Program Relevance

The findings of the evaluation of the Community Futures Program in Western Canada on the issue of program relevance are presented in this section of the report.  The evaluation questions which were considered in addressing the issue of relevance were as follows:

• Is there a continued need for the Community Futures Program?
• Does the CF Program compliment, duplicate or overlap other government programs?  Other private sector services?
• Are local CFs objectives and activities consistent with the national CF Program?  Are CF program objectives consistent with departmental objectives?

Findings

The overall findings for the Relevance section are that:

• there is a continued need for the CF Program;
• there is a high degree of complementarity between the CF program and other programs;
• CFs are more aware about these programs than CFs' clients are; and
• the objectives and mandate of the Program remain relevant to government responsibilities and priorities. 

The following sections further elaborate on each of the findings.

Continued Need for the Community Futures Program

There is an on-going need for the CF Program and there is a growing demand for the three core services offered by the CFs.  Recognizing that the CF Program is offered nationally, it is apparent that there is a continued need for Federal Government involvement.  At this time, there is no evidence supporting a realignment of the program to the Provinces.

Findings in this section are primarily based on a review of literature, survey results, and the analysis of interview and case study findings. A review of relevant documentation was conducted in order to determine the extent to which the CF Program is needed. Following are some of the key findings from the document review:

In the 2002 Impact of the Community Futures Program in Western Canada study, the following statement was made: "There is a strong perceived need for the CFDCs in the Communities.  Community representatives and CFDC clients all indicated that there is a very strong need for CFDCs.  On a scale of 1 to 5, where 1 is no need at all and 5 is a major need, the community representatives and CFDC clients provided average ratings of 4.6." 

The June 2008 Senate Report, Beyond Freefall: Halting Rural Poverty clearly indicates a continued need for the program by stating: "The challenges of accessing credit in rural Canada have long been recognized at the federal level. Arguably the most successful program to help address this concern has been the Community Futures program." Furthermore the committee recommended that, "the federal government reaffirm its long-term commitment to the Community Futures program". ²

The continued need for the program was further supported by interviewees that formed part of the current evaluation, 96% of persons interviewed agree that there is a continued need for the CF Program.  The remaining 4% of interviewees (a total of two individuals) recognized the continued need for the program, stating that the need is significantly less now then a decade ago since banks and credit unions are offering a larger degree of assistance to businesses.  Although a variety of responses were provided, the top three reasons sited for a continued need for the program include:

• The importance of the program in supporting SMEs located in rural and remote communities; and
• The CF Program is important for initial loans on business start-ups as people can't get money from traditional lenders and would not exist without the CF Program.
• CFs are non partisan organizations with the ability to bring partners together to work collaboratively on issues and growth strategies related to the region/community.

The client survey results support the justifications provided during interviews.  Of a total of 75.5% of respondents who sought business start-up funding from another financial source for a new business, only 23.1% were successful in obtaining their loan.  The client survey further indicates that over 70% of respondents thought it is very or somewhat unlikely that they would have been able to start or maintain their business without CF funding.

Through the case study and survey results, further review was undertaken to determine the continued need for the three key program services (i.e. access to capital, business services and community economic development). All participants in the case study indicated a continued need for the three core program services and anticipate that, over the next five years, there will be an increase in demand for all three services. Case studies further indicate that there is a need for the program services under both strong and weak economic conditions.

Focus group participants and interviewees indicated that under economic downturns conditions, new business start-ups drive the need for both loans and business advisory services. Under economic downturns, CFs brings community partners together to develop strategies and plans to address the economic issues collectively.

Conversely, under strong economic conditions, there is a growing need for support to businesses that provide goods and services to the expanding economy.  Evidence from the case studies suggests that in all four western provinces, the strong health of the economy is not equally beneficial to all regions within each province. Growth occurs in specific pockets of the province, thus creating an out-migration of the population from some rural communities and jeopardising the sustainability in certain rural communities. Under such circumstances, some rural communities are actually negatively impacted by the strong economic growth and CFs are, therefore, needed to support the sustainability of the affected rural communities.

Trends in responses were noted when analyzing the results of both the CF and client survey responses.  Results of the CF survey indicate that at least 80% of respondents indicated that there was some or great need for all of the services listed in the survey (Figure 1); comparable to 90% of client respondents. There is also an alignment between the CF and Client's perceived need for services.  Both surveyed groups indicated a greatest need for business counselling (99% in the CF survey vs. 98% in the Client Survey).  Figure 1 (below) illustrates the similarities in responses.

Figure 1: Percentage of Survey Respondents Believing there is Some or Great Need for CF Services

Interviews revealed that not only is there a continued need for the Program but there is a continued need for the Federal Government involvement in the Community Futures Program.  The majority of the interviewees that commented on this subject (15 of 18 interviewees) indicated that there is a role for the federal government in the CF Program.  The three most common justifications provided to reinforce this statement include:

• This is one of the few government programs aimed directly at assisting small rural communities.
• Rural economic development is a shared responsibility between provinces and the federal government.
• This is a way for the Federal Government to tap into the community pulse.

Interview results clearly indicate that the CF Program should not be realigned with the Provinces.  Of the 19 interviewees who provided a response to this question, all agree that the Program should not be re-aligned with the Provinces.  However, there is a common perception that increased cooperation (i.e. a collaborative approach) and increased communications with provincial governments and other economic delivery agents (i.e. municipalities, credit unions, etc.) should take place. 

Degree of Complementarity/duplication with other Organizations

No organizations (i.e. government programs, private sector services, etc.) fully duplicate or overlap the CF Program.  However, numerous complementary services are provided by various organizations.  The level and type of collaboration with these organizations varies from one CF to the other.  There is no standard approach to ways in which the CFs communicate and coordinate work with other organizations.

Findings in this section are primarily based on the analysis of interview and case study findings, survey results and the review of documentation.

There is a general agreement among interviewees that coordinated efforts between the CFs and other departments/organizations are being made.  The level of collaboration varies from minimal interactions to formalized agreements.  Numerous complementary organizations were identified during interviews.  The following is a list of the most commonly cited organizations providing complementary services:

• Regional Economic Development Authority/ Corporations (REDA/ REDC/RDC).  These organizations assist in activities such as project development, facilitation, research, provision of information, etc.  These "coordination bodies" are established by the Provincial Governments.  The REDA/ REDC/RDC are not considered funding agencies and do not provide small business planning services.
• Provincial Economic Development Associations: These associations are dedicated to enhancing provincial economic growth through the following service pillars: Facilitation of Networks & Information Sharing Services, Communications & Collaboration, Development & Delivery of Educational Programs and Research, Development & Project Management.³   These economic development (ED)-focused associations do not offer lending services. They are primarily professional development and networking organizations for CED practitioners.
• Local Chambers of Commerce: Are member driven organizations that focus on such things as: providing a voice for businesses in the community, a forum for debate on critical issues affecting the community, constructively influencing public policy to support a healthy private enterprise system, and relationship building.

Results of the case study concur with those of the interviews.  Participants commonly agree that other existing programs complement the CF Program.  Additionally, they agree that collaborative efforts are deployed (i.e. leveraging resources, risk sharing, referrals, etc.) in order to jointly respond to client needs.

In the Office of the Commissioner of Official Languages' Audit report, a high-level analysis of the objectives of the Francophone Economic Development Organizations (FEDOs) was conducted.  The report states that: "Although these organizations [FEDOs] are not CFDCs, many of their services are identical to those offered by CFDCs...Some managers of the federal institutions covered by our audit stated that there was an important difference between the mandate of a CFDC and that of a FEDO: the CFDC operates at the local level while the FEDO has a province-wide mandate."⁴ Furthermore, FEDOs serve a specific target clientele (Francophone clients and communities") and only one FEDO (Manitoba) provides loans.

In the General Findings section of the Impact of the Community Futures Program in Western Canada study, it is stated that: "The services of the CFDC's complement and benefit those of organizations in the community."⁵

An assessment of the Client and CF surveys provided an indication as to the level of awareness, by survey respondents, of similar services offered by other organizations.  Figure 2 (below) demonstrates that CF respondents have a higher level of awareness of other programs/ organizations offering similar/complementary services than do clients, suggesting that clients are dependant on CFs to be a gateway to services.

Figure 2: Survey Respondents Awareness of Similar Services

With such a large number of complimentary organizations and clients' relative lack of awareness of organizations offering similar services, it is important for CFs to recognize their role as relationship builders and service gateways.

RECOMMENDATION 1:
WD should introduce one or two specific indicators to capture CFs' role in pursuing collaborative relationships with other organizations (i.e. informal arrangements, memorandums of understanding, etc.) and acting as a gateway to services for their clients (e.g. number of referrals).

Consistency with the National CF Program and WD Objectives

The local CFs objectives and activities are consistent with the National CF Program.  However, the emphasis placed on each of the core service areas differs from one CF to another. The local CF's objectives and activities are generally aligned with WD's objectives.  However, CF program managers will need to be mindful of a recent shift in departmental priorities and ensure that, going forward, the CF Program remains in alignment.

The findings in this section are primarily based on documentation review and supported by interview and case study results.

Consistency with the national CF Program

According to the CF Program Terms and Conditions⁶ , the objectives of the National CF Program are to assist communities to successfully pursue:

1. Economic stability, growth and job creation
2. Diversified and competitive local rural economies
3. Sustainable communities

In order to achieve program objectives, the CFs help communities to develop and diversify through the following activities:

• Strategic community planning - working with communities to assess local problems; establish objectives; plan and implement strategies to develop human, institutional, and physical infrastructures; and support entrepreneurialism, employment and the economy.
• Business services - delivering a range of business counseling and information services to small and medium sized enterprises.
• Access to capital - providing capital to assist existing businesses or to help entrepreneurs create new businesses.

Persons interviewed have a common understanding that the three core services provided by the CF Program are: Community Economic Development, Business Services and Access to Capital and that their services are directly aligned to these key services.  However, through the analysis of interview findings, it is clear that the emphasis placed on each of these service areas varies from one CF to the other (i.e. some CFs invest a large portion of their time and effort in community economic development work whereas another CF is primarily involved in lending activities).   Results from the case studies corroborate this finding; with the time spent by CF staff on CED activities ranging from 5% to 60%, on lending activities from 15% to 65%, and on business services activities from 5% to 50%. Variation is inherent in the Program's design. The CFs are independent organization whose activities are driven by local needs.

The previous CF Program evaluation conducted in 2003 also found that, "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."⁷

Consistency with WD objectives

According to Western Economic Diversification Canada's website, the mandate of WD is to "promote the development and diversification of the economy of Western Canada and advance the interests of the West in national economic policy. This mandate is delivered primarily through grants and contributions programs, which enable the department to contribute strongly to the productivity and competitiveness of the West. This is achieved through collaboration with partners including the private sector, other levels of government, academic and financial institutions, as well as research centres, to maximize investment in Western Canada and to create alternative sources of funding for commercial ventures." The CF program objectives, listed above, are very consistent with WD's mandate (development and diversification of the economy) and methods (collaboration with private sector, other levels of government etc.). However, according to some interviewees, there could be room for more collaboration with financial institutions and more formalized arrangements with other levels of government.

A review of the department's Report on Plans and Priorities for fiscal years 2006/07, 2007/08 and 2008/09 determined that the three following strategic outcomes for WD are identical during this time period:

1. A competitive and expanded business sector in Western Canada and a strengthened western Canadian innovation system.
2. Economically viable communities in Western Canada with a high quality of life.
3. Policies and programs that support the development of Western Canada

The specifics are further elaborated in Table 8 below.

Table 8: Overview of WD's Strategic Outcomes

	2006-07	2007-08	2008-09
A competitive and expanded business sector in Western Canada and a strengthened western Canadian innovation system.
Business Development and Entrepreneurship	X	X	X
Innovation	X	X	X
Economically viable communities in Western Canada with a high quality of life.
Community Economic Development Planning, Development and Adjustment	X	X	X
Infrastructure	X	X	X
Policies and programs that support the development of Western Canada.
Collaboration and Coordination	X	X	X
Advocacy	X	X	X
Research and Analysis	X	X	X

In 2006, WD undertook a Visioning Initiative consisting of a series of roundtable discussions with western Canadian business, academic and community leaders across the West and in Ottawa to obtain their views on the role, activities and future directions of the Department.
This initiative confirmed the important economic challenges and opportunities facing Western Canada and the need for a renewed focus on economic priorities, and the economic growth and diversification objectives that form the core of WD's legislated mandate.⁸
As a result of those discussions, the department re-defined its strategic framework and created a new vision.  Those consultations also were instrumental in helping the department determine its priorities for the 2008/09 year.  The four program priorities are:

1. Technology Commercialization;
2. Trade and Investment;
3. Business Productivity; and
4. Rural Diversification.

Through rural diversification, WD will "promote rural diversification by supporting projects that will increase the capacity in rural communities to undertake applied research and development and value-added processing and encourage new opportunities for skilled employment. In addition, the department will undertake research to identify opportunities to further diversify the rural western Canadian economy."⁹

The type of rural diversification discussed seems to have more of an emphasis on supporting larger, more regional projects that have export potential. This sentiment was echoed in interviews with some of the WD Senior Managers. Out of the interviewees who presented their viewpoints regarding the level of alignment with WD priorities, 94% of respondents agree that the activities carried out by the CFs are directly aligned with the objectives of WD.  The remaining 6% of respondents believe that there is no direct alignment with WD objectives due to the recent shifts in WD's priorities. This 6% was made up of WD Senior Managers.

Further evidence of this shift in mind set was found in the 2008 Senate report Beyond Freefall: Halting Rural Poverty. The report states: "...Community Futures concept needs to expand beyond providing money only for start-up operations and to move toward supporting larger-scale operations."¹⁰  This reference reinforces the concerns expressed during interviews.

Evidence from the case studies indicates that CFs are not given clear directions and guidance on the new WD priorities and the drivers/trends behind them. Managers of six out of the 10 CFs selected for case studies, also indicate that there is no clear definition of expectations, and there is confusion about the meaning of some words such as "community innovation", " Diversification" to the point that they do not know for sure which project(s) fall under which WD priority.

WD program managers need to reflect on how this shift in focus will impact the CF program and how the Program can respond to the shift. An inherent risk is that the shift in focus could discourage the issuance of smaller loans, an area that is reportedly not well served by traditional lenders. The opportunity is that CFs could be encouraged to work on a more regional basis to coordinate larger projects with multiples partners and financers. The key will be for WD to decide if the CF Program can effectively operate at both levels or if efforts should be focused on a particular area. WD may not have to take on the sole responsibility for these efforts. The 2008 Senate report recommended that, "the proposed Department of Rural Affairs should also conduct a study of the program (CF program) to assess the potential of expanding the size of loans that the program makes available."¹¹

RECOMMENDATION 2:
WD Program Managers need to review the recent shift in WD priorities to determine how the CF Program should respond in the future.

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