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:

  1. 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.
  2. 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.
  3. 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.

New Terms and Conditions for Grants and Contributions - Transcipt

The video opens with slowly moving black network web with nodes. Text fades in: “An idea whose time has come! New Terms and Conditions for Grants and Contributions. A new approach to delivering funds that provides better access for more organizations and individuals” Fade to image of man and woman walking in front of a building. The woman is holding a tablet. Fade back to moving black network web with nodes, with text fading in: “Encourages Innovation and Experimentation Across Sectors.” Fade to image of woman holding digital eyeglasses. Fade back to moving black network web with nodes, with text fading in “Applies New Tools to stubborn problems. Fade to image of man in lettuce patch shovelling dirt with little boy watching. Fade back to moving black network web with nodes, with text fading in: “Improves flexibility and innovation for Better Impact.” Fade to image of man painting an Aboriginal-inspired mural. Fade back to moving black network web with nodes, with text fading in: "Innovation in Gs and Cs = results for Canadians." Fade to image of the Canadian flag flapping in the wind, with mountain in the background. Fade back to moving black network web with nodes, with text fading in: “find out more at gcpedia.gc.ca wiki/experimentation, gcpedia.gc.ca wiki/Grants_and_Contributions_portal.” Fade to Canada Wordmark symbol.

Minister Brison talks innovative funding models - Transcipt

(Fade in to Minister Brison standing in front of a white backdrop)

Hello – I’m Scott Brison, President of the Treasury Board.

Our government is always looking for ways to get a bigger bang for your buck.

(Fade to a man and a woman at a desk looking at a tablet. Transition to an overhead shot of 4 business professionals sitting in a circle. Transition to group of business professionals holding a table and paper documents.)

To do that, we want to encourage public servants to think of new and better ways to serve Canadians.

(Transition to Minister Brison)

We’re experimenting with 3 new innovative funding approaches – all part of our government’s strong emphasis on innovation and experimentation.

  • Number one, we have incentive-based models, which allow departments to pay for outcomes when they’re actually met.

(Transition to man and woman standing in front of a window looking at a map.)

  • Secondly, we have prize- or challenge-based approaches, in which payments go to those who find specific solutions to specific challenges.

(Transition to Minister Brison)

  • And number three, we have micro-funding, which allows departments to give out small amounts of money to individuals for small but useful innovative projects.

(Transition to lab worker looking at a line of plant-filled cylinder beakers. Transition to a lab worker testing a leaf in from rows of plants in a green house. Transition to Minister Brison.)

As we test and experiment with these new innovative funding approaches, we are focusing on results for Canadians that we can measure, and we’re not getting stuck in process or on individual components of a program.

Ultimately, it will pay off and get us better solutions to serve you better.

Let me give you an idea of the potential.  You may be left wondering why this wasn’t done before:

(Transition to a lab worker using a syringe. Transition to a microscope. Transition to Minister Brison.)


  • Why not offer an incentive prize to researchers who develop a new vaccine to tackle dangerous new strains of infectious diseases?

(Transition to a street scene with people leaning on the side of the building. Transition to a woman serving a man a plate of food. Transition to a construction site.)

  • Tough challenges like homelessness stymie all levels of government. Instead of being stuck with the status quo, why don’t we put our money where the solutions are, or where they will be? New ideas that work to address chronic homelessness.

(Transition to Minister Brison)

Already, we’ve seen our innovative funding approach in action.

(Transition to a group of youth planting d watering plants. Transition to Minister Brison. Transition to a nature scene with mountains and waterfall. Transition to a nature scene with snow-filled mountain tops. )

 Environment Canada used innovative funding to give Canadian youth small grants to plan events for World Environment Day. These events are key for better awareness, which then brings changes in behavior, all to meet one of our great generational challenges: climate change.

(Transition to Minister Brison)

We’re excited to hear what other solutions will come out of these innovative funding methods.

And I’ll leave you with this:

We’re serious about experimenting, trying new things, constantly measuring what works, refining it, and then starting again.

It’s simply the smartest way to get better government.

(Transition to the Canada Wordmark)

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