Summative Evaluation of the Northern Ontario Economic Development Fund (NODF)
3.1 What evidence exists to show that projects are relevant (e.g., adapted to local economic development needs)?
Needs and challenges for economic development in Northern Ontario continue to persist. In 2002, some of the main needs identified related to a dependence on natural resources such as forest products and minerals, lack of appropriate community economic diversification strategies, an aging and declining population, youth out-migration and high unemployment rates. More recently, FedNor has concluded that while much progress has been made, Northern Ontario's economy continues to struggle with similar and persistent socio-economic and geographical challenges including:
- an unemployment rate of 7.8% (2004), far above the 6.8% rate for Ontario and 7.2% rate for Canada;
- a 2% reduction in population (1999–2004) compared to a 9.4% growth in Ontario and 6.9% growth in Canada;
- significant labour losses over the last twenty years (1981–2001) in primary industries (48.5%), manufacturing (33.8%) due largely to the increased use of technology;
- an 11% share of employment in the manufacturing sector compared to 16.3% in Ontario (2001);
- inadequate telecommunications and transportation infrastructure;
- youth out-migration and a regional youth unemployment rate 51% higher than the national average (2001);
- geographic isolation from large urban markets to the south; and,
- distinctive barriers in Aboriginal communities such as social dependency, access to capital and at-risk youth.
A comprehensive analysis of the economic characteristics of Northern Ontario was conducted by Lakehead University in 2004.5 The research included population profile, trends in industrial structure and manufacturing sector, specialization patterns and trends in Northern Ontario's economic base sectors, and Northern Ontario's contribution to the provincial and national economies. An economic well-being index was developed indicating a decline by 32% during 1996–2001 due to the high effective unemployment rate that has resulted in significant out-migration from Northern Ontario.6 The report recommends that FedNor emphasize the following criteria for program areas within its mandate:
- help resource-based industries develop new value-added products and services, commercialize research and develop new markets;
- provide funding (repayable and non-repayable based on performance) to small and medium-sized value added business start-ups in sectors such as forestry, mining, machinery and biotechnology;
- support community projects that are in line with the overall industrialization objectives of promoting these sectors;
- develop low cost energy production to reduce electricity costs to value-added firms; and,
- encourage relocation of existing government agencies to Northern Ontario.7
The database review revealed that the NODF is reaching a wide range of recipients and funding a wide range of projects. The profile of projects, based on the information in the database is as per Table 7.
|Characteristic||# of Projects||%|
|Studies or Implementation|
|Total||1 075||100 %|
|North Eastern||520||48 %|
|North Central||263||25 %|
|North Western||291||27 %|
|Total||1 074||100 %|
|Business Financing Support||32||3 %|
|Telecommunications and ICTs||84||8 %|
|Innovation and Technology||62||6 %|
|Trade and Tourism||134||12 %|
|Community Economic Development||416||39 %|
|Human Capital||347||32 %|
|Total||1 075||100 %|
|Total Project Cost||$|
|Minimum||4 030 $|
|Maximum||48 867 137 $|
|Mean||371 224,14 $|
|Sum||399 065 953 $|
|FedNor Authorized Assistance||$|
|Maximum||4 500 000 $|
|Mean||113 574 $|
|Sum||122 091 955 $|
|Proportion of FedNor Funding||%|
Table 7 shows that FedNor is providing assistance for a wide range of project types, across the regions of Northern Ontario, with a good range of objectives, covering FedNor's target groups (albeit minimally for women and francophones). Additionally, the projects are of varying sizes financially, from as little as 4,030 to as much as close to $50 million.
As for the organizations funded, Table 8 shows that FedNor is providing assistance to a wide range of types of organizations in a wide variety of industry sectors.
|Characteristic||# of Projects||%|
|Type of Organization|
|Incorporated Company – Private (SME)||54||5%|
|Other Non-Profit Organization||563||52,4%|
|Municipality / Municipal Development Corporation||178||16,5%|
|Indian Band Council / Aboriginal Community||201||18,7%|
|Federal Government / Federal Crown Corporation||1||0,1%|
|Agriculture, Forestry, Fishing and Hunting||4||0,4%|
|Transportation and Warehousing||3||0,3%|
|Information and Cultural Industries||1||0,1%|
|Finance and Insurance||1||0,1%|
|Professional, Scientific and Technical Services||68||6,3%|
|Administrative and Support, Waste Management and Remediation Services||2||0,2%|
|Health Care and Social Assistance||41||3,8%|
|Arts, Entertainment and Recreation||64||6%|
|Other Services (except Public Administration)||198||18,4%|
Service Improvement Initiative
In the 2002 Service Improvement Initiative survey, 87% of surveyed recipients indicated that they agreed (strongly agree and agree) that FedNor / Industry Canada was responsive to their needs. In the 2005 survey, 94% of those answering this question indicated that they agreed with the statement. While the increase is not statistically significant, the results show that recipients strongly believe that FedNor is responsive to needs, and thus relevant.
All FedNor management and staff interviewees agreed that NODF programming is relevant to the economic needs of communities in Northern Ontario. The relevance of projects is seen to be enhanced by the fact that program officers are out in the community and therefore understand local needs. Interviewees commented that projects are generally targeted to communities and not-for-profit organizations (some of which represent various industrial sectors – health care, mining, agriculture, forestry and tourism). Interviewees commented in the programs ability to not only respond to specific community needs but to bring a broader, more regional perspective to the table. Flexibility of program criteria is seen as a key feature and efforts are made by program officers to ensure supported projects are a good fit with program criteria, indicating that some initiatives are community-oriented while others may have a focus on specific sectors whether it be from a regional or pan-northern perspective. Partnerships are encouraged in order to ensure communities do not work in isolation or at cross-purposes. Staff described their role as being a catalyst for economic development in Northern Ontario. There was also strong agreement amongst management and staff that the new NODF priorities or strategic objectives are appropriate. There was consensus that the change in strategic objectives from the previous ones was appropriate and added greater clarity and definition with respect to FedNor priorities and were a better reflection of work being done through FedNor.
There was also agreement amongst CFDCs and other stakeholders that NODF programming is relevant and that priorities and strategic objectives are appropriate. However, a few individuals felt that FedNor programs were more relevant to larger urban areas and felt that there should be a stronger presence of FedNor officers in their communities.
The survey of recipients shows that the NODF priorities are all perceived to be very important to recipients, regardless of their specific project needs. Additionally, when recipients approach FedNor for NODF funding, they indicate that their needs were well met. Table 9 summarizes the average importance ratings of each FedNor priority, the proportion of surveyed recipients who indicated that this priority pertained to their needs in their dealings with FedNor and the average ability of FedNor to address their needs in this area.
|Strategic Priority||Mean Importance (out of 10)||% Needing||Mean Ability to Address Needs (out of 10)|
|Telecommunications and ICT||91||57%||8|
|Innovation and Technology||86||52%||81|
|Trade and Tourism||81||54%||79|
|Business Financing Support||84||3%||78|
|Community Economic Development||91||75%||82|
When asked in what way the FedNor program was not able to address their needs, 44% of the surveyed recipients indicated that their needs were all met; another 2% said they did not know. The key responses were:
- it does not fund enough; we did not get enough money; it does not cover enough eligible expenses; other money-related issues (22%); and,
- it is too restrictive; the scope of what they fund is too limited; there are too many rules to eligibility (21%).
All other responses were given by less than 10% of the surveyed recipients.
The case studies for the nine projects selected provide specific examples of how NODF projects are linked to local economic development needs. One indicator of the alignment of the projects with local needs is the co-funding that local municipal and other public, not-for-profit and private sector organizations are providing for these projects. Table 10 identifies the types of needs being addressed through each of the nine projects examined in the case studies. The table also lists the local co-funding partners to give examples of the types of local organizations supporting these projects. In most cases, the support is from local municipalities, either directly or indirectly through not-for-profit economic development corporations created by the municipalities.
It should be noted that some NODF projects support broader socio-economic objectives. For example, the funding for the provision of tele-medicine equipment for seven remote First Nations in North Western Ontario, is directly linked to improving the health of the local community. In doing so, the project is building telecommunications and tele-health infrastructure, and supporting the training of technical and health care delivery personnel. These benefits are directly linked to social and health benefits and indirectly to economic benefits by reducing the need to go south for medical diagnosis and treatment. More broadly, access to quality health care is an important precondition to economic development.
|Case Study||Local Needs Being Addressed||Local Organizations Providing Funding|
|GIS Strategic Plan for West Simcoe||Municipal and regional strategic planning Improved delivery of municipal services (planning, zoning, fire, police, use of natural resources)||Seven local municipal governments|
|Sault Ste. Marie Innovation Centre youth internship||Development and retention of human capital in
Development and delivery of GIS applications and services to the region
|Innovation Centre (not-for-profit responsible for improving competitiveness)|
|Private Sector firm youth internship||Development and retention of human capital in
Development of technical skills Support for start-up firm
|Private sector firm|
|Construct museum complex for Gore Bay Heritage Centre||Tourism development
Improved access to cultural events
Business opportunities for local crafts
|Town of Gore Bay|
|Sault Ste. Marie 2003–2004 Winter Tourism Initiative||Winter tourism development
Restoration of tourism business following
Support for local businesses linked to tourism
|Sault Ste. Marie Economic
Local ski and other winter tourist businesses
|Technology and content development for TV services Chilly Beach in Sudbury||Development of high technology business
Development, retention and repatriation of young people
|City of Sudbury|
|Development of ultra-sensitive diagnostics for detection of cancer||Development of high technology
Creation of jobs Development and retention of young people
|Pre-project funding from:
Thunder Bay Ventures (local CFDC)
|Development of Marketing Plan and Content for Timmins region||Attraction of new businesses
Expansion of existing businesses
Creation of jobs Retention of youth
|City of Timmins Local businesses|
|Provision of telemedicine equipment for seven remote First Nations in North Western Ontario||Development of telecommunications
Training of technical and health care delivery personnel Improved access to healthcare
Improved delivery of health care services
|No other funders
Delivery agent is not-for-profit tribal council serving seven remote First Nations
Management and staff interviewees indicated that they had no difficulty in determining how the projects met the program selection criteria. Several program officers described how they work with clients in the early stages of project development to ensure that the project would be a good fit with the NODF program. Sector specialists also play a key role in ensuring a good match between program selection criteria and actual projects. Some officers also described a process whereby project proposals are discussed at internal team meetings, thereby providing the opportunity to assess their appropriateness in the context of other projects that have been approved or being considered.
All projects examined in the case studies are in general aligned with one of five NODF program elements (Community Economic Development, Trade and Tourism, Innovation and Technology, Telecommunications and ICT, and Human Capital8).
In addition, many of the FedNor project summaries identify specifically the FedNor objective under which the project is being funded. For example, the project involving the development of multimedia technology and content for the television service Chilly Beach in Sudbury under the Innovation and Technology element, was funded under criterion 7.1.2, whereby FedNor can make "contributions to start-ups and pre-commercial product development which would be unlikely to attract commercial debt due to the risk involved". In the case of the Sault Ste. Marie Innovation Centre Youth Internship, it was noted that the project meets the requirements of FedNor's Program Framework, by "promoting entrepreneurship and enhancing business management skills as well as providing a post-secondary graduate with valuable work experience in business and economic development, with the objective of leading to longer term employment". The construction of the Gore Bay museum complex is an example of a tourism related initiative. In this case, the project summary cited Section 7.1.2 c of FedNor's terms and conditions, which provide for "contributions for costs of activities such as the development of economic infrastructure and the strengthening of Northern Ontario's tourism industry through the development of destination tourist facilities".
The case study files also show that the percentage of total project funding for each project follows FedNor criteria. For example, funding for youth internship projects consists of non-repayable contributions that are limited to 50% of eligible costs for private sector firms, but provide up to 90% funding for public and not-for-profit organizations. For contributions to projects led by private sector firms, contributions are limited to 50% of total eligible costs and are repayable and depending on project success, may exceed the amount of the contribution. For one of the projects involving private sector firms examined, repayment is based on 1% of annual gross sales arising from commercialization of the product, to a maximum of 125% of the contribution. For the other project, repayment is set at a fixed amount per year, to a maximum of 120% of the contribution.
The case studies also show that there is flexibility in administering the guidelines and criteria. In one of the projects involving a private sector firm, the recommended contribution is 57% of eligible costs, exceeding the normal 50% limit. This was justified on the basis of the "strategic importance of this project to Northern Ontario" and "the difficulty such innovative companies have in raising capital in Northern Ontario".
1. The economy of Northern Ontario continues to struggle with economic development issues. NODF strategic priorities are relevant and adapted to these economic development issues. Additionally, the projects are relevant in their objectives and meet the criteria established by FedNor.
The key aspects of NODF which make the program particularly relevant are:
- its flexibility;
- its broad criteria and broad range of priorities;
- the range of project size it funds;
- its broad reach;
- the fact that it is customized to needs;
- its partnership approach;
- its geographic delivery; and,
- its ever evolving strategic outlook.
5 Dr. B. Moazzami, Department of Economics, Lakehead University, Northern Ontario in the 21st Century: New Challenges and Opportunities.(Return to reference 5)
6 Ibid (p. 102–106) (Return to reference 6)
8 Excludes Business Financing Support which was not included in the case studies.(Return to reference 8)
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