CFDC Evaluation Report - April 2003

Executive Summary

A significant transformation and restructuring is being witnessed across all levels of government in Canada. Key underpinnings to this fundamental change have been demonstrating results for the resources provided (i.e., financial and non-financial), transparency, and alternative delivery of programs and services.

Consistent with these trends, and in accordance with a Treasury Board decision (May, 2000) as well as observations made by the Office of the Auditor General in her December 2001 report, Western Economic Diversification Canada (“WD”) has committed itself to both an audit and evaluation of the Community Futures Program (“Program”).

Background to the Review

Established in 1986 by what is now Human Resources Development Canada, the Program is currently managed in the Western Canada region by WD and supported at an operational level through ninety Community Futures Development Corporations (“CFDCs”). These CFDCs are non-profit corporations that receive core-funding assistance from WD.

In keeping with the directive from Treasury Board and the findings of the Auditor General, as well as impending decisions over future funding, WD required an evaluation that would provide senior management with information on the alignment and clarity of strategic directions and priorities, management and delivery, and results of the Program. There were three broad areas of focus for the evaluation, namely:

Strategic alignment and clarity - the degree of alignment and clarity of Program priorities and strategic directions with those of WD and the Federal government as well as CFDCs.
Management and delivery - the allocation of resources and appropriateness of a community-based service delivery model coupled with the state of monitoring and reporting practices.
Results - degree to which client and community needs and expectations with respect to the level and quality of service are being met, and impacts on local communities and businesses.

To properly gauge the extent to which criteria in each of these areas were being met, information was collected from multiple sources using a variety of techniques, including twenty CFDC site visits that resulted in focus groups with over 130 service clients and interviews with more than 100 Board members, managers, staff and local partners. The results of these various assessments were incorporated into this report, along with recommendations for future action.

Grant Thornton LLP would like to thank the many individuals who were willing to participate in this evaluation, in particular the management and staff of the CFDCs as well as Audit and Evaluation, WD. Without their invaluable contribution, this evaluation would not have been possible.

Overall Conclusion and General Findings

The results of the evaluation demonstrate that the Program has generated positive results for businesses, entrepreneurs and communities, continues to have a strong rationale, and is supportive of the strategic directions and priorities of both WD and the Federal government.

Although the manner in which strategic directions are translated into specific priorities, programming and service delivery varies among CFDCs, there remains a general consistency with the intent of the Program, WD and the Federal government. It was also found that the community based service delivery model for the Program was highly valued with regional Boards that engage local interests and build community capacity, strong management, and innovative partnerships and projects that are generally viewed as complementary to other regional and community-based agencies and institutions. With respect to maintenance of the current CFDC network, the general consensus among respondents was that this is critical for addressing the service needs of rural communities. Along these same lines, clients indicated a high level of satisfaction with the level and quality of services. The majority of respondents further indicated that the Program demonstrated positive outcomes in terms of the creation and maintenance of jobs, new business start-ups and retention, importation and maintenance of wealth in the regions, and improved community planning and prosperity.

A number of associated issues must be accounted for though, to ensure that the Program and, in turn, the CFDCs are both effective and sustainable over the longer term.

Due in part to financial pressures, a number of CFDCs have reported that they are no longer strategically committed to serving as the “lender of last resort” to entrepreneurs and new business ventures. Rather, there is a growing emphasis on managing loan portfolios in a manner that serves to reduce the risk of unrecoverable debt and increases the return on these funds.
There is a need for further collaboration among CFDCs in terms of sharing resources and best practices, and in strengthening partnerships with local groups and communities (e.g., Aboriginal groups).
The provision of core funding is commonly acknowledged as being critical to the ongoing viability of the vast majority of the CFDCs. However, the degree to which this core funding is considered sufficient to cover the scope and geographic areas of service as well as the requirements stipulated in the contribution agreements is questionable. This constrains, in turn, the ability to service more remote areas with distant communities, to attract and retain key staff, to provide staff with adequate professional development opportunities, to commit to longer-term projects, and to engage in community economic development initiatives.
The governance model varies among CFDCs, ranging from more of a Carver policy-based framework to “hands-on” director involvement. Such differences also exist in the level of representation, recruitment and turnover at a Board level.
The majority of Board respondents reported that CFDC managers demonstrated strong capabilities and performance, although the attendant risk is that the loss of a competent senior manager in the absence of any succession plan could have a significant and detrimental effect on the operations of the office.
With some notable exceptions, particularly in Saskatchewan, respondents described provincial associations as providing needed support and value. However, improved communications over the role and contributions of the associations, especially the Pan West association, are warranted given uncertainty expressed over mandates and services. In the case of the Pan West association, this may reflect both the need for enhanced communications and that this institution is less mature in its development.
There is a need for further refinement of the measures of performance used in the Program, and as reported by CFDCs. This would entail the use of a smaller set of metrics that are both relevant and targeted towards the key decisions to be made. Frustration was also expressed by a majority of management and senior staff respondents over the monitoring and reporting process being too time and resource intensive. Inconsistencies in statistics, and between templates that are used and reporting formats, has resulted in what is seen to be a “very bureaucratic process”.
There was a general lack of certainty among CFDC Board, management and senior staff respondents as to the use of reported information by WD for decision-making.
A general lack of awareness among the communities and in relation to the Program and CFDC services was also raised as a concern. The attendant risk to be managed, however, is the creation of demand for services through successful outreach that might exceed what can be provided using available resources.

Overall, there is a need to address the implications for future delivery of services under the Program given funding constraints as well as consistency in governance, the level of engagement among CFDCs and with First Nations, succession of senior management, performance measurement and reporting, and further outreach. With respect to the associations, improved communications over their roles, mandates and services is also warranted.

The main report describes more fully our findings in relation to the key areas of focus for this evaluation.

The Way Forward

Building off of the findings from this evaluation, the following general recommendations for action by WD were identified:

Continue to financially support the CFDC network and the Program.
Establish a long-term funding mechanism between the Federal government, WD and the Program.
Provide for funding augmentation based on specific CFDC attributes (i.e., large service areas with remote and dispersed communities, an absence of partners in areas with relatively small populations, limited abilities to pursue alternative sources of funding, etc.).
Establish a standard governance model that incorporates “best practices” and that can be adopted by CFDCs.
Refine the current set of performance measures, and streamline monitoring and reporting requirements for CFDCs with more of a focus on quarterly reports that draw on a core subset of measures coupled with an annual report.
Provide for more regular and consistent feedback on CFDC performance.
Promote the investigation of opportunities for more proactive outreach among CFDCs, and by CFDC associations.
Develop and distribute a general strategy to recruit, retain and provide for the succession of the best and brightest Program personnel.

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