Audit of Economic Development Programs

Aboriginal Entrepreneurship Program

The Aboriginal Entrepreneurship Program (AEP) seeks to increase the number of viable Indigenous owned and controlled businesses, provide a supportive business environment for Indigenous Peoples, and inform employers about the hiring of Indigenous Peoples. AEP includes the following two components:

• The Access to Capital component provides funding to Indigenous entrepreneurs, communities, and organizations that may have difficulty in obtaining conventional financing.
• The Access to Business Opportunities component provides funding to Indigenous organizations to undertake projects that promote entrepreneurship, increase business opportunities, and help Indigenous businesses gain new skills and experiences.

Community Opportunity Readiness Program

The Community Opportunity Readiness Program (CORP) provides project-based funding to First Nation and Inuit communities and organizations for a range of activities to support them in pursuing specific economic opportunities. Where communities have identified opportunities but lack the financial resources to pursue them, CORP provides an opportunity to submit proposals to obtain additional funding.

Lands and Economic Development Services Program

The Lands and Economic Development Services Program (LEDSP) includes the following components.

• LEDSP-Core component provides annual funding to First Nations and Inuit communities to support economic development activities within their communities. The amount of funding provided to each community is based on historic community formulas that consider population and geographic location.
• LEDSP-Targeted component provides project-based funding to First Nations and Inuit communities, and organizations to undertake activities that identify potential economic opportunities and help establish the conditions for economic development to occur.

Strategic Partnerships Initiative

The Strategic Partnerships Initiative (SPI) is a federal horizontal program which is administered by CIRNAC but whose authorities belong to all 17 partnering federal departments which includes CIRNAC. SPI is intended to provide an internal federal mechanism to federal and non-federal partners to coordinate their efforts around shared priorities to increase economic development opportunities and benefits for Indigenous Peoples. SPI stimulates partnerships between federal and non-federal partners within key sectors of the Canadian economy. The program funds complex multi-year initiatives that are expected to support multiple Indigenous communities and organizations from a regional to a national scope.

Community-Level Economic Development Goals are not Consistently Integrated into Program Decision-Making

Each Indigenous community has its own set of priorities. These priorities can be based on a variety of factors including location, size of population, and socio-economic conditions. Some communities may choose to identify specific economic development goals within their priorities. These goals may be broadly established, such as improving access to sustainable employment, or be more focused on specific initiatives such as conducting feasibility studies or establishing business parks. The audit team expected that regional staff were continuously engaging with Indigenous communities to understand about their economic development goals. Further, it was expected that this information was being used to inform the design of economic development programming and related funding decisions.

Examples were identified of regional staff collecting community-level economic development goals and objectives. This information was collected from existing community-level plans such as Economic Development Plans or Community Development Plans. Community-level economic development goals were also collected through conversations with community representatives.

Overall, information on economic development goals was not collected for all communities and the collection of information was not consistent between different regional offices. Some regional offices leveraged the information provided by communities in their LEDSP-Core reports, however, the information was not validated.

In addition, the information that was collected did not appear to inform decision-making related to economic development program design, support funding decisions, or provide a platform for further engagement with the communities. Before reaching any funding decisions, project assessments are undertaken in the Regions. It was found however that economic development projects were selected based on the proposals received from the communities and that funding decisions were made based on such things as the timing of when the proposals were received, and the extent to which funding requirements aligned with availability of funds. Further, the audit found that there were no other methods in place to consistently and accurately capture the economic development goals of Indigenous communities.

Coordination with Other Funding Organizations is not Consistent

In each region, there are multiple public sector organizations that provide funding to support economic development in the local communities. These organizations include other federal departments and federal regional development agencies. It was expected that regional staff would work closely with other funding organizations to provide a coordinated federal response to the needs and goals of Indigenous communities.

Inter-departmental working groups dedicated to Indigenous economic development have recently been established at a national level which includes representatives from several government departments. These groups include senior level government officials including Assistant Deputy Ministers and Directors General. Similar groups have not been established consistently at the regional level and tools and processes have not been developed to consistently promote regional level collaboration.

There were specific examples of regional offices interacting with other public sector funding organizations that were identified. This was usually done through meetings, phone calls or emails. In most cases, these interactions occurred because regional staff had established professional relationships with staff from other federal organizations. One regional office had established regular meetings with these other funding organizations.

Challenges with undertaking coordinated approaches were identified by the regional staff. For example, some organizations were reluctant to share information on the projects they planned to fund or the communities with which they were working. It was felt that some tension was created by a perception of "competition" among the funding organizations.

Overall, other than SPI, the audit noted very few instances where regional offices worked collaboratively in a formalized way with other federal departments.

Impacts on Indigenous Communities

With limited methods in place to consistently capture the economic development goals of Indigenous communities, economic development programs may focus on projects that promote economic development but are not aligned with the community's goals.

Challenges in coordinating with other funders at the regional level may limit the overall economic development support available to a community that is in a region supported by multiple funding organizations.

There are Longstanding Challenges to Collecting Performance Information for Economic Development Projects

Interviewees from CIRNAC's LED Sector and ISC's regional offices recognized challenges with collecting performance information for economic development projects. The main challenge was that the impacts on a community from many economic development projects may not be seen until several years after the completion of a project. For example, there may be a long delay between when a business plan is completed and when jobs and revenue may be created.

There were also challenges in the collection of existing performance information. Considerable effort from the Indigenous community and regional staff was required. There were concerns that both groups lacked the resources required to collect performance information, particularly when it needed to measure performance over several years. There was also a departmental expectation to reduce the reporting burden on communities.

Information Being Collected is Not Being Used to Provide Insight into Program Performance

Project reporting requirements were established by the regional offices on a project-by-project basis, which has created inconsistencies. When project-level performance information was collected, it was not always well positioned to support an assessment of that project's impact on the community. For example, some regions have included a requirement for "quantitative performance information" for some projects such as the number of jobs created or the number of spin-off businesses created. Other regions had no similar requirement which limited how project performance could be compared across the program.

New Performance Information is Planned to be Collected for Economic Development Programs

A Performance Information Profile (PIP) is used by federal government departments to communicate how it plans to assess the success of its programs. The PIP sets out program objectives, the performance information that will be collected, and the methods that will be used to collect that information.

In August 2017, CIRNAC revised its PIP for its suite of economic development programs. New performance information will be collected to help in assessing the broader impacts of Economic Development programs. The new measures will include:

• A comparison of the total income per capita of Indigenous communities to neighbouring non-Indigenous communities; and,
• Identifying the number of Indigenous communities where non-government revenues represent 25% or more of total revenues.

Impacts on Indigenous Communities

Overall, and on specific project outputs such as business plans and engineering drawings. This type of short-term information provides limited insight into the medium- to long-term outcomes of the projects or the potential improvements that may be required in the economic development program. It may be difficult to assess the full impact of the economic development programs on improving the socio-economic conditions of communities.

Communities with Stronger Past Performance Have Had More Success Accessing Economic Development Funding

CIRNAC completes a General Assessment (GA) for each funding recipient prior to entering into a funding agreement. The GA is a tool used to provide an annual snapshot of the funding recipient's past performance. It considers governance, planning, financial management, program management and other factors. The GA produces an overall rating of "low", "medium" or "high" risk for each funding recipient. "Low" is the ideal rating and represents strong past performance in managing funding agreements.

The majority of economic development funding was provided to communities with a low GA. These communities had experience successfully meeting the requirements of their funding agreements. Figure 2 illustrates the distribution of proposal-based economic development funding for each GA rating. Less economic development funding is provided to communities with higher GA ratings. This means that funding recipients with less experience and resources to manage the requirements of a funding agreement receive less funding. In order to ensure access, the departments have made adjustments to scoring system to distribute funding to communities which have not traditionally been funded. 

 

 

Description of Figure 2 - Proposal-Based Project Funding (CORP & LEDSP) by GA Rating

Figure 2 illustrates the total funding dollars of proposal-based project funding to the Community Opportunity Readiness & Lands and Economic Development Services Programs by their General Assessment Ratings. Proposal-based project funding to projects with a LOW General Assessment rating was $114,127,431.65 in total funding. Proposal-based project funding to projects with a MEDIUM General Assessment rating was $13,039,168.65 in total funding. Proposal-based project funding to projects with a HIGH General Assessment rating was $504,868.00 in total funding. Proposal-based project funding to projects WITHOUT a General Assessment rating was $8,754,478.00 in total funding.

Lack of Support Tailored to Smaller Communities

Annual funding is provided through the LEDSP-Core program. The level of funding provided to each community is generally based on the population and geographic location of the community. Consequently, smaller communities receive less funding which is often not sufficient to pursue economic development opportunities. These are often the communities that are already challenged to obtain and retain the skills and experience necessary to pursue economic development opportunities.

Experience of Regional Offices

Regional economic development staff are in a unique position as they have seen successful economic development projects across a range of communities and can offer insight on the factors that led to success. This knowledge and experience could be helpful to support communities who are interested in pursuing economic development opportunities. However, the current proposal-based approach to CORP and LEDSP-Targeted program requires that regional staff devote considerable effort and time to administrative activities. This limits regional staff's time to work with communities that require support and who wish to pursue economic development opportunities.

Impacts on Indigenous Communities

Small communities and communities with limited skills and experience in managing the requirements of funding agreements may be limited in the economic development funding that they receive. Without the support to develop experience with the management of funding agreements, these communities may continue to be challenged in accessing economic development funding.

Leveraging CIRNAC Funding Through SPI

At the program level, CIRNAC is successfully working with other federal departments and non-federal organizations to leverage its federal funding. The program consists of many multi-year economic development initiatives that are supported by several projects. CIRNAC participates in projects that are led by other federal departments and also leads its own projects. It was found that CIRNAC's funds were leveraged to support these economic development opportunities. 

Inconsistent Understanding of the SPI Program

The SPI program was launched in 2010. At the time, the program was focused on five "priority sectors" that included specific resource sectors (forestry, fisheries, mining, energy and agriculture). An original priority sector was mining which resulted in substantial funding for the Ring of Fire in the Ontario Region. Over time, the focus shifted from resource sector priorities to include opportunities in emerging industries. Shipbuilding emerged as a sector of interest, which resulted in an initiative in the Atlantic Region. As such, some regional offices had early experience working with the DGIC and the SPI program.

The audit found that the SPI program is not consistently understood across all regional offices. Some regions are unclear about who is eligible, what could be considered a SPI initiative, and how to access the program. Typically, these are the regions that did not have an early experience working with the DGIC and SPI program. The regions that were involved early on seemed to have used that experience to further secure funding throughout the years. As such, this inconsistent understanding of the SPI program across the regions may have led to some Indigenous communities and organizations having reduced access to the program.

Subsequent to an internal Quality Assurance Review performed on the SPI and CORP programs in 2015-16, LED Sector began some outreach activities, holding information sessions for the regional offices and other departments on the SPI Program. Additionally, a SPI workshop was held in the spring of 2018 (more information below). This was done to improve the understanding of the program and increase participation in the program.

Recent Efforts to Improve Community Access to the Program

In the past, most ideas for an initiative came from the regional offices or from the other 17 departments. To get more participation and interest from Indigenous communities and organizations, LED Sector established the Indigenous Economic Opportunities Network (IEON) in mid-2017 which was named an LED Blueprint 2020 Best Practice. IEON involves a series of meetings where representatives from Indigenous communities can discuss economic development ideas with all SPI partner departments and agencies through a single-window approach. It provides an opportunity for these departments to collectively hear the economic development goals of these communities and establish an initiative to meet those goals.