Western Economic Diversification Canada
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Cost-Effectiveness
Leveraging of Funds
Were funds leveraged from other government sources and/or the private sector?
WDP funded projects helped to develop sustainable networks, leverage funds, and receive matching funds, particularly from other federal departments and provincial and municipal governments. For every dollar spent by the WDP, a further $1.82 was leveraged from project partners (for relevant sub-components). Differences exist in between sub-components in terms of the amount of monies leveraged from other sources. In total, 417 partners contributed matching funds to projects by the WDP from 2002 to 2007.
Funding relationships mostly included partnerships with other levels of government, with the majority of funding organizations located in the provincial governments. Funding recipients typically have partners (some projects with multiple partnerships). For the most part, these partnerships are not first time relationships. Funding recipients generally anticipate the project partnerships developed for the WDP funded projects being sustainable and extending beyond the end of WDP funding.
Dollars and Percentage of Leveraged Funds Relative to WD Investment
Some sub-components, such as the cost-shared agreements, were able to leverage funds (Table 5-1). It is important to note that not all sub-components are required to leverage funds while some have leveraging built into the agreements. Overall (only including the sub-components that did leverage funds) the WDP was able to leverage $1.82 for every funding dollar spent.
| Program | WDP Funding | Leveraged Funding | Total Funding | Dollars Leveraged |
|---|---|---|---|---|
| AB/SK Centenaries and Canada Celebrates SK (ASC/CCS) | $91,024,491 | $192,266,000 | $28,329,0491 | $2.11 |
| Western Economic Partnership Agreements (WEPA) | $94,098,102 | $155,254,108 | $249,352,210 | $1.65 |
| Urban Development Agreements (UDA) in Regina, Saskatoon, Winnipeg, Vancouver | $27,523,973 | $42,820,920 | $70,344,893 | $1.56 |
| Canada/SK Northern Development Agreement | $7,251,086 | $8,814,123 | $16,065,209 | $1.22 |
Number of Organizations Contributing Matching Funds
The number of organizations contributing matching funds was 417 from the database. The amount of leveraged funding was $479,851,524. This includes all projects where funding was either matched or exceeded that of WD funding.
The majority of organizations providing leverage funds were other federal departments, provincial, or municipal governments. This is the case with the cost-shared agreements, whereby projects are often shared on a 50-50 basis such as WEPAs.
Percentage, Types, and Length of Partnerships
Approximately 73.3% of recipients mentioned having one or more partners for their projects, aside from the WDP (Table 5-2). Of those projects with at least one partner, 68.4% had partners drawn from other areas of government. 14.3% reported partnerships with other parts of the federal government, 26.1% with municipal governments, 28.0% with provincial governments, and 24.9% with not-for-profits organizations. Projects also included partners from other organizations, such as clubs/other organizations (21.5%) or private funders or donors (8.1%).
| Number of Partners | Percentage |
|---|---|
| None | 26.7% |
| One | 19.7% |
| Two | 16.2% |
| Three | 10.5% |
| Four | 6.5% |
| Five or more | 20.4% |
From the administrative data, funder organizations represented a wide range of government organizations and departments, including the provincial government (52.0%), the federal government (28.4%), and municipal governments (16.7%) (Table 5-3).
| Organization | Percentage |
|---|---|
| Provincial government | 52.0% |
| Federal government or federal crown corporation | 28.4% |
| Municipality, municipal development corporation | 16.7% |
| Other responses that are each less than 3% | 2.8% |
| Total | 99.9% |
The file review indicated funder organizations coming from other federal government departments other than WD (15.4%), from provincial governments (34.5%), and from municipal governments (16.4%). Industry partners including financial institutions, educational institutions, non-profit organisations, and other private companies were mentioned in 22.0% of the files. WD was the only funder in about 11.7% of the files.
Estimations of Partner Sustainability and Future Investment
In terms of the sustainability of partnerships, recipients were asked if they felt that the partnerships for their particular project would extend beyond the project. Most of the funding recipients surveyed felt that the project partnerships would continue to extend beyond the project end date (Table 5-4). For instance, 77.5% of recipients felt that the relationship with their primary partner would extend beyond the project.
| Partner Support | Yes | No | Don’t Know |
|---|---|---|---|
| Partner Given (1st in support) (n=721) | 77.5% | 20.0% | 2.4% |
| Partner Given (2nd in support) (n=503) | 78.5% | 20.3% | 1.0% |
| Partner Given (3rd in support) (n=342) | 77.5% | 20.5% | 2.0% |
According to rolled-up data from the database, slightly more than one-half (50.8%) of projects have sustainable partnerships.
Degree to which WDP Funding Encouraged Other Partners
Of the 756 recipients who had partners, 65.7% reported that the funding received from the WDP encouraged the participation of other funders. 47.1% of the respondents who said that the WDP encouraged participation reported that they needed other funding partners (Table 5-5). However, 23.0% of recipients reported that they already had other funding in place, and that departmental involvement did not encourage other funders.
| Category | Percentage |
|---|---|
| Needed the funding to have WD or other organization participate | 47.1% |
| Already had funding in place, funding not required, didn’t seek other funding | 23.0% |
| Respondent provided list of other funder/funders | 10.2% |
| Project was able to start, move forward, was possible | 3.6% |
| Credibility, legitimacy to project | 3.4% |
| Received matching funding | 3.4% |
| Outcomes of funding, completed project, what funding allowed | 3.2% |
| Didn’t answer question, other | 6.1% |
| Total | 100% |
Cost-shared Agreements and Other Project Activities
Did cost-shared agreements allow the department and its funding partners to carry out activities that would not have been done otherwise?
The WDP does allow partners and funding recipients to carry on activities that would not be done otherwise. Funding relationships mostly included partnerships with other levels of government, most of which are not first-time associations. Generally, activities could not have been completed without WDP funding, as the WDP is critical to the success of the project; and, only small projects, or those with other funders would have been able to move forward. Most projects are not considered viable without WDP funding. WDP funding enhanced and broadened the scope, as well as accelerated the projects. The majority of projects were expected to continue more than five years beyond the expiry date of departmental funding.
Could Regions/Organizations Have Carried Out Project without WDP Funding Could Carry Out Project
Key informants envision projects going ahead without WDP involvement, but a scaling back would likely have occurred: project delays, changes in project scope, and smaller economic impacts were all predicted. Based on the file review and information in the DDRs, the evaluators deemed that 37 out of the 110 (33.6%) projects likely would have proceeded without departmental funding. However, most of the 37 projects would have likely been scaled back in scope or implementation would have been delayed. In terms of how projects would proceed, all stakeholder groups believed that other funding sources could have been accessed. These included accessing funding from industry partners, the private sector, or other municipal, provincial or federal monies.
Key informants were asked about any projects that they were aware of that did not receive WDP funding, but had been able to move forward. These projects assessed funding from other sources such as provincial governments, federal governments or industry. A critical part of WD's due diligence is to assess other more appropriate funding sources.
On the basis of case study analysis with non-funded projects, it was found that three of the four projects were able to move forward. Alternative funding sources included other federal funding, provincial government funding, and other organizations. It should be noted, however, that due to the limited sample size, the conclusion could not be drawn that WDP funding duplicates funding available from other organizations.
Future of the Project beyond WDP Funding
Some projects from the file review (three multi-year projects) were deemed as needing WDP funding for continued operation. Projects in some of the activity areas such as community planning, economic research, technology research and development, and knowledge infrastructure are not revenue generating projects and may need WDP funding for other phases. 5.2% of the projects in the administrative data included information on project and client sustainability. 67.9% of these projects continue to need government funding, generally because they are deficient in generating their own (e.g., through revenue). Of those projects in the file review and the administrative database that are sustainable this sustainability is achieved through other funding and/or revenue that the project is able to generate.
Recipient survey respondents expressed their opinion on the likelihood of future continuation of their project past the expiry of WDP funding. 70.2% of the recipients reported that their project would continue. Among those that said their project would continue, 66.9% stated that their project would continue for five years or more after the expiry of WDP funding.
Value for Tax Dollars
Are Canadians getting value for tax dollars from the WDP?
Opinions expressed by stakeholders indicate that the WDP provides value for tax dollars. Direct and indirect benefits from the WDP in areas, such as bringing products to commercialization, reflect the value Canadians derive from the WDP. It was not possible to estimate the incremental extent to which the program reflects "value for money" due to the lack of similar programs for comparison.
Departmental management and staff were asked if they believe the WDP is a cost-effective approach to promoting western economic diversification, and if projects supported by the WDP generate financial returns that are greater than investments. Generally, departmental management and staff believe that Canadians are getting value for tax dollars from the WDP, although some room for improvement was noted. Importantly, informants also stressed that not all projects are intended to be "cost-effective," and that this should not be the only measure of success.
Informants pointed to direct and indirect benefits of the program, such as return of funds to the tax system, creation of jobs, bringing products to the commercialization stage, and generation of wealth in the economy.
Some management and staff brought the following forward: the need for ministerial approval (the Minister only approves projects over $1 million) causes time delays; the program is not as responsive as it could be; and diversification cannot be attributed solely to the WDP, because of the importance of its partners.
It is challenging to estimate the extent to which the department delivers programs that reflect "value for money" associated with WDP investments. A review of an audit done internally by the department of the grants and contributions program noted, "that overall grants and contributions procedures at WD were effective and improvements are being made on an ongoing basis as a result of previous audit work" 19.
When asked whether or not the package of sub-components resulting from the WDP were affordable and provide value for tax dollars, management and staff strongly argued that WDP sub-components are affordable and provide value for tax dollars. It was largely felt that the sub-components had been successful in building partnerships, and leveraging funds from other participants. Projects were said to make "a real difference in Western Canada" by serving local communities' interests and having long-term impacts.
It should be noted, however, that the completed audits referenced above did not provide information as to the extent to which the department delivered programs on a cost-effective basis. In addition, there were no similar programs to compare to the WDP in order to analyze overall program cost-effectiveness.
19 Administration of Grants and Contributions Audit, Western Economic Diversification Canada, Audit, Evaluation, and Ethics Branch, July 2007, p.13.
