R&D by universities can help solve global challenges through a collaborative, world-class research environment. R&D is of key importance for Indiana’s economy, with the state’s three largest research universities contributing directly and indirectly to all 92 counties. Indiana University, Purdue University and the University of Notre Dame are all ranked in the top 150 universities according to the Times World University Rankings. Together, they produce annual research expenditures of approximately $1.3 billion.  This spending drives the economy forward and is necessary for developing advanced technology-based economies, which results in high-paying jobs. Jobs created from R&D activity include those for both university and contracted employees as well as jobs being sustained indirectly. Many US states are beginning to create economic strategies that are partially focused around their universities R&D capabilities.

Of course, Indiana’s private company R&D is also an enormous contributor to the state, with expenditure making up around $6.2 billion p.a. According to the National Science Foundation, the state ranks 17th in the US for overall R&D expenditure, 16th for research funding at public universities, 17th for research funding at private universities and 15th for industry R&D spend.

There is some good news for the Crossroads of America. Ball State University’s Center for Business and Economic Research (CBER) says that federal and state technology based research and development efforts have been beneficial to Indiana’s economy.

Studies That Show Results

The first study performed by the CBER analyzed activity from 2010 through 2014. During the span of these four years, $27 million was granted to 74 Indianan organizations through a variety of well-known programs. The results indicate that investments contributed to the creation of 323 jobs, an $18 million growth in GDP, and $16 million rise in personal income.

The second study examined firms that were either awarded or rejected assistance by the 21st Century Fund. Results indicate that average annual wages, sales, and productivity all increased for those who received support. As a result, it was recommended to continue the program through 2020.

Overall Positive Impact

Hoosier tech companies have seen a “significant positive impact” according to CBER Research Assistant Professor, Srikant Devaraj. He goes onto add, “More importantly, these organizations are leveraging the funds they receive from Indiana to acquire loans and investments from banks and other venture capitalists. Receiving a grant from one of the funds is seen as a stamp of approval by outside groups. This certainly helps these companies expand.”

Indiana’s Marion and Hamilton Counties received approximately 75% of the total funding from various sources such as Indiana’s 21st Century Research and Technology Fund, the Indiana Angel Network and Indianan High-Growth Fund, and the Small Business Innovation Research and Small Business Technology Transfer programs. Furthermore, they received aid from the U.S. Department of Energy’s Office of Science.

Overall, a rise in job totals, GDP, and personal income levels prove that Indiana has benefited from the boost in technology-related R&D.

To discuss all the facets of the research and development tax claim process, contact one of Swanson Reed’s R&D tax specialists today.