Indigenous Services Canada falls short in transforming fiscal relationship with First Nations
New Fiscal Initiatives With First Nations
Report metadata
- Tabling date:
- Audited entities:
- Indigenous Services Canada
- Topics:
- Indigenous Affairs
- Business and industry
- Report type
- Auditor General reports
At a glance
Overall, Indigenous Services Canada did not effectively implement, monitor, or assess the New Fiscal Relationship initiatives it committed to with First Nations. The Government of Canada and the Assembly of First Nations agreed in 2016 to establish the initiatives to advance First Nations’ right to self‑determination and support efforts to close persistent socio‑economic gaps between First Nations and other Canadians.
Two of the commitments under the New Fiscal Relationship have not been met. First, the Default Prevention and Management Policy was not replaced with a new policy focusing on First Nations’ capacity development to prevent financial default. Second, a mutual accountability framework between First Nations, their citizens, and the federal government was not created. Such a framework was intended to strengthen accountability to First Nations citizens while establishing mutual accountability between Indigenous Services Canada and First Nations for commitments made and results achieved.
By the end of the 2024–25 fiscal year, the department had provided more than $6.5 billion in funding to First Nations through 10‑year grants—a key commitment of the new fiscal initiatives. A main objective of the grants is to provide long‑term, predictable, and flexible funding for First Nations.
To remain eligible to receive payments under the 10‑year grants, recipients must meet certain financial performance measures. The First Nations Financial Management Board supports the department in assessing these measures by producing monitoring reports based on an examination of each grant recipient’s audited financial statements. We found that only 39% of the grant recipients’ files we examined had the required monitoring report for all fiscal years. This reflects broader resourcing and access challenges, such as limited financial capacity and difficulties securing auditors.
We also found that Indigenous Services Canada did not assess whether the 10‑year grants were helping to address the disparities and inequities between First Nations and other Canadians and contributing to the new fiscal initiatives’ objective to advance First Nations’ right to self‑determination.
Key facts and findings
- In 2016, the federal government and the Assembly of First Nations agreed to provide more long‑term and predictable funding to First Nations. The intent was to move away from the past approach where funding was applied for and allocated for specific programs individually.
- As of September 2025, there were 191 First Nations, tribal councils, First Nations health authorities, and First Nations education authorities receiving funding through the 10‑year grants. All recipients that received a grant were eligible, and we found that payments aligned with the initial or adjusted payment schedules.
Why we did this audit
- One of the commitments of the new fiscal initiatives was to create 10‑year grants to provide predictable and flexible funding to First Nations so they can better plan for the long‑term and have more flexibility on how funds are allocated to improve outcomes for their citizens.
- Sufficient data and analysis are required by Indigenous Services Canada to determine whether the 10‑year grants are contributing to the new fiscal initiatives’ objectives to advance First Nations’ self‑determination and help close the socio‑economic gaps between First Nations and other Canadians
Highlights of our recommendations
- Indigenous Services Canada should provide additional support to First Nations, including 10‑year grant recipients, to increase their administrative and financial capacity to prepare financial statements.
- Indigenous Services Canada should leverage relevant data it collects from 10‑year grant recipients to measure, assess, and annually report on the extent to which the grant contributes to closing the socio‑economic gaps between First Nations receiving the grant and other Canadians.
Please see the full report to read our complete findings, analysis, recommendations and the audited organizations’ responses.
Exhibit Highlights
Exhibit 1—Milestones in the development of the 10 year grant
Text version
Exhibit 1—Milestones in the development of the 10‑year grant
This timeline shows the milestones related to the 10‑year grant for the period from 2016 to 2025 as follows:
•2016—Memorandum of understanding: Memorandum of Understanding Between the Assembly of First Nations and Indigenous and Northern Affairs Canada.
•2017—New fiscal relationship: Officials from the assembly and the department developed recommendations to support the establishment of a new fiscal relationship with First Nations.
•2019—Launch of the 10‑year grant: First Nations began to receive the 10‑year grant.
•2021—10‑year grant escalator: Introduction and implementation of the 10‑year grant escalator.
•2024—Expanding eligibility: First Nations–led service delivery organizations and self‑governing First Nations became eligible to apply for the 10‑year grant.
•2025—10‑year grant funding expanded: First Nations–led service delivery organizations began to receive the 10‑year grant.
Source: Based on information from Indigenous Services Canada
Source: Based on information from Indigenous Services Canada
Exhibit 2—There were 10 year grant recipients in all provinces
Text version
Exhibit 2—There were 10‑year grant recipients in all provinces
This map of Canada illustrates the distribution of 10‑year grant recipients across Canadian provinces, categorized into First Nations, tribal councils, health authorities, and education authorities. The map indicates a total of 191 recipients across all provinces, which consist of 173 First Nations, 15 tribal councils, 2 health authorities, and 1 education authority. The map also details the number of each recipient type within specific provinces as follows:
•British Columbia: 82 First Nations and 3 tribal councils
•Alberta: 5 First Nations, 1 tribal council, and 1 education authority
•Saskatchewan: 20 First Nations and 4 tribal councils
•Manitoba: 13 First Nations and 1 tribal council
•Ontario: 23 First Nations, 2 tribal councils, and 1 health authority
•Quebec: 14 First Nations, 1 tribal council, and 1 health authority
•Newfoundland and Labrador: 1 First Nation
•Prince Edward Island: 1 First Nation
•New Brunswick: 5 First Nations and 1 tribal council
•Nova Scotia: 9 First Nations and 2 tribal councils
Notes:
•Data is as of September 2025.
•First Nations have been receiving 10‑year grants since the 2019–20 fiscal year, while tribal councils, First Nations health authorities, and First Nations education authorities have been receiving 10‑year grants since the 2025–26 fiscal year.
Source: Based on information from Indigenous Services Canada
Notes:
- Data is as of September 2025.
- First Nations have been receiving 10‑year grants since the 2019–20 fiscal year, while tribal councils, First Nations health authorities, and First Nations education authorities have been receiving 10‑year grants since the 2025–26 fiscal year.
Source: Based on information from Indigenous Services Canada
Exhibit 3—A total of $6.5 billion in 10-year grant funding had been provided to First Nations by the end of the 2024–25 fiscal year
Text version
Exhibit 3—A total of $6.5 billion in 10‑year grant funding had been provided to First Nations by the end of the 2024–25 fiscal year
This bar chart illustrates the annual 10‑year grant funding provided to First Nations, measured in billions of dollars, across 6 fiscal years from 2019–20 to 2024–25.
Overall, the chart shows a consistent increase in 10‑year grant funding provided to First Nations each fiscal year, starting at $0.64 billion in 2019–20 and reaching $1.68 billion in 2024–25.
The data presented is as follows:
•In the 2019–20 fiscal year, funding was $0.64 billion.
•In the 2020–21 fiscal year, funding increased to $0.79 billion.
•In the 2021–22 fiscal year, funding increased to $0.91 billion.
•In the 2022–23 fiscal year, funding increased to $1.11 billion.
•In the 2023–24 fiscal year, funding increased $1.36 billion.
•In the 2024–25 fiscal year, funding increased to $1.68 billion.
Note: Final data for the 2025–26 fiscal year was not available at the time of our audit.
Source: Based on information from Indigenous Services Canada
Note: Final data for the 2025–26 fiscal year was not available at the time of our audit.
Source: Based on information from Indigenous Services Canada
Exhibit 4—The number of grant recipients increased every year from the 2019–20 fiscal year to September 2025
Text version
Exhibit 4—The number of grant recipients increased every year from the 2019–20 fiscal year to September 2025
This bar chart shows the number of 10‑year grant recipients from the 2019–20 to 2025–26 fiscal years.
Overall, the chart shows a consistent annual increase in the total number of 10‑year grant recipients, starting from 85 in the 2019–20 fiscal year and reaching 191 in the 2025–26 fiscal year.
The data presented is as follows:
•In the 2019–20 fiscal year, there were 85 First Nations receiving the grant.
•In the 2020–21 fiscal year, the number increased to 111 First Nations.
•In the 2021–22 fiscal year, the number increased to 117 First Nations.
•In the 2022–23 fiscal year, the number increased to 130 First Nations.
•In the 2023–24 fiscal year, the number increased to 143 First Nations.
•In the 2024–25 fiscal year, the number increased to 160 First Nations.
•In the 2025–26 fiscal year, the total number of recipients reached 191, consisting of 173 First Nations, 15 tribal councils, 2 health authorities, and 1 education authority.
Note: Tribal councils and other First Nations–led service organizations became eligible to apply for the 10‑year grant in 2024 and began receiving the grant starting in the 2025–26 fiscal year.
Source: Based on information from Indigenous Services Canada
Note: Tribal councils and other First Nations–led service delivery organizations became eligible to apply for the 10‑year grant in 2024 and began receiving the grant starting in the 2025–26 fiscal year.
Source: Based on information from Indigenous Services Canada