Enabling the innovative use of Transfer Payments
Experimental new approaches to existing problems
How do you leverage the most out of government spending, while fostering a culture of experimentation and innovation?
Changing citizen expectations, coupled with fundamental demographic shifts and highly complex policy challenges demand more agile and adaptive responses from governments around the world. Applying new ideas and tools to stubborn problems and promoting continuous improvement with limited resources is the key. This requires experimenting and measuring: determining what works and redirecting resources where they can have the biggest impact.
That is why the President of the Treasury Board, as part of his mandate, is pushing departments and agencies to devote a fixed percentage of program funds to experimental new approaches to existing problems. Fundamentally, this is about a culture of measurement, evaluation and innovation built into the design and delivery of programs and policy.
The Treasury Board Secretariat is giving departments new paths for distributing government grants and contribution programs that aim to solve existing problems. The new TBS approach, entitled generic terms and conditions, applies to all departments and agencies covered by the Treasury Board Policy on Transfer Payments.
New paths for delivering government grants and contribution programs
These are specific terms and conditions that create authorities, provisions, and exceptions in grants and contributions programs. Three specific categories have been approved, effective April 1, 2017, and will be leveraged over the course of the 5-year pilot:
- Incentive-based funding mechanisms allow organizations to pay for outcomes rather than for activities. Government, service providers, and investors will be able to work together under one outcomes-based payment model. Pre-determined performance outcomes may be negotiated before starting a project, with payments then directly linked to the achievement of these outcomes.
- Prizes/challenges are grants used to meet a significant challenge where a satisfactory solution has yet to be found. They are best used in situations where a clear objective exists, where there are many potential problem solvers, and where problem solvers are willing to bear the up-front costs and risks associated with meeting or taking on the challenge.
- Micro-funding provides low-dollar value payments (up to $1,000) to individuals or not-for-profit organizations for targeted reasons, in situations where such grants are considered low risk. This instrument can mobilize individual and small-scale community actions to achieve progress in specific policy areas (for example, reconciliation and inclusion).
Experimental methods to test different approaches
This pilot is an excellent opportunity to use experimental methods to test different approaches, successfully adopted in jurisdictions such as the US, UK, and Australia, and to determine which ones are most effective. With these insights, the Government of Canada is better able to invest in what works.
These tools will help the Government of Canada make the transition from funding based on tasks and activities to funding based on the achievement of concrete goals. It is fundamentally about evidence-based decision making and generating better value for money.
The introduction of generic terms and conditions, terminology aside, has the potential to create real benefits for Canadians, and to do so faster and more effectively than has been the case to date.
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