Contributions to Support Aboriginal Participation in the Northern Economy - Transfer Payment Program Terms and Conditions

1. Summary

The Canadian Northern Economic Development Agency (CanNor) (the Department) works to create a diversified, sustainable, and dynamic economy across Canada's three territories that supports prosperity for all Northerners, Aboriginal people and their communities.

When CanNor was established in 2009, it received responsibility for regionally-based Aboriginal Economic Development programs supporting community economic and business development, and has coordinated delivery with its regional programming of general application.

Through the Northern Aboriginal Economic Opportunities Program (NAEOP) CanNor supports increased participation by northern Inuit, Métis and First Nations communities and businesses in economic opportunities.

Support under NAEOP is complementary to the support for Northern Aboriginal people provided through programs of general application and Aboriginal Affairs and Northern Development Canada (AANDC)'s programs of national application.

NAEOP comprises two program streams:

Community Readiness and Opportunities Planning (CROP) provides project-based support to First Nations and Inuit communities and organizations, including organizations providing business development, financial or economic development services under this authority, for capacity and readiness activities so that communities are able to plan for, pursue and participate in economic opportunities. The Department may allocate a portion of CROP to non-project support to First Nations and Inuit communities and their mandated organizations to enhance their economic development capacity.

Entrepreneurship and Business Development (EBD) assists Aboriginal entrepreneurs, Aboriginal businesses and Aboriginal organizations in the pursuit of economic opportunities for the benefit of Aboriginal people. The stream includes project-based support for activities that facilitate the establishment or expansion of Aboriginal businesses

NAEOP will use set, fixed and flexible contribution funding approaches for transfer payments to Aboriginal recipients, as described in the Directive on Transfer Payments (Appendix K: Transfer Payments to Aboriginal recipients) and according to the Department's framework for the management of transfer payments.

NAEOP applies to a category of recipients, and includes components specifically targeted to Aboriginal communities, Aboriginal organizations, Aboriginal people and Aboriginal businesses.

2. Legal and Policy Authority

The authority for contributions under these Terms and Conditions is granted under:

Orders in Council P.C. 2009-1422/1432 – Creation of the Canadian Northern Economic Development Agency

3. Purpose, Objectives and Expected Results

The purpose of these Terms and Conditions is to establish the policy and criteria for the administration of financial assistance under NAEOP.

Overall, the Program supports greater participation by northern Aboriginal communities and businesses in the Canadian economy and enables Aboriginal people to pursue opportunities for employment, income, and wealth creation.

Community Readiness and Opportunities Planning aims to:

• enhance the economic development capacity of Aboriginal communities;
• increase economic development by supporting Aboriginal communities in their pursuit of, and participation in, economic opportunities.

Entrepreneurship and Business Development aims to:

• increase the number of viable Aboriginal businesses and to provide a supportive business environment for Aboriginal people in the territories;
• cultivate a culture of entrepreneurship in the Aboriginal community and to improve access to Aboriginal economic opportunities;
• establish, expand and diversify the network of Aboriginal financial and business development organizations providing developmental capital in Canada, that are functionally complementary to the mainstream financial sector;
• enhance access to capital for Aboriginal businesses in the territories that have difficulty in obtaining conventional commercial financing;
• enhance the capacity of Aboriginal financial and business development organizations to provide financial services, business information, and developmental support services;
• increase Aboriginal participation in economic benefits from resource development.

Performance indicators that apply to the Program are included in a more detailed program Performance Measurement Strategy.

The Program's expected results align with CanNor's strategic outcome of developed and diversified territorial economies that support prosperity for all Northerners, and are included in the program Performance Measurement Strategy.

4. Eligible Recipients

Eligible recipients may fall within the following categories:

5. Eligible Initiatives and Projects

Eligible activities under Community Readiness and Opportunity Planning include:

• Activities for Aboriginal communities to respond to, pursue and participate in economic opportunities;
• Activities to enhance the economic development capacity of communities, including: community economic development planning, capacity development initiatives, development of proposals, leveraging of financial resources, performance of economic development activities, access to technical and professional expertise and advisory services;
• Pursuit of employment opportunities for community members;
• Development of resources under community control;
• Access to opportunities from resources not under community control;
• Promotion of investment in the community, including engagement and negotiation with potential partners in economic opportunities;
• Research, analysis and advocacy;
• Support for business development and economic development organizations or associations that provide business development, financial or economic development services to Aboriginal individuals, Aboriginal businesses or Aboriginal communities under this authority. Support can include operating costs, organizational support, training and development required for these organizations or associations to carry out these activities.

In cases where funding under the Community Readiness and Opportunities Planning stream is allocated, eligible activities include:

• Community economic development and support services;
• Development of community organizational capacity.

Eligible activities under Entrepreneurship and Business Development include:

• Business advisory and entrepreneurship development, including negotiations, mentoring, coaching, referrals, opportunity identification (domestic and international), partnership building/brokering, identification of sources of private capital;
• Planning and research activities, including: pre-feasibility and feasibility studies, market assessments, business and financial planning, environmental evaluation, information gathering, and diagnostic studies; construction, architectural, engineering and project design activities;
• Skills and capacity development, including developmental support in the areas of governance, organizational design, financial management, and business development;
• Commercial ventures
  • Capital to support the establishment, acquisition by way of capital assets or share purchases, expansion or modernization of a business venture carrying on business in Canada; or related to business development
  • Operating costs: such as for start-ups and short term operating costs where essential to the success of a business venture carrying on business in Canada.
• Market development and promotion, including: marketing, advertising, promotion, trade shows, export development, trade missions, forums, seminars, conferences and other similar events;
• Infrastructure development
• Innovation, including: research and development, product or process development, productivity improvement and quality control, information highway and advanced technologies access, and quality improvement;
• Advocacy in support of Aboriginal businesses and entrepreneurs, and sources of financing available to Aboriginal people;
• Capitalization, including: the establishment, expansion or diversification of financial instruments for Aboriginal businesses and entrepreneurs;
• Development of community-owned and community member businesses, including equity financing for community-owned and community member businesses.

6. Eligible Expenditures

Contributions will be made towards eligible project costs that may include, but are not limited to:

• Salaries, wages and benefits
• Travel
• Overhead, including, but not limited to, rent, utilities, supplies, minor repairs and maintenance, accounting and audit services, and insurance
• Professional, consulting, advisory and other services
• Costs associated with acquiring and providing business, financial and economic development services
• Attendance at or participation in training and professional development programs, conferences, workshops, seminars, events and meetings
• Preparation, organization and delivery of conferences, workshops, seminars, events and meetings
• Preparation, organization and delivery of training and professional development
• Work experience
• Communications costs
• Feasibility studies, marketing, advertising and promotion
• Financial capital: seed capital and capitalization costs

Economic infrastructure:

• Capital costs relating to economic infrastructure or the establishment, acquisition, expansion or modernization of commercial operations
• Minor machinery and equipment

Ineligible expenditures include:

• Any community economic development costs that would be incurred in the absence of NAEOP –Community Readiness and Opportunity Planning component
• Payments for services that would normally be provided without charge
• Expenditures for economic development services provided by CanNor or AANDC or funded through other federal departments
• Expenditures not related to economic development

7. Stacking Limits

The stacking limit maximum level of funding to a recipient from all sources (including federal, provincial/territorial and/or municipal) for any one activity, initiative or project is 100% of eligible costs. Limits specific to the program streams will be provided in the Program Management Control Framework.

All recipients of financial assistance under these terms and conditions will be required to inform the Minister of any government (federal, provincial / territorial, municipal) financial assistance received or expected to be received prior to the approval of the contribution. Furthermore, the funding agreements will contain continuing disclosure obligation (for the duration of the agreements) concerning other government assistance. Provisions for repayment shall be included in the funding agreements.

8. Method for Determining the Amount of Funding

The amount of funding is determined based on review and consideration of the proposal, and taking into account: the relevance of the proposal to the program's objectives, expected economic benefits accruing to Aboriginal individuals, businesses or communities; and the demonstrated need for federal funding.

Contributions will be determined based on the minimum level amount to ensure that the project or initiative is realized in accordance with the proposed time-frame, scope and location.

In cases where funding is allocated, various factors will be taken into account, such as the population of an eligible community.

9. Maximum Amount Payable

The maximum amount payable to an eligible recipient for a project will not exceed 100% of the eligible project costs and may not exceed $3,000,000 per annum.

10. Basis on Which Payments will be Made

Assistance will be administered and paid according to specific funding agreements between the Minister and the recipient, which will identify the conditions of the assistance, the obligations of both parties and the conditions under which payment will be made.

Payments will be made based on the achievement of pre-determined performance expectations or milestones and/or documented claims for eligible costs incurred and paid or financial statements.

Claims for payments will be certified by officials designated by the Minster as per the requirements of the Financial Administration Act.

Where it is essential to the achievement of the program objectives and specifically provided for in the funding arrangement, advance payments may be made in accordance with the cash management provisions of the Directive on Transfer Payments.

A holdback portion of any payment will be realized when deemed appropriate based on the risk of non-performance or overpayment.

11. Information (Application) Requirements

Prospective recipients will be required to submit sufficient information to determine that they are eligible recipients as well as any information required to assess the recipient and/or project against the program assessment criteria. This includes, but is not limited to:

• Full name and description of the applicant;
• Information on the legal and financial status of the applicant;
• A description of the management and organizational capacity of the applicant;
• A detailed description of the proposed project and description of activities to be undertaken;
• Timelines for the project;
• A cost forecast of the project as well as details of financing, including all sources of funding for the project;
• Anticipated economic benefits of the project, including expected outcomes and proposed performance measures; and
• Any other information considered necessary by the Department.

In some cases, including cases where funding is allocated, additional information may be required, which may include any of:

• A strategic or business plan that addresses: use of funds; identification and justification of costs and activities; and where appropriate addresses compliance with laws and regulations; environmental effects and proposed mitigation measures; land tenure requirements; and maintenance;
• Documents indicating the interest, or need, or support for the project by Aboriginal individuals, Aboriginal communities, Aboriginal businesses or Aboriginal organizations
• Relevant documentation related to partnership arrangements and commitments;
• Other corporate documents, such as articles of incorporation, by-laws and corporate policies and procedures manuals;
• Documentation related to the applicant's legal structure, ownership and control, and dividend policies to determine whether dividends may be paid or distributed;
• Documentation related to the applicant's client application and approval process, portfolio management guidelines, general policies, organizational structure and administration, and shareholder accountability, as relevant given the nature of the project;
• Documents related to the business's or project's financing gap.

12. Assessment Criteria

Types and levels of assistance will be commensurate with assessment of the risk involved, the resources of the recipient and the benefit to the Aboriginal community or business. Assistance will generally be determined on the basis that the amount and level are the minimum required to ensure that the project proceeds in the timing, scope and location approved, and in keeping with the forecast benefits to the Aboriginal community or business.

The assessment of the required level of funding will take into consideration all other sources of funding available to the recipient. The assessment of the required level of assistance will take into consideration the total government assistance (federal, provincial/territorial and municipal assistance) towards the eligible costs supported by the contribution. This includes assistance such as all grants and contributions being considered, implicit subsidies, forgivable loans, investment tax credits and any other grant or contribution.

Requests for assistance will also be assessed on the basis of their relevance to the program objectives. Assistance will be provided only to those initiatives that would not otherwise proceed in the proposed location, proposed scope, or proposed time without such assistance.

The following assessment criteria will be used as appropriate and relevant to determine the need, the amount and level, and the type of assistance to be offered:

• The project or activity has the potential for generating net economic benefit to Aboriginal people in the territories;
• The demonstrated management capacity and business expertise of the eligible recipient in relation to the project;
• The ability of the eligible recipient to obtain financing for the project;
• The amount of any federal, territorial or municipal assistance or tax credit that is likely to be relevant to the project;
• The resources of the eligible recipient that could reasonably be expected to be contributed to the project;
• The probable cost of each job likely to be created or maintained for an Aboriginal person as a result of the proposed project;
• The recipient has demonstrated that the assistance is necessary to ensure that the project or activity proceeds with the desired scope and timing in the desired location;
• The impact of the proposed project on the environment;
• The relationship of the project to federal government national and regional economic strategies and priorities;
• Any other criteria that the department may deem appropriate.

For business development and economic development organizations or associations that provide business development, financial or economic development services and activities under this authority, additional assessment criteria may include:

• Demonstrated need for the service or activity;
• Demonstrated governance, management and service delivery capacity;
• Experience in dealing with Aboriginal clients and related understanding of financial constraints experienced by Aboriginal businesses and entrepreneurs;
• Demonstrated ability to offer financial and economic development services to Aboriginal communities and businesses, and utilize non-traditional approaches to risk assessment and security;
• A plan or documentation that demonstrates operating performance.

13. Monitoring and Reporting Mechanisms

The level of detail in reporting that is required from the recipient of a contribution will be aligned with the risk of the project and may include schedules, plans, and reports in sufficient detail to enable the Department to:

• Assess the progress of the project;
• Assess the financial status of the project/recipient;
• Carry out the post-completion monitoring called for in the funding arrangement;
• Administer the repayment of the contribution where applicable; and
• Evaluate the effectiveness of the contribution.

Reporting requirements will be determined by the Department for each project or initiative. Progress and financial reports will be required from recipients at a minimum on an annual basis. Recipients will also be required to submit a final report at the conclusion of a project, in accordance with the terms of the funding arrangement, for review and acceptance by the Department.

A process to monitor each project funded under this authority will be developed and managed by the Department. The purpose of the monitoring process will be to gather periodic information regarding the progress of the initiative against the milestones proposed in the application and to identify unanticipated risks or impediments to achieving intended results.

The evaluation process or criteria to be used to assess the effectiveness of the contribution program may include, but is not limited to, program/initiative rationale, success, cost-effectiveness, and design and delivery, the results achieved and the nature of impacts and effects resulting from the implementation of programs.

Further details are set out in a Program Performance Measurement Strategy, consistent with the requirements in the Policy on Transfer Payments.

14. Redistribution of Contributions

Where a recipient delegates authority or further distributes contribution funding to an agency (e.g. an authority, board, committee, association, organization, development corporation or other entity authorized to act on behalf of the recipient), the recipient shall remain liable to the Department for the performance of its obligations under the funding agreement. Neither the objectives of the programs, nor the expectations of transparent, fair and equitable service shall be compromised by this delegation or redistribution of contribution funding.

15. Repayable and Conditionally Repayable Contributions

Contributions may be conditionally or unconditionally repayable and funding agreements will contain the factors that determine whether and how the repayment is to be made and the amount of the repayment, the terms of repayment, and a description of the process to be used to monitor funding agreements and establish when repayments are due. The agreements will take into consideration the particular capacities and concerns of the business.

Contributions to commercial entities will normally be conditionally repayable. Repayment is provisional upon specific conditions occurring or being met. The amount to be repaid is to be commensurate with benefits which accrue to the recipient from the project. Specifically, the amount to be repaid will be based on success factors such as the achievement of sales forecasts, the expected return on investment, the recipient's financial position and ability to repay. Where due diligence indicates that the commercial entity's ability to repay the contribution is not dependent on the achievement of the success factors of the project, the contribution will be unconditionally repayable. Unconditionally repayable contributions are those which must be repaid, in part or in full, irrespective of the benefits resulting from the project.

The establishment of a repayment period will be based on such factors as the useful life of the funded assets, the duration of the project, the period during which the recipient will realize the benefits of the project, and the recipient's financial position and ability to repay.

The terms of repayment are to be based on a fixed time schedule with due consideration to any seasonal nature of a recipient's operation with provisions for full repayment by a specified due date, not exceeding a period of 10 years from the project's completion date.

Recipients may be exempt from the requirement to repay a contribution when one or more of the following apply:

• The contribution is less than $100,000 and the administrative burden of repayable contributions is not justified;
• The recipient is a not-for-profit organization;
• The benefits from the contribution accrue broadly rather than to the recipient;
• The recipient is an Aboriginal-controlled business whose articles of incorporation do not permit dividends to be paid or distributed to shareholders.

The Department's corporate finance systems will be used to assist with the verification of invoice dates, appropriate follow-up on overdue accounts, viability reviews, collections or rescheduling decisions, and the handling of defaulted accounts.

16. Official Languages

Implementation of activities will respect the requirements stipulated in the Official Languages Act, related regulations, and federal government policies. Compliance will be achieved by ensuring that all external communications and public consultations and associated documents will be in both official languages.

17. Other Terms and Conditions

Changes in Program Funding
The Department undertakes to allocate adequate financial resources for the effective management of the contribution program. Funding agreements and information literature will provide for cancellation or reduction of payments in the event that funding levels are changed by Parliament.

Intellectual Property
The Department will retain the right to use intellectual property created by a recipient that is a direct result of an authorized contribution.

Public Acknowledgement and Recognition
The recipients of contributions approved under this program shall give appropriate recognition and acknowledgement of the contribution to the project in all promotional programs, advertising and related publications. Recognition of Canada's support of the project will be in accordance with the Federal Identity Program.