Conclusions

The CF program remains relevant and there is a continued expressed need for the program. WD objectives are changing and the CFs will need to be kept abreast of the changes and how the program needs to evolve to respond to the changes. The various networks that are in place to support the program are viewed as effective. Generally speaking, the investment fund is viewed as well managed but there has been recently a growing proportion of investment fund maintained as cash on hand, due in part to the economic context in the west, availability of other credit/capital, and some CFs adopting conservative lending practices. A conversation will need to occur between WD and CFs to determine appropriate loss rates on loans, acceptable levels of risk, and levels of loan activity. Performance measurement data is being collected and used for decision making purposes but some measures will need to be put in place to support the systems and human resources involved in performance measurement to ensure accuracy and quality of the data.

Clients are very satisfied with the services that they receive from CFs and they express a high level of need for all services (loans, business services, CED). The CF program has issued over 8,500 loans from 2001-02 to 2007-08 worth more than $328M and that have resulted in nearly 28,000 jobs. Business services have led to the creation of a further 27,000 jobs over this same time period. There is evidence that clients are applying what they learn from the CFs to their businesses. CF supported businesses are active in a wide variety of sectors suggesting that diversification is occurring. Diversification is further assisted by the 1 to 5 CED projects that CFs are supporting per year and by CF involvement in the majority of strategic planning that is occurring in communities. Over the period of 1999/00 to 2005/06, CFs have led or coordinated 4,902 long-term and 5,803 short-term community economic development projects. There has recently been a trend towards regional CFs working together and with other level of governments on broader CED initiatives with regional scope. There is evidence that some of these initiatives resulted in business and investment attraction, as well as tourists attractions.

The evidence presented in the short-term and medium term impact sections of this report would suggest that the CF program is having an impact on the long-term outcomes of the program particularly as it relates to diversification of local communities and community economic development. It is reasonable to believe that the loans, advice and support provided the new and existing businesses is increasing their survival rate but administrative data is lacking to corroborate this expectation. Going forward, WD will need to work with the CFs through the associations to further define indicators associated with the long-term outcomes and ensure that data is being tracked against them.

The CF Program is still cost-effective when the level of activity and return on investment (ROI) are compared to costs. Conservative estimates have CF loan clients generating anywhere from $6 to $11 of gross revenue for every loan dollar issued and loan clients are leveraging an additional 40% to 60% of additional funding; not including their own equity. When cost and level of activity are observed over time, it is apparent that operating costs have been on the rise over the last few years and the level of activity has been declining. The decline has been gradual (e.g. average number of loans issued per CF has been decreasing by less than one per year over the last 6 years). The decline was associated, in a significant part, with the credit market conditions (i.e., easing of the business-lending conditions by traditional commercial lenders). Minimum performance measures have been put in place and this combined with a conversation on acceptable levels of risk should help to reverse the trends. WD will need to monitor these trends closely over the next year and engage in discussion with CFs about their performance.

Independent observers continue to strongly support the delivery model, calling it an outstanding/unequivocal success, innovative, and one of the few signs of the federal government in rural Canada.

There are areas for improvement particularly when it comes to performance information and the trends in level of activity relative to the cost of the program. Recommendations to address the areas for improvement have been made throughout this report. The implementation of these recommendations combined with the measures already being put in place will ensure that the CF program remains, relevant, cost-effective and in a strong position to demonstrate the impact that the program is having on rural communities.