Summative Evaluation of the Northern Ontario Economic Development Fund (NODF)

5.0 Findings – Success

5.1 Has FedNor contributed to the development and retention of new and existing businesses?

Document Review

Through the NODF, FedNor provides indirect assistance to private sector organizations through:

• direct capitalization of the CFDCs (top-up to the CFDC investment fund);
• the Credit Union Loan Loss Reserve; and,
• The BDC Loan Loss Reserve.

These organizations in turn use the NODF funds to provide assistance to private sector organizations for the development of new businesses and the retention of existing ones. These private sector firms are secondary recipients of NODF funding. As such, FedNor has reports and data from the CFDCs / Credit Unions / BDC on the funding and its impacts.

An independent review and evaluation of the effectiveness of the Credit Union Loan Loss Reserve program was conducted in November 2003. The study concluded that the financing provided under the funding program has resulted in both job creation and retention. Feedback received from participants in the program indicated a high level of satisfaction, with only minor recommendations noted related to eligible projects / expenditures, interest rates and loan amortization periods.^{Footnote 11}

FedNor also completed an independent review of the effectiveness of the lending program established with the Business Development Bank. The lending program was designed to assist small and medium sized enterprises in Northern Ontario. Although there were a total of 25 loans issued under the program (for a total dollar value of 2,621,500), participation in the program has been non-existent since July 2004. The September 2005 evaluation included a number of recommendations concerning the program's future. It was recommended that if a decision is taken to continue with the program that project eligibility requirements for the program should be expanded, marketing efforts should increase within BDC, the program should be modified to accommodate quasi-equity and equity financing, and that a number of administrative and reporting improvements should be implemented.^{Footnote 12}

Data Review

The data shows that 32 "projects" have been funded with the CFDCs, BDC and Credit Unions, for a total of 27,483,930 in NODF assistance.

The Northern Ontario CFDCs received a total of 11,892,180 in NODF capitalization assistance (direct capitalization and special capitalization "top ups"). It is impossible to determine the impacts of these "top-ups" since the CFDCs do not track the projects funded through their NODF capitalization fund separately from their existing investment fund. However, the CFDCs report performance from their investment activities as summarized in Table 15.

Table 15: CFDC Performance from Investment Activities (2002–03 to 2004–05)

Performance Area	Result
Businesses started	488
Businesses maintained	458
Businesses expanded	347
Total businesses assisted	1,293
Jobs created	2,124
Jobs maintained	4,277
Total jobs created / maintained	6,401
Funds leveraged – owner's equity	$37,193,602
Funds leveraged – third party	$52,507,462
Total funds leveraged	$89,701,064

Interviews

Management and staff emphasized FedNor's role as working with the not-for-profit sector to achieve results that create an environment in which new and existing business can develop and prosper. In this respect NODF's contribution to private sector firms is indirect. Numerous examples were provided by CFDCs and other stakeholders which highlight the ways in which FedNor has contributed to the development and retention of new and existing businesses. For example, FedNor has provided support in areas such as:

• the Sudbury and Area Mining and Supply Association whose mission is to provide the most innovative and highest quality supply / product / services for domestic and worldwide services;
• the Discover Abitibi Initiative, a joint collaboration with provincial, municipal and private sector partners to coordinate and direct an integrated geoscientific investigation of the Abitibi Greenstone belt of North Eastern Ontario in order to provide tools for the discovery of new mineral wealth and generate investment in region;
• business retention and expansion surveys in a number of communities (including Kenora, Dryden and Red Lake) serve to identify relevant issues and lead to the development of action plans;
• support to various business centres, economic development organizations and CFDCs;
• the film and television industry;
• the Shania Twain Centre and the Sudbury Art Gallery;
• a feasability study for the Group Health Centre;
• a educational video for the Ontario Mining Association;
• the Wood Works project of the Canadian Wood Council to promote the use of wood in non-residential buildings;
• helping a First Nation's organization stabilize a store front for nature products that now acts as an anchor for the downtown area;
• development of an abattoir and bakery in a First Nations community;
• bringing a Teletech Call Centre to Timmins which is now a major employer; and,
• the Iroquois Cranberry Growers were assisted with financing to upgrade processing equipment with an optical sorter.

Recipient Survey

In total, 23% of surveyed recipients indicated that their project involved the development of new businesses. Those who indicated that the project involved the development of new businesses also reported an average of 3.4 new businesses created (between 0 and 30) as a result of the project. For the survey sample, this represented a total of 124 new businesses created. In addition, these 124 new businesses created an average of 13.1 jobs or a total of 470 jobs created.

As previously noted, a total of 54 private sector organizations have received assistance from NODF. A total of 20 of those were surveyed in this evaluation. Table 16 shows the growth in the surveyed private sector organizations.

Table 16: Growth in NODF-funded Private Sector Organizations (Base: Survey Sample)

	Before project	Now	Change
Full-time Employees
Mean	7	85	15
Sum	133	170	37
Part-time Employees
Mean	5	125	75
Sum	10	25	15

Private sector organizations were also asked if the project had helped them retain some of their existing employees. In total, 53% said yes and reported that the project had helped retain an average of 2.6 full-time employees and no part-time employees. This represents a total of 26 full-time jobs retained for the surveyed private sector organizations.

Case Studies

The projects examined show that NODF projects help retain and create businesses in Northern Ontario in a number of ways, some direct and some indirect. Two of the projects funded start-up private sector initiatives that, if successful, would directly result in new businesses in Northern Ontario. One of these has already proven successful, and the other has just completed the proof of concept stage and is involved in product development. Another project helped attract new business to Northern Ontario through a successful marketing plan that described business opportunities in the region. This has led to several retail businesses coming to town, that will employ several hundred people. The increased economic activity generated by these new local businesses will also help existing local businesses survive and grow.

Two other projects contribute to retention and creation of businesses indirectly through increased tourism. Tourists spend money on accommodation and meals, and other retail purchases. This spending helps retain and grow existing businesses and possibly develop new tourist related business.

Table 17 summarizes the contribution of each case study to the retention of existing businesses and creation of new ones.

Table 17: Contribution of Each Case Study

Case Study	Retention and Growth of Existing Businesses	Creation of New Businesses
GIS Strategic Plan for West Simcoe	Minor indirect through improved municipal planning	Minor indirect through improved municipal planning
Sault Ste. Marie Innovation Centre youth internship	Medium direct through introduction of new capabilities	None
Private Sector firm youth internship	Major direct through development of new products and applications	None
Construct museum complex for Gore Bay Heritage Centre	Major indirect through increased tourism	Minor indirect through increased tourism
Sault Ste. Marie 2003–2004 Winter Tourism Initiative	Major indirect through increased tourism	Minor indirect through development of new winter tourism attractions
Technology and content development for TV services Chilly Beach in Sudbury	Minor through sales of products and services to new company and employees in region	Major – creation of new multimedia production capability
Development of ultra-sensitive diagnostics for detection of cancer	None	Major – creation of new biopharmaceutical business
Development of Marketing Plan and Content for Timmins region	Major through construction of new buildings, purchase of equipment and services, and retail sales to new employees	Major through attraction of new retail and other businesses to community
Provision of tele-medicine equipment for seven remote First Nations in North Western Ontario	Minor through training of personnel to utilize telecommunications equipment	None

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5.2 Has FedNor improved competitiveness of Northern Ontario firms?

Interviews

As stated earlier, FedNor's contribution to the competitiveness of firms in Northern Ontario is indirect. Interviewees identified examples such as FedNor's support of trade networks and missions and business training services offered by their partners. FedNor's support and participation in the Royal Winter Fair was an example identified by a few interviewees as an important initiative to bring firms from Northern Ontario to Toronto and provide exposure to the Southern Ontario and international marketplace. Interviewees discussed a number of direct and spin-off benefits for Northern Ontario firms. They reported that international trade missions and the role played by trade advisors who work directly with firms are making an important contribution to increasing the competitiveness of firms. Stakeholders and CFDCs generally found it harder to provide specific examples or comment on FedNor's contribution to the competitiveness of firms.

Recipient Survey

The survey of recipients gauged the impact of FedNor on the competitiveness of Northern Ontario firms by asking private sector organizations about their gross revenues and profits before their application to FedNor for the project as well as now. The results demonstrate that FedNor has contributed to improved competitiveness as shown in Table 18.

Table 18: Change in Gross Revenues of NODF-funded Private Sector Organizations

	Survey Sample (20 firms)
	Before project	Now	Change
Mean	$793,165.60	$984,401.24	+$191,235.64
Sum	$15,863,312.00	$16,734,821.00	+$871,509.00

The survey results revealed that several private sector recipients had experienced significant reductions in their profitability or even losses.^{Footnote 13}

In total, 55% of the surveyed private sector organizations indicated that their organization had grown in other ways as a result of their NODF project. The responses were fairly unique to each organization but included growth in employment, new services, and new capabilities.

In total, 71% of private sector organizations also reported that their organization had developed an innovative product, process or service as a result of the project.

Case Studies

Three of the case studies involved projects with private sector firms, and they were all essentially start-ups, developing new and innovative products and services. In the case of March Entertainment, the innovative technology developed has already proven commercially successful and has enabled the production of animated programming for internet and television at approximately 60% of the cost of the previous approach. As an indication of the competitiveness of the firm, it now conducts production of animated programming for other companies under subcontract, as well as for itself. These case studies were discussed in the previous section (Section 5.1) on the creation of new businesses.

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5.3 Has FedNor helped attract, retain and develop human capital, including special client groups (women, Francophones, First Nations and other Aboriginal people, youth)?

Document Review

Annual evaluations of the Youth Internship Program were conducted. Some of the key information and key findings are provided in the following table.

Table 19: Key Information Regarding Annual Evaluations of Youth Internship Program

	2002	2003	2004
# of interns completing survey	96	69	112
# of representatives from host organizations	160	30	114
% of hosts satisfied	93%	91%	96%
% of youths satisfied	88%	97%	92%
% who indicated they would be employed following their internship	72%	71%	65%

Data Review

As previously noted, FedNor has provided assistance for 347 human capital projects. These involved special client groups as shown in Table 20.

Table 20: Human Capital Projects by Target Groups

Target Group	# of Projects	% of Human Capital Projects
Note: Totals may equal more than 100% due to the fact that some human capital projects could target several groups.
Youth	340	98%
Women	2	1%
Aboriginal	43	12%
Francophone	20	6%
No target group involved	6	2%
Total	347	100%

Interviews

All interviewees stated that they very familiar with FedNor's Youth Internship Program (YIP) and stressed that it has been very successful in developing skills for youth and tackling the problem of youth out-migration from Northern Ontario. The Youth Internship Program also reaches FedNor's other target groups: Francophones, Women, First Nations and other Aboriginal Groups. Many of the interviewees also have first hand knowledge of the program as they had used youth interns within their organizations. Although satisfied with the program, many felt that there should be greater flexibility with respect to the term of the internship assignments. Some felt that in certain cases a term longer than one year would be beneficial particularly if the assignment was tied to the completion of a specific project. Another suggestion related to the Program is that there be an opportunity to have an overlap period for the interns so the outgoing intern can provide some training to the incoming intern. One person also suggested that it would make sense for CFDCs to administer the YIP to speed up the application process. Other youth related initiatives identified by interviewees included FedNor's support of business plan competitions, the Scoops Program targeted towards at-risk youth, working with the Mineral Council Cluster to address gaps in highly qualified personnel, establishment of a facility for training welders, training simulators for forestry industry, support to educational institutions to enhance their capacity for on-line course offerings so youth may stay in their own community, and efforts to encourage youth to pursue careers in health care and mining. Most interviewees felt that FedNor was not targeting women specifically although support is provided to organizations such as business women's networking and some micro-lending initiatives.

Recipient Survey

The survey of recipients revealed that 49% of projects resulted in the attraction of new staff to the funded organization, 39% resulted in the retention of existing staff within the organization and 53% resulted in the development of existing staff within the organization. Only 23% of the projects did not involve any form of human capital. The results are summarized in Table 21.

Table 21: Impact of Projects on Attraction, Retention and Development of Human Capital

Target Group	Survey Sample
	% incidence	Mean #	Sum #
Attraction of New Staff to Organization
Youth	30%	1.2	111
Women	32%	1.3	123
Aboriginal	8%	7	63
Francophone	13%	6	53
Total	49%	3	293
Retention of Existing Staff Within Organization
Youth	12%	7	58
Women	26%	1.7	130
Aboriginal	7%	1.2	91
Francophone	11%	0.5	40
Total	39%	5.2	498
Development of Existing Staff Within Organization
Youth	17%	8	77
Women	44%	8	80
Aboriginal	13%	5	50
Francophone	13%	4	412
Total	53%	5.8	604

For youth internships, 72% of respondents indicated that the youth had obtained on-going employment after the internship as follows:

• 51% within the funded organization (45% in the intern's area of expertise);
• 35% in another Northern Ontario organization (21% in the intern's area of expertise);
• 9% outside Northern Ontario (7% in the intern's area of expertise); and,
• 5% did not know where the intern had found employment.

Based on the aforementioned 340 youth internships, this means that more than 200 youth found employment in Northern Ontario after their internship.

Case Studies

Many NODF projects contribute to the attraction, retention and development of human capital, either directly or indirectly. Examples of a direct contribution are provided by the youth internship case studies, whose objective is to provide work experience and skills development for post-secondary students, with a view to long-term employment with the participating organization after the project. A broader goal is to provide employment opportunities for youth in the North to counteract the out-migration of youth from the North. As mentioned previously, 11 youth internships at the Sault Ste. Marie Innovation Centre have resulted in nine of the eleven people developing useful skills in information technology (IT) related areas and securing long-term employment in the region. None of the case studies included projects that involved special client groups other than youth.

A number of other projects examined through the case studies also demonstrate the achievement of this outcome. The successful creation of a multimedia animation production capability in Sudbury has resulted in the creation of about 60 jobs to date, with another 40 expected over the next few months. A number of the skilled animation positions are occupied by young people who went south to Sheridan or Algonquin Colleges for their schooling and have returned to the Sudbury area to work. The others are held by individuals from the South who have moved North for employment. All support worker positions in the company are held by local residents. This is an example of a single project contributing to all aspects of this objective and more, namely the attraction, development, retention and repatriation of human capital.

In another case, the creation of new businesses in Timmins, resulting in several hundred new retail positions will also contribute to the development and retention of human capital in the North and reduced out-migration.

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5.4 Has FedNor contributed to the economic development of Northern Ontario communities?

Document Review

A review of documentation indicates that several consultations and conferences have been carried out with respect to tourism in Northern Ontario. Eco-North Conferences were held in 2002 and 2004. FedNor has also supported the development of information tools to support tourism operators in marketing and planning.^{Footnote 14} In September 2003, consultations held with over 350 tourism stakeholders resulted in the identification of five major needs for the sector including the need for a comprehensive tourism strategy for Northern Ontario, a coordinated marketing and branding strategy with a consistent message to position Northern Ontario as a world-class tourism destination, infrastructure investment for major tourist attractions, easier access to capital for operators and business training for operators and staff.^{Footnote 15} In May 2004, FedNor and the Ontario Tourism Marketing Partnership Corporation (OTMPC) signed a Memorandum of Understanding to officially enter into a partnership to provide strategic support for Northern Ontario's tourism industry. The Canadian Tourism Commission (CTC) agreed to participate on a project-by-project basis and the Ontario Ministry of Northern Development and Mines (MNDM) and the Northern Ontario Heritage Fund Corporation (NOHFC) have agreed in principle to consider participating as a partner to the agreement in its second and third years.^{Footnote 16}

Data Review

Based on the FedNor recipient database, 80% of projects (860 projects) involved community capacity outcomes. These involved total FedNor authorized assistance of  99,344,732 and total project costs of 331,854,669.

Additionally, 25% (264 projects) involved tourism outcomes. These involved FedNor authorized assistance of 22,938,651 and total project costs of 82,617,135.

Finally, 3% (30 projects) involved trade outcomes. These projects involved FedNor authorized assistance of 2,993,694 and total project costs of 2,993,694.

Interviews

Community economic development is seen to be a key area of success by interviewees. FedNor's ability to encourage and build partnerships with a variety of players is seen as a major advantage in strengthening economic development. Some interviewees commented that FedNor brings a broader, more regional perspective to local economic development initiatives. Many economic development initiatives have been targeted towards various sectors such as tourism, agriculture, mining, forestry, health and the arts. While other initiatives are community driven such as economic diversification and adjustment strategies, community strategic plans and feasability studies. Some interviewees did express concern that many smaller communities and municipalities lacked the capacity and / or resources to follow through on implementing recommendations stemming from various studies.

Recipient Survey

The survey of recipients revealed that 74% of the youth internship projects had contributed to community economic development. Some of the reported ways in which this had occurred included:

• increased visibility / marketing / awareness / promotion (25%);
• increased participation / expanded customer base (19%);
• business growth (14%);
• economic development planning (14%); and,
• employment (11%).

All other responses were provided by less than 10% of the applicable respondents.

For those who received assistance for community economic development projects, 36% of those surveyed indicated that the project had resulted in the attraction of investments to their area. This represented average investments of more than 75 million per project. Respondents also indicated that these investments were over an average period of 1.4 years. Table 22 summarizes these results.

Table 22: NODF Results – Attraction of Investments

	Investments / year	Total Investments
Note: The reader should interpret these numbers with care since they are based on 1) a very small number of respondents (n=14) and 2) a wide range of responses (from as little as 1,000 to as high as 1 billion).
Minimum	$1,000	$1,000
Maximum	$333 million	$1 billion
Mean	$24.7 million	$75.5 million
Sum	$345.8 million	$1.016 billion

Additionally, 21% of community economic development project recipients surveyed indicated that their project had resulted in the attraction of businesses (i.e., private sector organizations) and / or institutions (e.g., educational, environmental, tourism and other types of institutions) to their area. In such cases, the recipients reported an average of 7.3 new businesses and 1.8 new institutions. Table 23 summarizes these results.

Table 23: NODF Results – Attraction of New Businesses and Institutions

	New Businesses	New Institutions
Minimum	0	0
Maximum	41	12
Mean	73	18
Sum	80	14

Based on the survey results, the new businesses and institutions were predominantly in the following sectors:

• forestry (31%);
• retail (31%); and,
• tourism / hospitality (15%).

All other sectors were mentioned by less than 10% of the respondents (or only 1 respondent).

Case Studies

A number of the projects examined by the case studies have been community economic development projects managed by municipalities or not-for-profit economic development organizations. All these projects have the objective of improving some aspect of the business environment of the municipality or region, to help increase economic activity and maintain existing businesses or attract new ones. The various projects use a number of strategies to accomplish this goal.

Some projects, such as the development of a marketing plan to attract businesses to Timmins will have a major impact on the local economy, bringing hundreds of new jobs and millions in new construction to the region. The following table summarizes the ways in which the case studies involving economic development have impacted the community.

Table 24: Community Economic Impact

Case Study	Project Description	Impact
GIS Strategic Plan for seven municipalities in the District of Parry Sound	Development of Strategic Plan to guideline the development and utilization of GIS and related services in the seven municipalities improved delivery of municipal services (planning, zoning, fire, police, use of natural resources)	Improved municipal planning, business development, delivery of fire, police and other services to businesses and homeowners Forestry and other natural resource planning Provide GIS and related information to potential new businesses
Sault Ste. Marie Innovation Centre youth internship	Youth internship for postsecondary graduates with organization developing and implementing GIS and other IT applications	Improved GIS applications for use by the municipality Supply of human capital with IT expertise for local businesses
Construct museum complex for Gore Bay Heritage Centre	Construction of museum complex to house museum collection, and provide a venue for local craft and cultural workshops and events	Increased tourism providing revenues to local tourist and retail businesses and local crafts people
Sault Ste. Marie 2003–2004 Winter Tourism Initiative	Development of 2003–2004 winter tourism promotion and marketing plan and material	Increased winter tourist traffic, providing revenues to local ski operation, snowmobiling and other tourist and retail businesses
Development of marketing plan and content for Timmins region	Development of marketing plan and content to promote Timmins as an attractive location for business and professionals	Attraction of Home Depot and Canadian Tire and several other smaller retail stores to Timmins, resulting in millions in new construction and several hundred new retail jobs
Provision of tele-medicine equipment for seven remote First Nations in North Western Ontario	Provision of tele-medicine equipment for seven remote First Nations in North Western Ontario	Improved access to health care Training of nurse practitioners

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5.5 Has FedNor helped develop business and trade skills?

Document Review

In order to assist tourism stakeholders, FedNor developed A Guide to Using Market Research and Marketing Measurement for Successful Tourism Destination Marketing. This is a step-by-step guide that provides general information about tourism market research methodologies, the rationale behind the practice, as well as the benefits and limitations of a variety of available measures.^{Footnote 17}

Interviews

Interviewees generally had a difficult time describing FedNor's contribution to the development of business and trade skills. CFDCs indicated that they play a role in the development of business skills. Management and staff discussed FedNor's support of trade networks and advisors who work directly with firms. In some cases, FedNor has provided funds for training (e.g., supported a mystery shopper initiative and provided follow-up training to business owners, investment to establish welding labs in a community in partnership with local schools and the private sector). An increasing shortage of skilled labour was described as being a major concern for Northern Ontario particularly for resource-based and agriculture industries.

Recipient Survey

In total, 43% of surveyed recipients indicated that their projects had resulted in the development of business and trade skills in their organization. These organizations benefitted in the following ways:

• increased capability / capacity to do things in-house (20%);
• new or expanded services (17%);
• new knowledge / ideas / understanding (17%);
• better trained staff (13%); and,
• improved marketing (13%).

All other responses were provided by less than 10% of respondents.

Case Studies

None of the projects examined by the case studies were directly related to business and skills development. However, several of the case studies included provide examples of how business and trade skills are developed or transferred. The two youth internships provide examples of the development of business and technical skills by post-secondary youth during the internship period, which can then be used either within the organization after being hired, or by the graduating intern in employment at other organizations. In the case of the Sault Ste. Marie Innovation Centre, one of the youth interns brought important skills concerning the security of web-based remote access to the organization that were transferred to other staff and Centre applications.

The projects involving funding of private sector firm innovation have also contributed to this outcome. Most new employees hired by the firms have been college or university graduates in their first or second job, who are developing new technical skills and business experience.

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5.6 Has FedNor helped develop external markets for Northern Ontario firms?

Data Review

The FedNor database revealed that only 2% of the projects (or 22 projects) involved export outcomes. Similarly, for those completed project outcomes sheets (after the project is completed), the project officers are asked to rate, on a scale of 1 to 5, the extent to which the project contributed to increased trading opportunities. Of the 630 completed project outcomes sheets, the mean for this question was 2.4 out of 5^{Footnote 18}. The distribution of responses is provided in Figure 1.

Interviews

In general, CFDCs and other stakeholders were very supportive of FedNor's efforts to support the development of external markets for Northern Ontario firms. It is expected that the benefits of trade missions and other work in this areas will be longer term in nature. Interviewees were aware of various international trade missions, trade shows and the role of trade advisors. A few CFDCs suggested that it would be wise to include representatives from CFDCs in future trade missions as they are often the first point of contact for local firms interested in expanding to other markets. The Northwest-Midwest Alliance, the Royal Winter Fair and Naturallia initiatives were all identified as being successful undertakings supported by FedNor.

Recipient Survey

In total, 17% of surveyed recipients indicated that the project had contributed to the development of external or export markets for their organization. For those who indicated that it had, these markets were in other parts of Ontario (80%), in the United States of America (60%), in other Canadian provinces (57%) and / or in other countries (54%). These resulted in an average of 163 new clients from these new markets, for a total across all surveyed organizations of 3,430 new clients.^{Footnote 19}

The organizations who reported benefitting from the development of external markets reported the following additional benefits:

• improved company image / exposure / marketing / raised awareness / profile (23%);
• increased sales / revenues (20%);
• employment (11%);
• new knowledge (11%); and,
• growth of organization / sustainability (11%).

All other responses were provided by less than 10% of the respondents.

Case Studies

Most of the projects examined involve public or not-for-profit organizations, and will not have direct outcomes related to export sales. However, one of the case studies involving private firms provides an example of a successful project that has already contributed to the development of an external market. March Entertainment has sold the Chilly Beach and other animation series developed with the technology funded by the NODF project to the U.S., Sweden and other countries. The other private sector project involving development of technology by Genesis Genomics will, if successfully commercialized while remaining in Thunder Bay, result in major levels of export sales from the North, estimated to be in the tens of millions of dollars over the next ten years.

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5.7 Has FedNor increased the use of technology? Has contributed to the development of innovation?

Document Review

With respect to results achieved in the area of telecommunications, FedNor's has identified the following key results:

• Point of Presence (PoP) in 102 communities;
• deployment of high-speed Internet in over 40 communities;
• eight regional networks servicing 85 communities; and,
• 1,000 businesses in business-to-business (B2B) activity.

In 2004, a Socio-economic Impact Study of FedNor Broadband and ICT Investments in Timmins and Cochrane District, Ontario was conducted. The study includes recommendations for assessing impacts from FedNor funded projects. The study indicated that the following economic impacts can be directly attributed to FedNor investments in the Timmins and Cochrane District region:

• 805 new full-time jobs and 1 part-time job (805.7 full-time equivalents – FTEs);
• 8 full-time and 13 part-time jobs retained that would have been lost without the investment (11.4 FTEs);
• 6.6 million in commercial / industrial expansion and operating costs; and,
• 8.6 million in expenditures associated with equipment and software installation and service.

A model was used to estimate the future effects of these impacts over the next two to four years. Based an investment of approximately 2 million made by FedNor, the following impacts are expected:

• 28.64 million increase in GDP for Cochrane District and 9.75 million increase for the Province of Ontario; and,
• 928 person years of employment for Cochrane District and 125.6 for the rest of Ontario; and 3.21 million increase in provincial tax revenues and 5 million increase in federal tax revenues.^{Footnote 20}

Data Review

FedNor has provided assistance for 62 innovation and technology projects. This involved FedNor authorized assistance for a total of 24,348,577 and total project costs of 115,420,583.

There are 138 projects (13%) where connectedness outcomes were reported in the FedNor database. In addition, 53 (5%) involved e-commerce and 212 (20%) involved knowledge-based outcomes.

When asked to summarize the extent to which projects contributed to a greater participation in the knowledge-based economy, project officers rated their completed projects, on average, as 2.8 out of 5 in this regard. The distribution of responses is illustrated in Figure 2.

Interviews

All interviewees felt that FedNor has made major contributions to enhancing the use of technology and applications in Northern Ontario. An increasing number of rural and remote communities now have the ability to utilize technology such as the high speed Internet and cellular phone service. Enhanced telecommunications capacity bridges the communication gap and compensates for issues related to remoteness and isolation (particularly for youth who now can connect to the outside world more easily).

On the applications side, interviewees felt that small businesses and tourism operators are making greater use of e-commerce, web-based applications and marketing tools. Access and use of technology such as video conferencing and digital imaging capabilities have also brought huge benefits to the Northern universities and aided in the provision of health care services to remote communities. Tele-health means that patients do not necessarily need to travel long distance for medical care. Colleges and universities are now able to offer a significant number of courses on-line providing students with greater flexibility and the ability to stay in their local community while pursuing post-secondary education and training.

Recipient Survey

Surveyed recipients were asked if their organization had adopted a new technology as a result of the project. In total, 31% reported that it had. Reported benefits resulting from the adoption of this new technology included:

• new or improved services, systems or products (29%);
• exposure / marketing / credibility / image (19%);
• increased productivity or efficiency (14%); and,
• more up-to-date organization (10%).

All other benefits were provided by less than 10% of the respondents.

Surveyed recipients were also asked if the project had resulted in increased use of technology in the organization. More than half (55%) reported that it had. Reported benefits resulting from this included:

• improved productivity or efficiency (16%);
• website-related benefits (14%);
• improved communications (11%); and,
• improved skills / capacity (10%).

All other benefits were noted by less than 10% of the respondents.

In total, 39% of surveyed recipients indicated that their organization had increased its use of telecommunications as a result of the project. Resulting benefits included:

• increased reach / participation (17%);
• increased use of the Internet (17%);
• improved communications (15%);
• website-related benefits (13%); and,
• improved productivity or efficiency (10%).

All other benefits were mentioned by less than 10% of the respondents.

Finally, 38% of surveyed recipients indicated that their organization had increased its use of research and development as a result of the project. Reported benefits were widely spread and were therefore not reported in a quantified manner. However, a few verbatim responses include:

Additionally, 38% of surveyed recipients indicated that their organization had developed an innovative product, process or service. Again, reported benefits were widely spread and therefore difficult to quantify. A few verbatim responses include:

Case Studies

The case studies included three projects that directly contributed to the development of innovative technology by private sector firms. These were the development of multimedia flash animation technology to create television content, which is being used in commercial production, and the development of mitochondrial DNA analysis capability for the early detection of cancer, which is still in the product development and testing phase. The third project involved the development of new software applications related to DNA testing. In examining the level of outcomes, it is important to keep the relative size of these three projects in mind. The multimedia project had a total budget of  5.4 million, the mitochondrial DNA project 1.72 million, and the Youth Internship  43,000.

NODF has also funded the development of innovative technical infrastructure, as a means to deliver services to the community more effectively and economically. For example, the project involving development of a GIS Strategic Plan for seven rural municipalities in the District of Parry Sound has contributed to the building of technical infrastructure related to GIS in these communities. This infrastructure will contribute to the improved, more efficient delivery of municipal services such as planning, fire, police and public utilities to taxpayers by these municipalities. Similarly, the project to fund the installation of tele-medicine equipment in seven remote First Nations is designed to help provide more effective and efficient health care services to these groups.

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5.8 What is the incremental impact of FedNor programs and projects?

Database Review

While the survey results will show the incremental impact of FedNor on projects, the FedNor data shows the financial project investments from FedNor funded projects. These are summarized in Table 25.

Table 25: Financial Incremental Impacts

Description	FedNor ($)	Total Project	Leveraged	% FedNor Contribution
Note: While the additional funds are not fully attributable to the program (in light of the fact that some recipients may still have proceeded with the project, albeit differently), they are highly attributable to the NODF because of the high incrementality as well as the fact that, in many cases, FedNor did not fund 100% of the project costs, and therefore required leveraged funds before it would approve projects.
Studies or Implementation
Studies	$ 16,587,046	$ 35,680,831	$ 19,093,785	46.5
Implementation	$ 109,529,409	$ 363,385,122	$ 253,855,713	30.1
Region
North Eastern	$ 60,463,425	$ 169,831,905	$ 109,368,480	35.6
North Central	$ 24,659,693	$ 84,736,002	$ 60,076,309	29.1
North Western	$ 37,993,337	$ 129,498,046	$ 91,504,709	29.3
Strategic Investments
Business Financing	$ 15,383,930	$ 27,483,930	$ 12,100,000	56.0
Telecommunications & ICTs	$ 18,731,510	$ 50,439,013	$ 31,707,503	37.1
Innovation & Technology	$ 24,348,577	$ 115,420,583	$ 91,072,006	21.1
Trade & Tourism	$ 17,716,965	$ 63,827,268	$ 46,110,303	27.8
CED	$ 40,099,225	$ 128,406,335	$ 88,307,110	31.2
Human Capital	$ 9,836,248	$ 13,488,824	$ 3,652,576	72.9
Type of Organization
SME	$ 8,809,090	$ 16,969,576	$ 8,160,486	51.9
Educational	$ 15,974,564	$ 93,114,819	$ 77,140,255	17.2
Other Non-Profit	$ 58,924,327	$ 164,100,394	$ 105,176,067	35.9
Municipal	$ 16,627,114	$ 57,627,160	$ 41,000,046	28.9
Aboriginal	$ 27,781,360	$ 52,254,004	$ 24,472,644	53.2
Federal	$ 3,000,000	$ 15,000,000	$ 12,000,000	20.0
Project Status
Not completed	$ 74,514,407	$ 224,542,314	$ 150,027,907	33.2
Completed	$ 51,602,048	$ 174,523,639	$ 122,921,591	29.6
Total
Total	$ 122,091,955	$ 399,065,953	$ 276,973,998	30.6

Interviews

As reported by the vast majority of interviewees, FedNor has made a significant impact in Northern Ontario. Interviewees commented that FedNor has leveraged significant amounts of financial support from other organizations through partnerships. Several CFDCs and stakeholders commented that many projects would not have gone ahead without the encouragement and support of FedNor. Some interviewees described FedNor as being an enabler or catalyst for economic development. Program officers indicated that incrementality has a lot to do with selecting projects that will have a multiplying effect over time. Stakeholders identified a number of projects that have demonstrated significant incremental impacts (e.g., support to the Northern Ontario School of Medicine, work with Sault Ste. Marie, West Nippissing, Wood Works, tele-health projects, NEONET, and Discover Abitibi).

There was general agreement from the vast majority of interviewees that FedNor programs are complementary to other programs available in Northern Ontario. In order to avoid potential duplication or overlap, FedNor works collaboratively with other provincial ministries and federal departments and agencies. Some interviewees felt that there is similarity in the mandates and objectives of other programs but indicated that eligibility criteria were sufficiently different that duplication and overlap were not seen to be an issue. Staff indicated that they are very familiar with their provincial and federal colleagues and as part of fulfilling due diligence requirements on specific projects the role and contribution of each party are clearly defined. CFDCs and other stakeholders also commented on the collaborative relationship that they had observed between FedNor and representatives of other programs. One interviewee emphasized the lack of resources at the municipal level for investment. The interviewee commented that it would be nice to see a federal / provincial agreement on sector development that assessed the fairness of funding formula given revenue streams back to the community (i.e., revenue back to the local tax base would occur over a much longer period than revenue generated for the provincial and federal levels through income taxes, provincial sales tax and GST).

Recipient Survey

In order to determine the extent to which FedNor played an incremental role in the ability of the funded organizations to undertake the project, survey recipients were asked about the impact on the project of not having NODF funding. The responses were categorized according to the following project incrementality principles:

• Full incrementality – the absence of NODF funding would have had a major negative impact on the project in that the organization would not have been able to proceed with it.
• Major incrementality – the absence of NODF funding would have had a major negative impact on the project but the organization may still have been able to proceed with it. However, the scope, timing, quality, etc.. of the project would have been affected.
• Minor incrementality – the absence of NODF funding would have had a minor negative impact on the project.
• No incrementality – the absence of NODF funding would have had no impact at all on the project.

Using these categories, Figure 3 illustrates that NODF is highly incremental on the projects it funds. The following statistically significant differences should be highlighted about Figure 3:

• NODF is significantly more likely to be fully incremental on studies than implementation projects;
• NODF is significantly less likely to be fully incremental on innovation and technology projects as well as human capital projects than on telecommunications and ICTs, trade and tourism, and CED projects; and,
• NODF is significantly less likely to be fully incremental for SMEs than any other type of organization.

Case Studies

There was full or major project incrementality for the funding provided by FedNor for all nine of the projects examined for the case studies. For several projects, there was full incrementality. These included:

• the two youth internship projects;
• the Gore Bay museum construction project;
• the two private sector firm innovative product development projects;
• the GIS Strategic Plan for seven municipalities in the District of Parry Sound; and,
• the provision of tele-medical equipment for seven remote First Nations.

For each of these cases, the project would not have proceeded at all without FedNor funding. This was definitely true for those projects where FedNor provided 50% or more of the funding. A closer examination of the project funding the development of multimedia production in Sudbury shows that FedNor contributed 500,000 or about 9% of the total budget of 5,400,000. Because of the limited financial resources of March Entertainment, the project would not have gone ahead in the North without the contributions of each of the major funding partners, including FedNor.

For the other four projects, there was major project incrementality in that the initiative would likely have gone ahead, but with a much reduced level of effort and expected outcomes.

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5.9 Conclusions – Success

4. A number of NODF projects have contributed to the development and retention of new and existing businesses. Evidence suggests that NODF projects have resulted in the development of new businesses, jobs and growth in existing businesses through retained and new employees as well as increased revenues. In addition, Northern Ontario CFDCs have indirectly contributed to NODF success in this regard through the impacts of the NODF capitalization assistance. The reported impacts from this assistance include close to 500 new, more than 500 maintained and close to 350 expanded business. Northern CFDC support, resulting at least partially from NODF assistance, have also contributed to the creation of more than 2,100 job and the maintenance of almost 4,300 jobs. The program is therefore contributing to the development and retention of new and existing businesses, both directly and indirectly.

5. The NODF's contribution to the competitiveness of Northern Ontario firms is, in most cases, indirect through the Community Futures top-up and the BDC investment fund. Nevertheless, the NODF also contributes directly to this objective through its trade networks and missions as well as through projects involving the development of new or improved products, services or technologies.

6. The NODF has been successful in attracting, retaining and developing human capital in Northern Ontario. With respect to special target groups, the program has made a significant impact on youth, women, Aboriginal people and Francophones even though the projects did not necessarily target these groups.

7. The NODF has made a significant contribution to economic development in Northern Ontario through community level initiatives as well as, to some extent, sectoral initiatives. FedNor's ability to encourage and build partnerships is a major contributor to the program's success in this area.

8. Based on the evidence available for this evaluation, it is difficult to conclude on the extent to which the NODF has helped develop business and trade skills. However, the survey results and case studies indicate that the NODF has made a contribution in this area.

9. Based on the activities in support of developing external markets, the NODF has made progress in this regard. Progress has been made as a result of project-specific activities such as trade missions. Progress has also been made as a result of support provided by the trade advisors as well as through other non project-specific activities and support.

10. As a result of the projects funded under the Telecommunications and ICT as well as Innovation and Technology strategic priorities, the NODF has contributed to significant investments in this area. These investments have reached a large proportion of communities and businesses in Northern Ontario resulting in increased use of technology and the development of innovations. This has, in turn, contributed to socio-economic benefits in recipient organizations and communities.

11. The NODF has been essential in enabling a large number of organizations to undertake the funded projects. As such, the project impacts are highly attributable to the program. In addition, the design features have contributed to high leveraging of funds from other sources. Over the period of the evaluation,  122 million of NODF funding has resulted in a total of 400 million in investments in the projects. FedNor is therefore recognized as a catalyst for economic development.

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Footnotes

1. ¹¹ KPMG, Evaluation of Credit Union Lending Program, November 12, 2003. (back to footnote reference 11)
2. ¹² KPMG, Evaluation of BDC Loan Loss Reserve, September 21, 2005. (back to footnote reference 12)
3. ¹³ It is not possible within the scope of this evaluation to determine the reasons for these losses. Nevertheless, two out of 12 respondents indicated losses for their most recent fiscal year end whereas an additional four out of 12 reported reductions in their profitability. (back to footnote reference 13)
4. ¹⁴ Mitchell, Erin and Westlake, Mitchell, A Guide to Using Market Research and Marketing Measurement for Successful Tourism Destination Marketing, June 2005, and, Research Resolutions and Consulting Ltd. Information Tools for Marketing and Planning, Tourism Volume, Value and Characteristics in Northern Ontario, Canadian International Travel Surveys, 2002. (back to footnote reference 15)
5. ¹⁶ Assessing the Challenges: Summary Report of the 2003 Northern Ontario Tourism Consultations, 2003. (back to footnote reference 14)
6. ¹⁵ Strategic Tourism Development and Marketing Partnership for Northern Ontario. Year 1: Progress to Date, Draft Revised January 25, 2005. (back to footnote reference 16)
7. ¹⁷ A Guide to Using Market Research and Marketing Measurement for Successful Tourism Destination Marketing, 2005 (back to footnote reference 17)
8. ¹⁸ Note: the average is not higher if only trade projects are selected. (back to footnote reference 18)
9. ¹⁹ One respondent reported 3,000 new clients; the balance therefore represent a total of 430 new clients. (back to footnote reference 19)
10. ²⁰ Strategic Networks Group, EKOS, and Phoenix Strategic Perspectives Inc., Socio-Economic Impact Study of FedNor Broadband and ICT Investments in Timmins and Cochrane District, Ontario (p. 5). (back to footnote reference 20)