Press Release  Audit Reveals Massachusetts Growth Capital Corporation Inaccurately Reported Impact of its Economic Development Efforts

Boston — In an audit released today, State Auditor Suzanne M. Bump revealed the Massachusetts Growth Capital Corporation (MGCC), a quasi-public agency that works to foster economic growth and create jobs in economically distressed communities, inaccurately reported on its website and brochures the impact it has had on job creation and small business development across the Commonwealth. The audit, which examined the period of July 1, 2016 through June 30, 2018, found these inaccuracies could harm the quasi-public agency’s credibility and could discourage local businesses from using its services.

Bump’s audit determined that on its website, MGCC overstated, by nearly 3,000 the number of jobs it has created or saved from the time the agency was established in 2010 through fiscal year 2018. The agency’s website claimed it created or saved 22,182 jobs during the above period; however, the audit shows it actually created or saved 19,204 jobs. The audit also noted that on various marketing materials and its annual report, MGCC inaccurately stated the number of companies it had provided services to, the dollar value of loans facilitated by grant recipients, and the number of jobs created or saved in specific years.

“Quasi-public entities, such as the Massachusetts Growth Capital Corporation, are subject to less day-to-day oversight than line agencies. Nonetheless, it is imperative that they diligently and accurately report on their activities and impact. These types of reporting inaccuracies negatively affect the agency’s credibility and reduce public trust in the program,” said Bump. “The Massachusetts Growth Capital Corporation must be accurate in its reporting practices to not dissuade local businesses in need of financial support from using its services.”

MGCC reports that, in response to the audit, it has established a policy that all statistics on marketing materials must be checked by the agency’s controller prior to being published.

The audit also found that MGCC had not developed a business continuity plan and its risk management plan had not been updated since 2015. Although these plans are not required, they can help manage and assess risk and are considered best practice for all Massachusetts state government agencies. MGCC reports it is taking steps to address this issue.

The Massachusetts Growth Capital Corporation works with local banks and lending institutions, community development corporations, and nonprofit organizations to finance projects that will produce jobs in economically disadvantaged communities. During the audit period, it received $1,750,000 in appropriations to fund its grants. During this same period, it awarded 57 loans and 81 technical assistance grants, which totaled $21,809,051. MGCC is governed by a 12-member board that is chaired by the Secretary of Housing and Economic Development. As of June 30, 2018, it had 14 full-time employees.

The audit of the Massachusetts Growth Capital Corporation is available here.

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