Program Design and Delivery

The next evaluation question pertains to the Design and Delivery of the program.  In order to assess the extent to which the current program design and the service delivery model meet the needs of the program, the following questions were identified in the WD Evaluation Framework:

• Are the CF networks (national, provincial, regional, and sub-regional) working effectively?
• Are CF investment funds well managed?  Are the number, level and loss rates of the loans meeting the needs?
• Is the Department and CFs gathering the necessary data for evaluation and measurement purposes?
• What is the level of awareness of the CFs?  What activities have been undertaken to increase awareness?
• What strategies have been undertaken to recruit competent employees and board members?
• What factors impact or facilitate the achievement of program results?

Findings

The overall findings for the Design and Delivery section are:

• the CF networks are working effectively primarily at the provincial level;
• there are mixed views on whether or not the investment fund is well managed and CFs may be a little too risk averse;
• performance data is being collected and used but there is some room for improvement;
• there is no consistent plan in place to increase CF awareness but CFs seem to be engaged in a variety of awareness building activities;
• the focus on strategies to recruit of competent employees and board members varies from CF to CF with some CFs having no strategy and others placing a lot of emphasis on it; and
• there are certain recruitment practices in place that seem to be effective and that could be applied across the CF program.

The Design and Delivery findings are further elaborated in the following sections.

CF Networks

CF networks are working effectively and primarily at the provincial and sub-provincial levels.

There are four levels of networks in place for the CF Program in the West: a pan-Canadian network that provides a framework for regular collaboration and sharing of best practices across the country; a pan-Western network that allows for collaboration and sharing across the West; provincial associations that focus on supporting the CFs in their province; and, some sub-provincial CF networks that enable sharing and collaboration of CFs with common interests in a particular region.

An assessment of interview and case study findings demonstrate that respondents agree that the networks that are currently in place are working effectively. There is a general perception that the networks are more effective at the local (sub-provincial/provincial level) level due to the relevance of the work generated by these groups. As the networks move up to the national level, their effectiveness/appropriateness is increasingly difficult to assess due to the diversity of members and subjects discussed.

This notion of the networks being most effective at the local level is reinforced by results of the document review. Following are some examples:

• University of Guelph 2005 study, it is stated, "The Horizontal partnerships at the local level are the strength of the CF program."¹²
• 2003 CF Program evaluation by Grant Thornton, it was revealed that while there were several functional networks in place, there was room for improvement within the "higher-level" networks. The report states that: "Improved communications over the role and contributions of CF related provincial and national associations, especially the Pan West association, were deemed to be warranted given the uncertainty expressed over mandates and services. In the case of the Pan West association, it may have reflected both the need for enhanced communications and that this institution is less mature in its development (i.e., this association was formed after its provincial counterparts."¹³

The analysis of CF survey results also indicates that the Provincial networks are used most frequently and are rated as being the most effective. Figure 3 (below) provides a summary of CF survey findings related to the frequency of use and effectiveness of the various CF networks.

Evidence from the case studies indicates that the provincial CF associations are a great platform for networking and information sharing. Four out of the ten CFs assessed in the case studies suggested that the CF associations should do more promotion of CFs and facilitate more partnerships and access to provincial and federal programs.

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When asked regarding the types and level of communication between networks, 94.7% of interview respondents believe that effective mechanisms exist and are applied in order to facilitate cooperation and information sharing between networks and to the CFs.

The following is a list of the most common ways in which information is shared, according to interviewees:

• Information is shared through regular/ quarterly meetings that are attended by either Board Members or CF Managers.  The outputs of these meetings are made available to the CF community through the distribution of meeting minutes.
• Information is provided to CF personnel through regular e-mails.
• Information is obtained at the Annual General Meeting.
• Through dual/ triple memberships on various committees, information is funnelled down from the higher levels.

Management of the Investment Funds

The investment fund is well managed but there is evidence of a growing proportion of investment fund maintained as cash on hand and a need for clarity around appropriate loss rates.

In examining the management of investment funds, the evaluation aimed to assess whether CFs are sustaining their investment funds and whether or not they are reinvesting the investments back into the program.

With respect to the number of loans issued to clients, it has decreased on average 4.3% per year between 2002/03 and 2007/08 (Table 9). This amounts to a progressive average decrease of less than one loan (0.74) per year per CF. In looking at this data from a provincial perspective, all provinces have shown a decrease in the number of loans over this time period with Manitoba and Saskatchewan showing the greatest decrease. BC maintains the highest average number of loans issued per CF followed by SK.

Table 9: Average Number of Loans Issued Per CF, Per Region (2002-2008)

	AB	BC	MB	SK	CF Average
2002-03	15.8	22.2	13.4	17.2	18.0
2003-04	14.1	18.9	10.7	14.7	15.4
2004-05	15.0	18.7	10.4	19.4	16.2
2005-06	15.5	19.1	8.1	18.2	15.9
2006-07	13.3	18.0	9.6	15.5	14.7
2007-08	13.7	18.2	8.9	11.8	14.3
Period Average	14.6	19.2	10.2	16.1	15.8
Average Annual % Change	-2.5%	-3.7%	-6.9%	-5.4%	-4.3%

Evidence from case studies, interviews and document review attributed the decline to factors specific to each CF, to the strong state of the economy in the west, and to greater access to capital from traditional and alternate sources. The same sources also identify other factors that contributed to the observed decline in the number of loans, with most of these factors linking to the strong economy (e.g. difficulties in recruiting and retaining staff; raising operational costs; and inability to undertake more promotion for the program).

Regression analysis can further demonstrate the correlation between the number of loans and the state of the economy in each province and in the west overall. The analysis used two main indicators for the state of the economy (unemployment rate and Gross Domestic Product (GDP)). The analysis shows that the number of loans tended to decrease as unemployment rate decreases and as GDP increases. Overall, the decrease in employment rate and the increase in GDP explained 46% and 63% of the decline in the number of loans issued, respectively. The associations of number of loans with unemployment rate and with the GDP were significant (using a 95% confidence level); and corroborate the above-mentioned views collected through case studies and interviews.

These findings are further substantiated by a recent study conducted by Bank of Canada¹⁴, which investigated the changes in business lending practices between 1999 and 2008. The results of this study indicate that between 2003 and 2007, which represents the period of this CF program evaluation, overall business-lending conditions eased significantly; making it hard for CFs to compete with traditional financial institutions in issuing loans (Figure 4 below). CFs have traditionally been considered as funders of last resort, funding high risk projects at a lending rate of at least 2% higher than the prime lending rate of traditional financial institutions. Furthermore, the Bank of Canada study indicates that the business-lending activities have tightened towards the last quarter of 2007 and early in 2008. The recent data available on the CFs issued loan show that the number of loans issued by CFs during the first two quarters of 2008/09 has increased by 14.5% and the dollar value of loans by 38%, as compared to the number and value of loans issued during the same period in 2007-08. Using data from 1999/00 to 2007/08, a regression analysis indicates that 70% of the variation in the number of loans issued by CFs is explained by the variation in the overall business-lending conditions and that the relationship is highly significant. Hence, these findings support the argument that the decline in the number of loans is inversely associated with the overall business-lending conditions.

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As the volume of loans has decreased, the average dollar value of loans that a CF has issued, in a given year, has increased on average 3.7% per year from 2002/03 to 2007/08. It is interesting to note that the average annual increase in the value of loans that a CF issued has increased less than the average annual decrease in number of loans. The overall number of loans has decreased 4.3% per year and the value of loans has increased 3.7% pear year (see Table 9 and 10). BC, MB and AB all show an increase in the average value of loans issued by a CF. Saskatchewan has shown a decrease over this same time period.

Table 10: Average Value of Loans Issued per CF, per Province (2002-2008)

	AB	BC	MB	SK	CF Average
2002-03	$561,979	$717,363	$310,824	$596,208	$580,974
2003-04	$530,771	$550,592	$311,653	$452,251	$487,963
2004-05	$633,491	$675,548	$255,226	$771,146	$602,016
2005-06	$672,472	$765,906	$249,828	$734,507	$641,593
2006-07	$633,389	$814,669	$391,144	$668,826	$663,926
2007-08	$634,493	$946,496	$370,351	$402,518	$671,895
Period Average	$611,099	$745,096	$314,838	$604,243	$608,061
Average Annual % Change	2.9%	7.1%	6.3%	-1.4%	3.7%

The CFs have not received any injections from WD into their investment funds during the 2002/03 to 2007/08 period. The growth of the investment funds is, therefore, a direct result of CF management of the funds. Overall the investment fund has grown over the years from $249.2 M in 2002-03 to $272.6 M in 2007/08 representing an average annual growth of 1.8% with the greatest amount of average annual growth being observed in BC and the least in MB (see Table 11).

Table11: Value of the Investment fund per Province and in Total

	AB	BC	MB	SK	CF Total
2002-03	$67,353,387	$117,790,205	$29,128,760	$34,942,842	$249,215,194
2003-04	$67,940,719	$120,821,794	$27,891,797	$34,079,259	$250,733,569
2004-05	$71,810,928	$117,221,121	$26,841,369	$33,204,538	$249,077,956
2005-06	$72,337,032	$120,567,103	$28,348,862	$35,806,441	$257,059,438
2006-07	$71,909,059	$124,558,983	$28,045,716	$37,120,015	$261,633,773
2007-08	$74,158,724	$130,252,554	$30,611,754	$37,583,240	$272,606,272
Period Average	$70,918,308	$121,868,627	$28,478,043	$35,456,056	$256,721,034
Average Annual % Change	1.97%	2.07%	1.14%	1.54%	1.83%

To further assess the management of loan portfolios, the evaluation examined the proportion of the CF loan portfolio that was invested in active loans. Administrative data shows that the percent of investment in active loans had been decreasing over the years in every province (see Table 12 below). This means that in each province the CFs are keeping a higher proportion of cash on hand rather than issuing it out in loans (see Table 13).

Table 12: Percent of Investment Fund in Active Loans per Province

	AB	BC	MB	SK	Total
2002-03	68%	75%	74%	70%	72%
2003-04	66%	69%	75%	70%	69%
2004-05	70%	65%	72%	67%	68%
2005-06	68%	65%	66%	65%	66%
2006-07	64%	57%	63%	62%	60%
2007-08	54%	59%	59%	57%	57%
Period Average	65%	65%	68%	65%	65%
Average Annual %Change	-4.1	-4.6	-4.5%	-4.0%	-4.5%

Table 13: Cash on Hand

	AB	BC	MB	SK	Total
2002-03	$21,727,918	$28,876,324	$7,521,245	$10,623,528	$68,749,015
2003-04	$23,329,666	$37,272,033	$6,885,947	$10,158,279	$77,645,925
2004-05	$21,629,220	$40,756,098	$7,462,516	$11,062,562	$80,910,396
2005-06	$22,837,024	$42,305,073	$9,527,848	$12,508,910	$87,178,855
2006-07	$20,332,792	$43,771,499	$8,364,478	$12,514,935	$84,983,704
2007-08	$27,687,749	$47,254,576	$8,026,785	$14,596,705	$97,565,815
Period Average	$22,924,062	$40,039,267	$7,964,803	$11,910,820	$82,838,952
Average Annual %Change	6.2%	10.7%	2.3%	6.9%	7.4%

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The decrease of the proportion of investment fund in active loans and the increase in cash on hand is partially due to the observed decrease in the number of loans issued. The increase of cash on hand was strongly and significantly associated with the strong economic conditions in the western provinces in the last six years (2002/03 to 2007/08). The statistical regression indicates that the decrease in employment rate and increase in GDP explained 30% (P=0.005) and 63% (P= 0.000004) of the increase in cash on hand, respectively. This finding is in line with the views of some CF managers and WD managers regarding the decrease in number of loans and the increase in cash on hand.

Other interviewees indicated that some CFs have adopted conservative lending practices to protect their "limited" pool of investment fund, resulting in an issuance of loans only determined to be low risk.  Those interviewees indicated that the adoption of conservative lending practices by some CFs is partially due to the fact that the last WD fund injection came with a clear message that the injection would be the last one; and that moving forward, CFs should manage their investment fund wisely. This was interpreted by some CFs that they should adopt conservative lending strategies to protect their pool of loan money.

The situation in Saskatchewan is somewhat different, as one CF in particular (Beaver River) issues about 45% of the number of CF loans in the province. Discussion with the CF Beaver River manager revealed that this CF has made a strategic decision to move away from investing in traditional sectors; hence probably the increase observed in loan loss rate (Table 15) and value of loan written off (Table 14).

In addition, when examining the CF program as a whole, there has been an average 10.4% annual decrease in the values of loans that have been written off (Table 14).  In looking at this data from a provincial perspective, BC and AB provinces have, on average over the 2002/03 to 2006/07 period, shown a significant decrease in the values of loans that have been written off; while MB and SK provinces have shown a slight increase (Table 14).

Table 14: Value of Loan that have Been Written-off per Province

	AB	BC	MB	SK	Total
2002-03	$1,659,138	$3,826,837	$1,144,252	$1,053,491	$7,683,718
2003-04	$1,657,274	$4,818,693	$621,437	$987,895	$8,085,299
2004-05	$1,237,653	$1,646,443	$919,702	$714,439	$4,518,237
2005-06	$1,009,123	$2,631,117	$598,238	$735,314	$4,973,792
2006-07	$1,211,293	$1,101,521	$887,508	$1,135,599	$4,335,921
Period Average	$1,354,896	$2,804,922	$834,227	$925,348	$5,919,393
Average Annual %Change	-6.0%	-9.6%	3.9%	5.9%	-10.4%

The loss rates are calculated by dividing the value of loans that have been written off (bad debt expense) by the value of active loans in a given year (loans receivable). It should be noted that CFs are typically writing off debts for loans that have been issued 3-5 years ago. The calculation is, therefore, crude and may not reflect the actual level of risk that CFs are taking in a given year. When examining the CF program as a whole, there has been an average 7.4 % annual decrease in the loan loss rate (Table 15).  In looking at this data from a provincial perspective, BC and AB provinces have, on average over the 2002/03 to 2006/07 period, shown a decrease in the loan loss rate; while MB and SK provinces have shown an increase (Table 15). Furthermore, it is important to notice that these values are relatively low; probably due in part to the formula used to calculate the loan loss rate. Data was not available, at the time of writing the report, to calculate the bad debt ratio since inception of the CF program. This ratio could have provided a good indication of the long-term performance of the CF loan program.

Table 15: Loss Rates per Province

	AB	BC	MB	SK	Total
2002-03	3.64%	4.30%	5.30%	5.30%	4.26%
2003-04	3.71%	5.77%	2.96%	4.13%	4.67%
2004-05	2.47%	2.15%	4.75%	3.23%	2.69%
2005-06	2.04%	3.36%	3.18%	3.16%	2.93%
2006-07	2.64%	1.56%	5.03%	4.95%	2.76%
Period Average	2.90%	3.43%	4.24%	3.96%	3.46%
Average Annual %Change	-4.83%	-6.56%	10.40%	7.01%	-7.41%

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While the majority of interviewees that formed the CF interview group (26 of 31) believe that the investment fund is well managed, the remaining individuals think that CFs are somewhat risk averse and should be providing a larger number of loans to applicants. 

WD senior managers and program managers raised mixed opinions regarding the investment funds. A total of four persons within this sub-group indicated that the funds were well managed.  As for the six others, they stated that the management of investment funds varies significantly from one CF to the other.  Interviewees demonstrated inconsistencies in their interpretation of "appropriate loss rate". Some interviewees believe that a good rate is between 10-15%, recognizing that the CFs are high-risk lenders while others believe that the loss rate on loans should not surpass 4%. CFs are looking to WD to define appropriate loss rates.

Follow-up
There is evidence that follow-up activities are being conducted with loan recipients. Follow-up mechanisms are not consistent across CFs. All CF interviewees and CF survey respondents indicated that they follow-up with loan clients, however, the case studies found that there is no consistency across CFs in terms of the frequency and the nature of the follow up. Six of the ten CFs receive monthly, quarterly or annual financial statements and based on the results a follow up (phone call, site visit, e-mail) occurs. The other CFs usually do not do frequent follow-ups; it is usually done in the form of phone call; e-mail; and occasionally a site visit. Almost all of the CFs agreed that they could do more follow-ups (aftercare) if they had more human and financial resources and time. 

All client surveyed indicated that follow-up does occur. Follow-up frequency varied from weekly to annually. Follow-up methods included telephone, email, mail and in-person. The vast majority of clients (98%) thought the follow-up frequency was appropriate. Follow-up practices seem adequate and there is no strong evidence that more frequent follow-up is required.

$150K Limit
Interviewees were asked whether or not they thought the $150K limit on loans was appropriate. Interviewees had mixed responses regarding the maximum limit on loans.  In total, 56% of respondents thought that the loan amount was appropriate, 17% of respondents did not provide a direct response to the question and 27% of respondents identified the need to increase the maximum value of loans. 

There is some concern among a few interviewees that the $150K- $500K group is not really serviced by anyone and that the current maximum limits the CFs' ability to participate in larger/ higher impact endeavours. The other interviewees think that CFs can partner with other lenders or with each other to meet this demand.

Evidence from the case studies indicates that, depending on the population size and geographic area served by the CF, both micro-loans and larger loan (> $150K) were advocated for. In large CFs such as CF Grande Prairie & Region; CF Okanagan Similkameen, CF East Parkland all advocated for larger loans; while in smaller CFs such as Boundary Area, micro-loans were considered a great success and were suggested as a best practice. 

Case studies findings also indicate that some CFs are embracing the principle of partnerships and collaboration and have been successful in working together on larger loans ($>150K) and larger regional economic developments initiatives.

A greater proportion of new business loan clients surveyed found the maximum loan amount appropriate (73.6%). Only 63.4% of existing businesses found the loan amount appropriate. Conversely, 26.4% of new businesses and 36.6% of existing businesses do not think that the $150K limit is appropriate. Client that did not find the loan amount appropriate indicated that the loan limit should be anywhere from $200K to over $400K or that the limit should be reviewed on a case-by-case basis. For a distribution of suggested appropriate loans amounts see Figure 5 (below).

The client survey, case studies and some interviewees are expressing a need for a higher loan limit in certain instances. The higher loan limits would be consistent with WD's focus on supporting larger projects. CF terms and conditions allow for some flexibility around the $150k limit but it is not evident in which instances the limit can be surpassed.

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RECOMMENDATION 3:

• WD should take the necessary steps to further enhance the management of investment fund.
  • WD should determine acceptable performance measures such as acceptable loss rates, number of loans, and levels of cash on hand, taking into account local, regional, and provincial economic conditions. This decision should be clearly and consistently communicated to all CFs.
  • WD should clarify the CF terms and conditions surrounding when the $150K loan limit can be surpassed. The decision should be clearly communicated to all CFs.

Performance Data

The CFs are gathering performance data for evaluation and measurement purposes.  Performance data is considered by the CFs and by WD during the decision-making process.  However, the accuracy and integrity of data currently available in the Lotus Note and TEA databases is questionable.

Findings are primarily based on interview and document review findings, a review of the administrative data, and case studies.

In the 2003 Audit Report, numerous references to monitoring practices were made.  To begin, the report stated that: "WD and Treasury Board policy outlines the monitoring practices that should be carried out as part of the monitoring of the CFDCs. These practices are based on the documents that are filed with WD by each CFDC, which are essentially the same in all jurisdictions. However, there are regional differences in how these documents are utilized, and the extent of their examination."  In addition, the report explains that: "the purpose of and the information contained in the Quarterly Performance reports should be revisited. These reports appear to be underutilized for monitoring purposes, and many of the variables are not relevant. While these variables, however, may be relevant to reporting on the results of the CF Program, quarterly reporting on all of these variables may be too onerous on the CFDCs preparing them."

Currently, according to interview findings, 98% of interviewees agree that reporting measures are in place.  All persons stated that they are increasingly referring to their performance data during the decision-making process.  In addition, there is an understanding that WD is now setting minimum performance targets and measuring the CFs against these established targets.

Evidence from the case studies, however, highlighted some issues associated with the lack of feedback from WD on individual CFs performance and the fact that WD does not acknowledge and reward best performers.  Six out of ten CF managers included in the case studies regret the inexistence of incentives for CFs best performers; which according to some of them, result in the CFs feeling unmotivated. The six CF managers regret the fact that all CFs are treated approximately the same in terms of resource allocation.

CF performance data is currently captured in the TEA system application.  Several respondents indicated that significant improvements to this database were required.  The following is a list of the concerns identified during interviews and case studies:

• Too much data is being requested, which is labour intensive
• Definitions of data elements are subject to interpretation (i.e. CFs input data inconsistently within the system).
• Many data elements are not perceived as relevant for local decision-making
• Cannot relate TEA results to the annual operations plan
• Different versions of the TEA system which creates some glitches and mis-reporting / mis-communication between the CFs reporting systems and WD's Reporting Performance Measurement system (RPM).

Although concerns regarding performance reporting are numerous, several persons indicated that there have been many improvements over the past years.  In addition, all CFs will be required to participate in reporting definition training during the 2008/09 fiscal year. The training will ensure that those inputting data into the TEA system are aware of the definitions of the various data elements. The goal of this training is to help improve the quality of information that is tracked in the system.

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RECOMMENDATION 4:

• WD should take the necessary steps to enhance the reliability and use of performance data.
  • WD should devise a strategy to resolve performance-reporting issues related to system inconsistencies and data definitions. 
  • WD should review the continued relevance of elements currently collected through the TEA system.
  • In order to ensure the integrity of data, WD should implement and lead quality assurance practices (i.e. sample audits, etc.).

Level of Awareness

A variety of promotional and outreach activities have been applied in order to promote the CF Program in Western Canada.

A review of interview findings indicates that promotional and outreach activities are numerous and vary between CFs.  Each CF is responsible for marketing their services, in accordance with the marketing strategy that they identified within their operational plan.  The most common outreach and promotional activities identified during interviews include:

• Publicity (i.e. in local newspapers, radio, TV, etc.)
• Board Member and staff involvement in community held events (i.e. trade shows, career fairs, partnership with schools, etc.) in order to promote the program
• Word of mouth (i.e. clients, staff, Board Members, etc.)

In order to improve the level of program awareness, a common branding strategy has been developed in Western Canada by the CFs through the associations. WD made a decision to not provide additional funding for the implementation of the strategy. CFs are therefore implementing the strategy at their own discretion and with existing resources. 

Evidence from the case studies indicate that six out of the ten CFs visited believe that the level of awareness/promotion of the CFs should be enhanced; while the remaining four CFs believe that the level of awareness is adequate and there is no need for more promotion as the CFs are operating at capacity and resources are stretched to the limit.

Recruitment of Staff and Board Members

Renewal of staff and board members is a challenge for CFs. There is no standard approach and/or strategy to recruit staff and Board Members.  Some recruitment and retention best practices have been developed by some CFs and/or Associations.

At the time of the evaluation, numerous persons interviewed identified difficulties in recruiting and retaining both staff and Board Members.  Several persons indicated that Board Member renewal is a constant challenge and recommended that the length of terms of Board Members be reviewed.  Some respondents stated that they encounter difficulties in recruiting Board Members due to the level of commitment/time that is required of them.  Also, Alberta representatives mentioned they have a lot of difficulty recruiting and retaining staff due to the Province's labour shortage.  In order to retain the workforce, many incentives (i.e. flexible work hours, health training programs, benefits package, etc.) are required.

Even though recruitment and retention challenges are apparent, several best practices were identified during interviews and are presented in the following list:

• In Manitoba, a common salary scale for 3 to 4 different positions was developed by the Provincial Association. This document provides more structure and consistency in the establishment of salary by position throughout the CFs.
• As part of BC's Continuous Improvement Strategy, a peer training support system has been established. This "buddy system" allows one CF to seek assistance and guidance from another CF.
• The Pan West Association lead the development of the Community Futures Staff Development program, which is designed around the competencies required for each of the four main Community Futures positions: General Manager, Business Analyst, Community Economic Development Coordinator, and Administrative Coordinator. ¹⁵

Recruitment and retention of staff is a key issue for CF managers. The efforts of the Pan West Association should address some of the issues with recruiting and retaining staff members. Continued attention needs to be paid to staff retention. CF associations should look to each other for best practices and strategies that can be applied across the West. Attention also needs to be paid to board membership.

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Factors Impacting the Achievement of Program Results

There are numerous factors, both internal and external, that impact or facilitate the achievement of program results.  Although a large majority of key issues/challenges identified at the community and regional levels can be addressed by the CFs and/or WD, most of the national challenges are external in nature, which limits the program's ability to address and resolve some of the identified challenges.

The findings in this section are primarily based on interview and case study results, supported by information contained in the document review.

Interviewees and case study participants provided comments regarding a wide range of issues impacting the achievement of program results. Table 16 (below) contains a list of the most common national, regional and community-level issues identified during interviews and the case study.

Table 16: Challenge and Issues Impacting the Level of Success of the CF Program

National Challenges/ Issues
Internal Factors (includes issues which are considered within the span of control of the CFs, the CF Program and/or WD)	The current level of program visibility does not provide sufficient level of program awareness
External Factors (includes issues which are considered outside the span of control of the CFs, the CF Program and/or WD)	Changes in Government Direction/ Political Shifts create program uncertainty
	Five year program renewal generates difficulties in conducting long-term planning and in establishing long-term partnerships
	Apparent wavering of program commitment at the national level
Regional Challenges/ Issues
Internal Factors (includes issues which are considered within the span of control of the CFs, the CF Program and/or WD)	The limited diversification of revenues does not allow the CFs to be self-sufficient
	The CFs do not have sufficient program autonomy/ decision-making authority (not a lot of delegation to the CFs by WD)
	Inadequate program accountabilities currently in place (i.e. procedures & guidelines, higher accountability for results, implementation of performance standards)
	There is no flexibility to leverage revenue-generating funds into operating dollars.
	There is a lack of operational funds.
	The TEA system is complex and information inputted and assessed is subject to interpretation
	Inconsistent level of cooperation/communication with WD and within WD (i.e. inconsistent information provided by different regions within WD)
	The absence of WD financial support of the Common Branding Strategy
	There is a lack of funds for community economic development work
External Factors (includes issues which are considered outside the span of control of the CFs, the CF Program and/or WD)	There is a lack of interest/collaboration from some provinces (i.e. BC)
	There are growing economic challenges (i.e. AB and BC)
	Increase in immigration (i.e. different client base, different types of businesses, etc.)
Community Challenges/ Issues
Internal Factors (includes issues which are considered within the span of control of the CFs, the CF Program and/or WD)	The structure/composition of the CFs may not be appropriate (i.e. number of CFs, geographical distribution, number and size of portfolios, etc.)
	Recruiting and retaining staff with the right skill sets is difficult.
	Inadequate level of program visibility and awareness
	Board Member vitality needs to be increased
	150K maximum value of loans does not allow CFs to support large projects.
	Misunderstanding of the realities that are faced by First Nation Communities
	Succession planning initiatives have not been developed
External Factors (includes issues which are considered outside the span of control of the CFs, the CF Program and/or WD)	Unwillingness of some communities to collaborate

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Respondents of the CF survey also raised numerous issues impacting the success of the CF Program. The following figures (Figure 6 below) illustrate the most common issues identified by CF representatives.

Figure 6 (above) demonstrates consistency with the results of the interviews and case study.
In support of the above responses, previous evaluations and studies were reviewed to assess whether identified issues have consistently been identified over time.  The following is a list of some of the key challenges included in prior reports and studies:

• Develop broad based community support (2003);
• Insufficiency of core funding (2003, 2004);
• Need for further refinement of performance measures (smaller set of metrics) (2003);
• Limited resources available for CED activities (2002);
• Size/geographical spread of regions serviced by CFs (2002); and
• CF low profile (2002).

In light of the challenges/issues identified in previous studies and the findings of this evaluation, it is fair to state that there is an alignment between past and current issues.

A majority of issues identified in this section pertain to elements that have been previously addressed in earlier sections of the evaluation.  However, concerns regarding funding limitations are apparent and should be clarified.

Using triangulation techniques, we determined that the factors impacting the CF program success fall into two major categories: overarching factors common to most CFs; and other factors specific and variable from one CFs to another. 

The top overarching factors include:

• Insufficient and short-term funding;
• Staff recruitment and retention;
• Insufficient visibility and, hence, awareness about the program;
• Inadequate program accountabilities and performance management currently in place;
• Strong economy in the west over the lat 6 years which made it hard for the CFs to issue loans, recruit and retain competent staff; and engage in more promotion of the program as a result of rising operation cost; and
• Changing government priorities

The top unique factors include:

• Large geographic area;
• Low profile of the CF (low population size with limited human and natural resources pools);
• Geographic location (remoteness; out-migration of population to places with more economic opportunities); and
• Unwillingness and/or lack of interest of some communities to collaborate with CFs.

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