Program Impact

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

• To what extent has the CF Program provided appropriate information, referrals and counselling to clients?
• To what extent has the CF Program improved business knowledge and skills of clients?
• To what extent has the CF Program created new business start-ups or strengthened existing businesses?
• To what extent is the CF Program serving the needs of Official Languages Minority Communities (OLMCs)?
• Have CFs been involved in developing community strategic plans? To what extent are CF activities linked to community plans?
• To what extent has the CF Program supported long term outcomes: community economic development; assisting communities to develop and diversify their economies; and strengthening community capacity?

Findings

The overall findings of the Program Impact section are:

• the CFs are providing much needed information, referral and counselling to clients;
• clients are applying what they learn from the CFs to their businesses;
• the CFs continue to support new businesses but seem to be providing less support to existing businesses;
• approximately 70% of new and existing businesses would have somewhat or very unlikely not been able to start and maintain/expand without the CF loans;
• the CF program is serving clients in their language of choice;
• there is strong expressed need for community strategic planning and CED related activities;
• CFs level of involvement in CED varies from one CF to the next; and
• there is some evidence that CF activities support diversification of communities and some evidence that CFs are strengthening community capacity.

The following sections further elaborate on each of these findings.

Appropriateness of Information, Referral and Counselling Services to Clients

Appropriate information, referral and counselling services are being offered and clients have a high level of satisfaction with the services. However, the volume of reported services has been declining over the last few years.

Clients were provided a list of the various services provided by CFs and asked whether or not their was a continued need for the service (scale of 1 to 4 where 1 = no need and 4 = great need), how often they access the services (scale of 1 to 4 where 1 = never and 4 = often), and their level of satisfaction with the services (scale of 1 to 4 where 1 = not at all satisfied and 4 = very satisfied). The majority of clients indicated a high level of need for the services (reported somewhat or great need) and a high level of satisfaction (reported being somewhat or very satisfied) for CF services. They more frequently used information, counselling and referral services than financing and training (see Figure 7 below).

Figure 7: Clients Belief in Need, Use and Satisfaction of CF Services

There is an alignment between CF and Client perceived need for services. Both groups indicate a high level of need for information, referral and counselling services (see Figure 8 below).

Figure 8: Survey Respondents Belief in Some or Great Need for CF Services

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The administrative data demonstrates that the number of reported services being offered to clients has been declining over the last 6 years. WD program managers caution that this decline in reporting could be associated with enhanCED scrutiny of data input rather than a decrease in the number of services being offered. Other factors, as indicated in section 3.1.6 could have contributed to this decline.

Certain CF managers mentioned that business services tend to decline when the economy is strong and tend to increase when the economy is weak. Using two indicators of the state of the economy (unemployment rate and GDP), regression analyses for each province and for all provinces combined corroborates the CF's managers claims. When all the four provinces are combined, the associations between the number of business services provided with unemployment rate was significant.  In fact, the analysis shows that the decrease in employment rate explained 62% of the variation in the number of business services provided. When analysing each province separately, the results indicate that the variation in business services is significantly associated with variation of unemployment rate and GDP, except for Saskatchewan where the association of business services and GDP was not significant.

In summary, while a large variation of the decline in business services offered can be explained by the state of the economy in the west during the last 6 years, other factors as explained in the previous section (3.16) could have also contributed to the decline.

Figure 9: Number of Services Provided per Province and in Total (services include advice, training and skill development)

The administrative data also shows that the number of reported jobs being created through CF offered business services has been declining over the last few years (see Figure 10 below). 

Figure 10: Number of Jobs Created/Maintained as a Result of Business Services offered by CFs

Clients were asked to identify business services that are needed in their community but that are not currently available. Roughly 25% of those surveyed provided suggestions for additional services. The services that were most frequently mentioned are listed below:

• Additional training and support for bookkeeping - mentioned most frequently as an area of need. The training is needed because new entrepreneurs cannot afford to pay for bookkeepers and often lack the skills to keep proper records;
• Additional training and support for marketing/advertising;
• Mentoring programs that provide new entrepreneurs with a sounding board for their ideas and challenges;
• Incubator facilities that have ongoing support and office space;
• Low cost networking opportunities with other entrepreneurs, financers, customers (outside of immediate region);
• Training/assistance for expansion and growth particularly in relation to HR issues and exporting;
• Courses available on-line, in areas that are not immediately served by a CF, to enable entrepreneurs to complete courses at their leisure; and
• First Nations specific courses (e.g. training, networking, mentoring, financing, etc.).

Some of these services are offered by some CFs and are referred to in greater details in the "Noteworthy Practices" section of the case studies (see Appendix I).

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Impact on Business Knowledge and Skills of Clients

CFs are having an impact when it comes to improving the business knowledge and skills of their clients.  

According to the CF Survey, 100% of respondents agree that the CF Program has contributed to the business knowledge and skills of its clients. Interviews with a sample of CFs further corroborated this. Interviewees stated that CFs contribute to improvements by offering training/education, workshops, skill-set building and one-on-one coaching with clients.

The client survey revealed that 74.3% of respondents think that their local CF has been somewhat or very successful in improving business skills and knowledge of businesses. Only a small percentage indicated that their CF was not successful (7.5%) and the remainder did not know (17.6%). Clients primarily use CF imparted knowledge and skills for business marketing, for the financial management of their business and to complete funding applications (see Figure 11 below).

Figure 11: Client use for CF Information/Advice

Impact on Creation and Strengthening of Businesses

The CF Program continues to lead to the creation of new businesses and, to some extent, the strengthening of existing businesses. 

All interviewees (External Stakeholders, WD senior managers, WD program managers and the CF sample) agree that the CF Program has had a positive impact on the creation and/or the strengthening of SMEs. According to interviewees, evidence of positive contribution includes: the number of loans (access to capital), large number of businesses and jobs created, and the number of business counseling services offered.

According to the CF Survey, 100% of respondents agree that the CF Program has been somewhat or very successful in contributing to SME creation; 99.2% agree that the CF Program has been somewhat or very successful in contributing to SME maintenance. 

The majority (72.3%) of respondents to the client survey agree that their local CF has been somewhat or very successful at creating businesses but fewer (64.8%) agree that their local CF has been somewhat or very successful in maintaining businesses in their community.

New business owners, for the most part, indicated that it would be very unlikely (44%) or somewhat unlikely (29%) that they would have been able to start their business without CF support. A smaller portion of existing business owners thought it would be very unlikely  (31%) that they would have been able to maintain/expand their business without CF funding while more thought it would be somewhat unlikely (40%).

Figure 12: Client Likelihood of Starting/Expanding Business without CF Funding

The suggestion that the program may be more relevant to new businesses than existing businesses is supported by the administrative data. The data shows that the number of loans to existing businesses has been declining over the years while the number of loans to new businesses has remained relatively stable (see Figure 13 and 14 below).

This decline is explained in a significant part by the state of the economy in the west in the last 6 years, as explained in the section 3.1.2, and to other factors, as explained in section 3.1.6.

Figure 13: Number of Loans to Existing Businesses

Figure 14: Number of Loans to New Businesses

There are still a number of jobs being created out of loans (27,823 over the last 6 years) but the overall number of jobs created has declined from 2002/03 (5,402) to 2007/08 (4,369).

Figure 15: Number of Jobs Created out of Loans

The impact on businesses can also be measured by examining the ability of businesses to leverage other funds.  The administrative data on leveraging showed large variations from year to year with no consistent trends across provinces and years. On average, CFs were able to leverage $1.34 from other sources (including owner's equity) for each one dollar of their loans. The client survey revealed that 31% of new businesses and 27% of existing businesses were able to access additional funding to start up their business because of the loan they received from the CF program. Financial institutions were the primary providers of additional funds for both new and existing businesses (see Figure 16). Businesses were able to leverage funds ranging anywhere from less than $5K to more than $150K (see Figure 17).

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Figure 16: Sources of Additional Funding

Figure 17: Value of Additional Funding

 
The case studies found evidence of positive contribution to the creation and/or expansion of SMEs as noted through market diversification, number of business start-ups, training opportunities, assessment of new market potential, etc.

Program Impact Short-term: Language of Choice

The CF Program is serving clients in their language of choice.

The vast majority of clients (97.5%) stated that they were able to access services in their official language of choice. A small percentage (2.5%) said they were not. All interviewees agree that advice, service and support is delivered in both official languages, where required. Interviewees did not identify any challenges in providing services in French. CFs are in the practice of referring French speaking clients to the Francophone Economic Development Organizations (FEDOs). Interviewees stated that this was an effective system. The effectiveness of the system is further supported by the Office of the Commissioner of Official Languages in a 2005 Audit of the Community Futures Development Corporations and Community Business Development Corporations.¹⁶

Program Impact Intermediate: Community Economic Development

CFs continue to be involved in community economic development and there is a strong expressed need for CED related work. Some CFs have combined efforts to lead a trend towards broad regional economic development initiatives, using innovative economic development and planning tools.

Number and Type of CED Projects
WD Program Managers and CF interviewees reported a wide range of numbers and types of CED activities. The number of CED projects they reported ranged from 2 to 25 exercises annually. There is a general perception that CED work is vital, essential and crucial. The perception among interviewees is that WD's support for CED related work has varied over the last five years; reflecting to some extent the vision and priorities of the governing party of the day. At one point CFs could make a case for and apply to WD for additional funding to support specific CED projects. The perception is that this type of financial support is no longer being offered by WD. CFs are being encouraged to pay increasing attention to business financing and business services.  As a result, interviewees from BC indicated that CED projects were undertaken much more in the past than at the current time. Regardless of WD's current focus, representatives from MB still see CED as their primary focus, recognizing that it is a sub-set of Business Development.

The case studies comprised a review of administrative data from 1999/00 to 2006 of long-term (LT) and short-term (ST) CED projects. Data on LT and ST CED is not available for 2006/07 and 2007/08 due to the move to a new performance measurement system, which did not include the same indicators. The data reveals that during this time period on average the level of LT and ST CED projects has remained relatively stable. The level of CED activity in BC rose over this time period and declined in AB (see Figure 18 below).  The decline in CED activities in Alberta could be a reflection of the strong economy in the province during that period. The regression analysis indicates that the decrease in unemployment rate and the increase in GDP explained 52% and 63% of the variation in the number of LT and ST CED projects. One CF manager revealed that the decline is also due to some communities not willing to collaborate on CED initiatives. Other factors, as explained in section 3.1.6 could have contributed to the decline of CED activities in Alberta.

Figure 18: Long-term (LT) and short term (ST) Community Economic Development Projects Initiated

The level of reported involvement in CED project in the CF survey is not as high as that found in the administrative data. Administrative data would indicate that CFs are managing on average 17 CED projects per year.  Almost all CF survey respondents (99.1%) indicated that they are very involved in community economic development. The majority of CFs reported being involved in 1-5 projects per year. The level of involvement in CED projects ranged from 1 to 5 per year to more than 15 per year (2 individuals reported 16 projects per year and one reported 20 projects per year) (see Figure 19 below). The case studies further corroborate this level of involvement.
Case studies highlight some of the noteworthy CED initiatives in the 10 CFs assessed that show the diversity, the size, and the degree of success (Appendix H) of those initiatives.

Furthermore, the case studies indicate that some CFs are combining efforts to work with other level of governments on broader initiatives with regional scope. Some of these initiatives (Appendix H) were very successful in attracting businesses and tourists to the communities, hence contributing to economic growth and sustainability of the economy. Other CFs were very instrumental in leading strategic planning and visioning exercises to develop growth strategies in the areas they served. Furthermore, some CFs used external expertise to develop leading edge tools for community economic development planning. Examples of these tools include "Land Use Mapping" and "Asset Mapping" which are two tools that have been used by some CFs and their partners for economic development and planning. These tools are captured under the noteworthy practices section (Appendix I).

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Figure 19: Number of CED Projects Reported by CF Survey Respondents

Client's Need, Use, and Satisfaction with CED activities undertaken by CFs
Clients report a high level of need for CED related activities and are satisfied with the CED related services that the CFs are providing. Clients more frequently access services related to the promotion of the community than planning exercises for the community (see Figure 20 below).

Figure 20: Clients' Belief in Need, Use and Satisfaction with CED Services

CFs and Clients report a similar amount of need for CED related activities. However, more Clients report some or great need for assistance with development of community strategic plans than do CFs (See Figure 21 below).

Figure 21: Survey Respondents Belief in Some or Great Need for CED Services

Partnerships Development by CFs as a Result of CED activities
All interviewees think that the efforts of the CFs have led to the development of partnerships, although several persons remarked that the number of partnerships varies from one CF to the next.  Partnerships have been established with: Governments (Federal, Provincial, Municipal), private sector organizations, local businesses, high profile entrepreneurs, provincially-funded economic development corporations, Aboriginal groups/First Nation associations, local banks or credit unions, Chambers of Commerce, economic development officers/committees, Canadian Youth Business Foundation, education institutions, etc.

The case studies also found that the number and diversity of partnerships varies across CFs. The trend is towards partnerships with regional scope (beyond the boundaries of a particular CF).

Based on recent administrative data, the total number of partnerships has increased from 1,731 partners in 2006/07 (average of 19 per CF) to 2,675 partners (average of 30 per CF) in 2007/08; an increase of 55%.  Alberta has had the largest increase in partnerships for this period of time, going from 456 partnerships in 2006/07 to 1,034 partnerships in 2007/08 (see Figure 22 below).

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Figure 22: Number of Partnerships Reported in Administrative Data

CF survey respondents indicated that they developed on average 24 partnerships per CF in the last 5 years. The number of new partnerships per CF ranged from 1-5 to 50 or more (see Figure 23 below). Evidence from the case studies indicate that over the last 2 fiscal years, the amount of money leveraged as a result of CF's CED activities ranged from $ 0 to $ 144, 454 per CF.

Figure 23: Number of Partnerships Developed by CF Survey Respondents over the Last 5 Years

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