Future directions

This chapter reviews the level of support for continuing the programs, identifies areas where improvements could be made to the program, and defines a process for making those changes.

Support for continuation of the program

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There is strong support amongst the representatives surveyed for continuing the programs. Of the representatives surveyed, 98% of the stakeholders, 91% of the WD and CFDA representatives, and 75% of the delivery agency representatives recommended that the program or programs be continued. The rationale for recommending continuation of the programs included:

Self-employment and entrepreneurship can be a viable option for people with disabilities and can enable them to better participate in the economy and integrate into society;
Entrepreneurs with disabilities commonly require additional assistance and support to overcome barriers to business creation and development;
There are few other sources of assistance available for entrepreneurs with disabilities;
The programs has proven successful in helping the target group; and
The program is needed to provide people with disabilities with more equal access to programs and services.

Areas for future improvement

While there is strong support for continuing the programs, most representatives also believe that there is considerable room for improvement with respect to the effectiveness of the program. For example, as noted earlier, when delivery agencies, WD representatives, associations and stakeholders were asked to rate the effectiveness of the programs, on a scale of 1 to 5 where 1 is not at all effective, 3 is somewhat effective and 5 is very effective, the average ratings were relatively consistent across the groups and ranged from 3.1 amongst the stakeholders to 3.3 amongst WD and CFDC representatives.

As such, in the minds of most stakeholders and representatives involved in the program, the issue is not whether the program should be continued but rather how the programs can in fact be enhanced and improved so that they will become even more successful in meeting the entrepreneurs with disabilities as well as the objectives of Western Diversification. The purpose of this section is to highlight specific issues or concerns about the program that identified during the course of the research and, therefore, represent potential areas for future improvement.

Objectives and Shared Vision

1. There are currently no formal objectives, shared vision or agreed upon strategy that guides activities related to the programs.

A well-developed strategy would clearly define the mission and goals of the program, the scope of the program including the target groups, the services that will be delivered and how those initiatives will contribute towards achievement of the goals, the operating model (particularly how the key services and initiatives will be resourced), the marketing strategy for the program, and the key indicators and methodologies that will be used to collect the data needed to effectively manage the program and report on its progress. In the absence of a clearly defined vision and strategy, there is considerable uncertainty amongst the delivery agency representatives regarding the objectives of the program and the basis on which their efforts will be evaluated. In addition, the level of coordination between the two programs, as well as between individual delivery agencies, is low.

Demand for Services

2. The programs have not been particularly effective to date in tapping into the potential demand that is believed by many to exist for the services.

There is at least the perception that the potential demand for services is high, particularly in the major urban areas, given the rising percentage of the population that have one or more disabilities and the increasing interest in self-employment and entrepreneurships. However, it should be noted that no statistically significant research has been done to confirm the size or characteristics of the potential market.

Low awareness amongst potential clients and community stakeholders who work with persons with disabilities is a major factor that limits existing demand for services. Some of the constraints to increasing awareness include the limited amounts of funding available for promotion, entrepreneurs with disabilities have proven to be a difficult group to reach through advertising, and the name by which the programming is known (as well as the names of the delivery agencies) varies by region which has made it difficult to implement joint promotions. In addition, some CFDCs indicated that there has been little incentive for them to aggressively promote EDP given that they do not receive any additional funding to offset the higher direct costs (more intensive precare and aftercare services are required) and indirect costs (e.g. higher loan losses) associated with serving the target group.

In addition to low awareness of the program, other factors that constrain more entrepreneurs with disabilities from participating in the programs include the limited pools of loan capital available (that have not been loaned out or written off), financial constraints facing entrepreneurs with disabilities, a reluctance of some entrepreneurs with disabilities to declare, and a high degree of perceived risk for clients, particularly when they have limited personal capital and there is a possibility that they may lose access to income and medical supports.

Business Success and Loan Default Rates

3. In comparison to the other programs such as the Community Futures general loan fund, loan default rates for the EDP and UEDI are high.

On average, the CFDCs reported a default or write-off rate of 25% while the UEDI agencies reported a default rate of 49%. Overall, the weighted average was 33%. Some of the factors that have contributed to a high default rate are that businesses operated by entrepreneurs with disabilities tend to involve a higher level of business risk (e.g. the business may be undercapitalized, there tends to be less security available, the entrepreneurs may have less experience, the nature of the disability can add an additional level of risk) and, at least in the initial years, the CFDCs and credit unions tended to have limited experience in working with entrepreneurs with disabilities while other UEDI agencies tended to have limited experience in preparing and reviewing loan applications as well as in managing loan portfolios.

No guidance has been provided to the delivery agencies regarding what would be a reasonable default rate. On average, the delivery agencies proposed a target loan default rate of 20%, suggesting that a default rate of lower than 20% may indicate that the loan criteria are too stringent while rates above 20% could mean that the negative impacts of the program (e.g. on the financial position of clients as well as their self-confidence, independence and health) may begin to outweigh the positive impacts.

4. The high loan default rates suggest that the programs need to become more effective in screening potential loan clients and in providing the pre-care and aftercares services clients need to be successful.

Entrepreneurs with disabilities tend to require more intensive pre-care and aftercare services because they may have less business and work experience, under-developed skills and self-confidence, and more limited access to information and other resources. In addition, the disability itself can serve as a constraint. The delivery agencies have noted that the resources needed to provide extensive pre-care and especially aftercare services have not been available.

Program Reporting

5. The existing management information systems for the programs do not provide useful information that will assist in making on-going strategic decisions regarding the design and delivery of the program.

There are a number of short-comings with the existing management information system including:

Data which reported is not consistent between the programs or across UEDI delivery agencies and cannot be aggregated.
No common benchmarks or targets have been defined against which performance can be assessed. The establishment of annual targets related to the activities could help to focus the relative emphasis placed on specific services. However, it is important that any such targets be developed as part of strategic plan to ensure that the targets reflect program priorities. Otherwise, the targets could result in agencies emphasizing activities completed rather than focussing on the achievement of the intended impacts.
Any methodologies to be used in assessing activities and impacts need to be clearly defined and those definitions need to be clearly understood across the agencies and staff.
The information reported by the agencies tends to be activity-based rather than outcome or impact-based. The development of any impact measures will require first defining what measures are appropriate given the objectives and priorities for the program and then developing a methodology that will be capable of collecting information, reporting on the progress made, and determining the extent this progress is attributable to the efforts of the program.

Support for the Program Amongst CFDCs

6. Support for the program amongst CFDCs has been eroding.

Evidence of the eroding support includes that over 30% of the CFDCs (28 of 90) have not made any EDP loans over the past three fiscal years and only 70% of the CFDCs we surveyed were in favour of the program being continued. Some of the concerns expressed about the program include:

The level of demand in some regions has been low although this can be attributed, at least in part, to not being actively marketed.
Resources have not been available to cover the additional costs associated with precare and aftercare and, in some instances, to replenish loan funds.
Some CFDCs do not agree with setting up loan funds for specific target groups. Rather, in their opinion, all loan funds should open to any potential entrepreneurs who can meet the eligibility criteria.
Many CFDC managers were not supportive of the transition which occurred in 2001 when WD changed from providing EDP operating funding for individual CFDCs to providing funding through the provincial associations. While some provincially funded projects have been well-received and the associations were commended for their efforts in administering the program, many managers suggested that the funding would be more effectively used at the local level.

However, should the program model be improved, all but two of the CFDCs indicated that they would be interested in continuing to deliver the program.

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