Terms and Conditions for Grants and Contributions - Impact Canada Initiative

1. Introduction

The Impact Canada Initiative (ICI) supports the Government of Canada in adopting a horizontal and transformative grants and contributions programming approach to better solve public policy challenges and improve results for Canadians. The Government of Canada has recognized that it must be bold, ambitious and inventive in finding new ways to address persistent societal problems that traditional approaches have failed to solve. The ICI has been established to enable the acceleration and mainstreaming of challenge-oriented, outcomes-based, and innovative programs and projects to help address complex economic, environmental and social problems. The ICI fills an important gap in the Government of Canada’s grants and contributions programming toolkit as it: 1) establishes a mechanism to work with departments to achieve common objectives of improving outcomes for Canadians; and 2) employs innovative funding models.

The Impact Canada Initiative terms and conditions (hereinafter referred to as the “terms and conditions”) are built in a flexible manner to support departments in their experimentation with prizes, challenges, micro-funding, and other outcomes-based and innovative programming approaches. Through the support of the Centre of Expertise in the Privy Council Office, new program streams as well as individual departmental projects from pre-existing Treasury Board approved programs will be co-designed with departments and will apply rigorous evaluation methods to measure their impact.

The terms and conditions will support program streams under the ICI as approved by Treasury Board and outlined in program stream annexes.

The terms and conditions will also support individual departmental projects funded from pre-existing Treasury Board approved programs as follows:

  • Individual departmental projects where departments want to pursue innovative funding approaches, such as prizes, challenges, micro-funding and other outcomes-based approaches. For these departments, the terms and conditions will support a range of projects that advance the ICI objectives to contribute to the improvement of outcomes in high-priority areas for the Government of Canada.

2. Authority and financial instruments

2.1 Preliminary notes

The terms and conditions apply the following exceptions to the Treasury Board Directive on Transfer Payments:

  • The requirement in section 6.2.1 for ensuring that the amount of a proposed grant or contribution is at the minimum level required to further the attainment of the objectives of the transfer payment program and the results expected from the recipient, and that the amount is appropriate taking into account other sources of funding available to the recipient.
  • The requirement in section 6.2.2 for a stacking limit where funding is not dependent on eligible expenditures.
  • The requirement in section 6.4.5 for obtaining timely accounting from recipients.
  • The requirement in section 6.4.7 for ensuring that the total amount of contribution funding paid to a recipient under a funding agreement does not exceed the eligible expenditures actually incurred by the recipient in completing the project, or such portion of the these expenditures that was to be funded under the agreement.

The terms and conditions also apply the following exception from the Treasury Board Policy on Transfer Payments:

  • The requirement in section 6.5.4 to consult with the Secretary of the Treasury Board when a minister proposes to take action under section 6.3.4.

The Minister of Democratic Institutions will add individual departmental projects from pre-existing Treasury Board approved programs to the terms and conditions and approve and attach new project briefs to the terms and conditions. The Centre of Expertise within Privy Council Office will ensure that the added departments or agencies are provided with the terms and conditions and that a project brief for each project, including details on the design parameters of the project, will be attached to these terms and conditions.

In all cases, formal project approval is obtained by the partner department, specifically the Minister or the delegated authority for the existing Treasury Board approved program that is being used as the source of funds for the project.

2.2 Grants and contributions vote and budget

For program streams under the Impact Canada Initiative (ICI), the grants and contributions vote and budget are listed in the Program Stream Annexes.

Policy authorities have also been granted through the Memorandum to Cabinet: Improving Outcomes for Canadians through the Impact Canada Fund, ratified by Cabinet on June 1, 2017.

For Individual Departmental Projects, the Minister(s) of department(s) that successfully apply under the ICI and use the terms and conditions will be designated as the lead Minister(s) for individual departmental projects, having the authorities to make grants and contributions provided by the applicable authorities of that department. Departments must obtain Treasury Board approval to increase the size of the existing grant and contribution program that would be used as a source of funds for an individual departmental project.

2.3 Innovative Funding Models

This section outlines the funding models that may be used under the terms and conditions and provides information on the context for their use. The program streams and individual departmental projects that are using the terms and conditions may make use of several funding approaches outlined below. The ICI is designed to support prizes, challenges, micro-funding and outcomes-based and innovative programming approaches using grants and/or contributions. In particular, funding will support:

Prizes and challenges

  • The ability to issue outcomes-based prize and challenge awards as grants and/or contributions including in instances where recipients are not known in advance and no agreement is signed with a recipient in advance of achieving the outcomes set out in the prize or challenge, and awards are determined based on the value of the prize or challenge and not related to eligible expenditures or costs incurred by recipients. Prizes may be awarded as a contribution agreement with a recipient where payments may be tied to outcomes achieved. Prizes and challenges may also be delivered through grants and/or contributions approaches in line with the Treasury Board Policy of Transfer Payments where prizes and challenges operate on a staged approach and may not strictly pay on outcomes, and/or may blend these approaches, as appropriate (e.g., using reimbursement of eligible expenditures and/or the achievement of pre-determined performance expectations and/or milestones).
  • Prior to establishing a prize/challenge, departments will consult the Treasury Board of Canada Secretariat if a Special Purpose Allotment is needed to freeze the prize/challenge funding and, if the funding lapses at the end of the fiscal year, departments will obtain concurrence from the Department of Finance that the funding can be reprofiled into the next fiscal year. This process will be repeated annually until the prize is claimed or the timeframe has expired.

Pay-for-results

  • The ability to issue grant and/or contribution payments based on a recipient achieving results (i.e., outcomes), including the ability to pay on a contingent basis for results achieved or partially achieved, as well as the ability to pay premiums and/or returns on investment to investors in pay-for-results arrangements. Pay-for-results arrangements may include instruments such as those generally known as social/development impact bonds, performance grants, pay-for-success and other similar instruments.
  • Prior to establishing a pay-for-results arrangement, departments will consult the Treasury Board of Canada Secretariat to establish a Special Purpose Allotment if needed to freeze funding that is contingent on results achieved and, if the funding lapses at the end of the fiscal year, departments will obtain concurrence from the Department of Finance that the funding can be reprofiled into the next fiscal year. This process will be repeated annually until the funding that is contingent on results is claimed or the timeframe has expired.

Micro-funding

  • The ability to issue micro-funding as grants when there is potential to yield positive results through their issuance. Simple, straightforward eligibility criteria and a streamlined application process may be used for micro-funding. Recipients may be required to share the results from the micro-funding.

Under the terms and conditions, grants and/or contributions mechanisms may also be used as outlined in the Treasury Board Policy on Transfer Payments (e.g., reimbursement of eligible expenditures) in support of broader innovative approaches.

The choice between a grant and a contribution may be determined by the nature of the investment and the degree of assurance and oversight deemed necessary to achieve the results and safeguard the use of public funds in a manner that is sensitive to risks.

Departments have established procedures for grants and contributions management to guide managers in their analysis and use of the terms and conditions, which will be tailored to incorporate challenge and outcomes-based funding approaches as a result of participating in the ICI. As well, departments operating under the ICI will tailor their risk evaluation and management approaches for assessing projects to take into consideration the innovative programming standards established for the ICI and will have criteria for recipients to apply evaluations based on a rigorous standard of evidence.

3. Purpose, objectives and expected results and key performance indicators

3.1 Purpose and objectives

The objective of the Impact Canada Initiative (ICI) is to help address complex economic, environmental and social problems by accelerating and mainstreaming the adoption of challenge-oriented, outcomes-based, and innovative programs and projects. This is accomplished through a whole-of-government mechanism designed to support innovation, improve the measurement and impact of programs and spending, and help accelerate progress in areas of high priority for the Government of Canada. The terms and conditions are supported by a Centre of Expertise in the Privy Council Office with departments having the ability to issue grants and contributions.

3.2 Expected results and key performance indicators

Program streams and individual departmental projects under the Impact Canada Initiative (ICI) will measure their results in a causal manner, where possible and as appropriate. Each department’s program stream(s) and/or project(s) will determine their own specific results in accordance with their respective organization’s results environment, ensuring alignment with departmental results frameworks and program alignment architectures.

At the ICI level, the Privy Council Office Centre of Expertise will analyze the extent to which the means of program delivery (e.g., prize, challenge, pay-for-results) has added value (or not) from an outcomes achievement perspective. The ICI will begin to build an evidence base around the most effective means of program delivery in various contexts. It will also monitor results in terms of leveraging funding, and scaling and mainstreaming projects and collaborations formed as a result of the ICI.

The following table illustrates the expected results and related performance indicators for the ICI, which would be derived from results achieved at the program and project level as carried out through program streams and projects delivered by departments under the ICI.

Program activity: Impact Canada Initiative (overall)
Expected results Performance indicators
Leverage Funds leveraged from non-government sources (e.g., private and philanthropic capital)
Scale and Uptake Number, type, and reach of projects that are transitioned to scale and/or mainstreamed into broader government programming
Evidence of Effectiveness Increase in evidence of what works in the area of innovative funding

For program streams, results and performance indicators are identified in the respective Treasury Board Submissions.

For individual departmental projects, objectives and performance measurement obligations will be the same as those listed in the existing Treasury Board approved program that is being used as the source of funds for the project.

4. Eligible projects

The Impact Canada Initiative (ICI) is designed to foster ingenuity, apply experimental approaches through evidence-based interventions, and work horizontally across departments. Under the terms and conditions, prizes, challenges, micro-funding and other outcomes-based funding approaches are eligible for approved projects. Departments using the terms and conditions are responsible for approving projects and may enter into a funding agreement with a recipient where resulting activities and outcomes are consistent with the purpose and objectives of its existing transfer payment program(s) and contribute to the ICI objectives. To support this work, eligible projects may include those that:

  • utilize innovative and experimental program delivery approaches through the use of prizes, challenges, micro-funding and other outcomes-based funding approaches;
  • enable recipients to carry out project planning (e.g., conceptualization, feasibility studies, specifications or design) and project implementation (e.g., capacity-building, financial management and program delivery capacity);
  • provide funding to intermediary organizations to support program and/or project planning and implementation (e.g., financial structuring and intermediation among parties, fostering collaboration and community-building among various constituencies, and establishing communities of practice/community support partners for networking, civic engagement and knowledge sharing); and
  • assist with monitoring and evaluation to collect rigorous data on results.

5. Eligible recipients

Recipient eligibility established herein is at the Impact Canada Initiative (ICI) level. Maximum flexibility is required with regards to eligible recipients, given that certain prize and challenge winners and other recipients best placed to implement innovative programming may not be known in advance and may change over time. As such, the eligible recipients may include but are not limited to: provincial, territorial, regional, and municipal governments and agencies; Canadian Crown Corporations; international organizations; academic institutions; unincorporated groups, societies and coalitions; Indigenous governments and representative organizations; and entities that have legal personality recognized in domestic and/or international law, including but not limited to non-government organizations, social enterprises, private sector organizations, individuals and non-Canadian recipients.

Where there is a requirement to narrow the focus of eligible recipients to reflect specific program and/or project objectives, program guidelines and/or guides for applicants may be more restrictive to be administered by the responsible department(s).

For transfer payments to foreign recipients (e.g., international organizations, non-Canadian recipients), the outcomes/results of the contribution or grant funding will be of benefit to Canadians.

Crown Corporations are not eligible for ongoing operating or capital requirements through grants or contributions.

6. Eligible expenditures

Program streams and individual departmental projects under the Impact Canada Initiative (ICI) terms and conditions are able to apply the ICI exceptions to the Treasury Board Directive on Transfer Payments (as outlined in Section 2.1 of these terms and conditions). These exceptions will enable departments to enter into agreements, as applicable, with recipients for prizes, challenges and outcomes-based payment models in which eligible expenditures may not be considered as payments, but rather payment may be based, in whole or in part, according to outcomes achieved.

Eligible expenditures for grants and contributions delivered through grants and contributions mechanisms that are in line with the Treasury Board Policy on Transfer Payments (e.g., reimbursement of eligible expenditures) may include, but are not limited to: cost of personnel, such as salaries and benefits; cost of goods, such as commodities; cost of services and/or specific per diem fees; cost of capital expenditures; cost of travel and accommodations; cost of materials and supplies; cost of professional development and training; cost of honoraria; cost of rent and utilities; cost of equipment and related installation and/or maintenance; cost of evaluation and collection and analysis of data; cost of overhead expenditures as agreed to by the department; and other actual and reasonable expenditures.

Ineligible expenditures for grants and contributions delivered through grants and contributions mechanisms in line with the Treasury Board Policy on Transfer Payments (e.g., reimbursement of eligible expenditures) include, but are not limited to: costs incurred prior to a program or project start date, financing charges, and loan interest payments.

Expenditures directly related to approved projects are duly defined in the contribution agreement or grant agreement/arrangement.

Program streams and individual departmental projects under the terms and conditions may further define the type and nature of eligible and ineligible expenditures in program guidelines and/or guides for applicants.

7. Total Canadian government funding and stacking limits

Program streams and individual departmental projects under the Impact Canada Initiative (ICI) may utilize the exceptions to the Treasury Board Directive on Transfer Payments (as outlined in Section 2.1 of these terms and conditions) in relation to stacking limits to enable departments to enter into agreements with recipients using financial instruments that focus on outcomes-based payment models in which funding is not dependent on eligible expenditures.

For grant and contribution agreements that use funding mechanisms that are in line with the Treasury Board Policy on Transfer Payments (e.g., reimbursement of eligible expenditures), the maximum level (stacking limit) of total government funding (i.e., federal, provincial, territorial, and municipal) for a project will not exceed 100% of eligible expenditures.

8. Method of determining funding amount

An appropriate funding amount for grants or contributions is determined through the application assessment process described in Section 11. Departments use various tools and resources (e.g., evaluation grids, checklists, internal or external expertise) to determine the amount of each grant or contribution.

Prior to entry into a grant or contribution agreement, the funding decision must be analyzed and clearly documented. The depth of analysis carried out should be appropriate for the dollar value and complexity of the project and related risks.

9. Maximum amount payable

For program streams under the Impact Canada Initiative (ICI), the maximum amounts payable for grants and contributions are detailed in the program stream annexes. For individual departmental projects under the terms and conditions, maximum amounts payable for grants and contributions will be equal or lesser than the maximum amounts payable identified in the pre-existing Treasury Board approved program authorities.

For micro-funding, the maximum amount payable for a micro-grant to a recipient for any one project under the program streams and individual departmental projects is $25,000.

There are no restrictions to the number of approved projects an eligible recipient may undertake.

10. Basis of payment

The basis of payments, including advance payments, progress payments, and the achievement of pre-determined performance expectations, milestones and/or costing formula, will be in accordance with the Treasury Board Policy on Transfer Payments and the Directive on Transfer Payments.

  • Contribution progress payments may be made in the following manner:    
    • reimbursement of eligible expenditures; and/or
    • achievement of pre-determined performance expectations, milestones and/or costing formula.
     
  • Contribution advance payments are limited to the immediate cash requirements for approved activities and budgeted amounts, based on periodic cashflow forecasts.

When contribution advance payments are used, recipients are required to account for previous period cashflow spending prior to issuance of subsequent advance payments.

Prize, challenge, or pay-for-results funding models (as outlined in Section 2.3 of these terms and conditions) may use the achievement of pre-determined performance expectations, milestones and/or costing formula as the method of payment, with the required exceptions to the Treasury Board Directive on Transfer Payments (as outlined in Section 2.1 of these terms and conditions), as appropriate.

Transfer payments to Aboriginal recipients may also be provided in the form of fixed, flexible or block contribution funding, subject to Appendix K of the Treasury Board Directive on Transfer Payments.

Holdbacks for contributions may be applied to manage the risk of non-performance or overpayment to a recipient and are to be based on prudent risk management practices. The maximum holdback amount should not exceed 15 percent.

Final payments will be made once funding agreement requirements are completed.

Instalments or single payments of grants may be made.

11. Application requirements, assessment and reporting

Proposals or applications for funding may be solicited and/or directed by departments. Applications will be screened for eligibility as outlined in program guidelines and/or guides for applicants.

Applicants may be required to submit, as applicable:

  • documents demonstrating that it has legal personality;
  • governance documents (e.g., corporate governance guidelines, annual reports, codes of conduct, organizational chart);
  • the most recent financial statements (e.g., annual statements, preferably audited as per generally accepted auditing standards);
  • a detailed proposal (multi-year, where appropriate);
  • an estimated budget (multi-year, where applicable);
  • prior experience relating to the proposal;
  • an outcomes-based assessment framework for outcomes-based payments; and
  • supplementary information deemed essential to properly evaluate the proposal and the applicant (e.g., associates or affiliates, information required to meet Canadian regulatory requirements, tax exemption information, or citizenship of individuals).

Departments may also require applicants to submit additional information for the purpose of its evaluation of the fiduciary risk both at the recipient and project level.

Projects under these terms and conditions may be assessed using the following criteria:

  • objective rationale;
  • alignment with departmental program objectives;
  • relevance and quality of the proposal;
  • responsiveness to the solicitation and/or challenge;
  • merit in terms of expected results; and
  • compliance with specific program guidelines and criteria.

Reporting requirements will be determined on a project basis. Frequency and details of requirements for financial reporting of contributions will be established in compliance with departmental policies and will be defined in the funding agreement.

Performance monitoring will track progress using the process and selected indicators as outlined in Section 3.2. If results are not being realized as intended, decisions will be taken as appropriate to the specific project.

Programs will operate within the scope of the Conflict of Interest and Post-Employment Code for Public Office Holders, and the Conflict of Interest and Post-Employment Code for Public Service Employees.

12. Official languages

Departments using the Impact Canada Initiative (ICI) terms and conditions are committed to respecting their obligations under the Official Languages Act. Specifically, departments provide the following bilingual services to facilitate access to both linguistic communities:

  • application forms are available in both official languages;
  • general programming information and any notice, advertisement or other related matter are available in both official languages; and
  • applicants can communicate with and receive services in the official language of their choice.

Funding agreements will also outline obligations related to official languages. Departments will ensure that grant and contribution programs are managed in accordance with the federal government’s objectives regarding official languages.

13. Effective date and duration

The terms and conditions took effect on October 5, 2017, and will be ongoing. Specifically for the program streams, the terms and conditions will expire once all funding for that program has been disbursed and all agreements under that program have been completed to the satisfaction of the relevant Minister (including the receipt of any outcome or repayment reports, any required repayments, and/or completion and resolution of any outstanding audits).

For individual departmental projects under the Impact Canada Initiative, the duration of the project will be guided by the department’s pre-existing Treasury Board approved terms and conditions.

14. Redistribution of contributions

When the initial recipient disburses funds to an ultimate recipient, said recipients will have full independence and responsibility in the selection of ultimate recipients and will not act as an agent of the government. Grants cannot be further distributed.

15. Non-repayable contributions to for-profit organizations

If contributions allow a for-profit organization to generate profits or increase the value of the business, non-repayable contributions may be permitted where: 1) the contribution is less than $100,000, and the administrative burden of repayable contributions is not justified; 2) the benefits from the contributions accrue broadly rather than to the recipient; 3) the contribution is made with the primary aim of furthering basic research and development, including a payment made through a granting council or other government entity whose mandate is to promote research and development; or 4) the recipient is an Aboriginal-controlled business whose articles of incorporation do not permit dividends to be paid or distributed to shareholders.

Details for non-repayable contributions will be included in departmental program guidelines and/or guides for applicants of program streams and individual departmental projects to be administered by the responsible departments.

16. Intellectual property

Intellectual property created by a recipient will remain the property of the recipient. Where it is to the advantage of Canadians, and not detrimental to the goals of the recipients, the department may negotiate the shared use of intellectual property developed by recipients or through a third party. The rights to use this material may include further use of data for research purposes and/or publishing the intellectual property online, in printed documents and in publications.

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