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) funding from the Department of Health and Human Services (HHS) — particularly from the National Institutes of Health (NIH) — than they were in FY 2019. NIH provides more funding to the SBIR/STTR program in total than the other participating civilian agency combined, and is also the top funder of the program within most states among the civilian agencies. As such — and with the approaching June 4 deadline for applications to the Federal And State Technology (FAST) Partnership Program — organizations dedicated to supporting technology startups and bolstering local innovation economies should consider how to better assist companies prepare and submit quality SBIR/STTR applications to NIH while designing outreach, education, technical assistance, mentorship, and other entrepreneurial support programs.

Recognizing the systemic barriers to economic opportunity faced by women of color, JPMorgan Chase (JPMC) has relaunched its AdvancingCities Challenge in 2021 with a new focus on directly supporting projects designed, led, and implemented by Black women and Latinas. Building on its experience investing in projects focused on supporting inclusive economies, and as part of the larger AdvancingCities strategy, JPMC is seeking collaborative solutions to challenge and disrupt the policies, programs, and institutional practices that have continued to thwart the equitable access to economic opportunities for Black women and Latinas.

When the full impact of the COVID-19 virus was just beginning to be realized in spring of 2020, small businesses across the country were faced with nearly insurmountable challenges and emergency orders, shutting down operations in many instances and choking off funding sources. Many in the technology-based economic development (TBED) community stepped in and pivoted their own organizations and plans to help others. We reached out to our SSTI members to hear about how they responded. While we can’t include all of the many success stories, below we feature a sampling of some of the stories that SSTI members shared regarding how they responded to help guide small businesses through the pandemic. And check back next week when we will share more from members who responded about their science and education pivots that helped the country navigate the pandemic.