INAC Funding approaches

Learn about the different funding approaches INAC uses for programs for Indigenous peoples.

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About funding approaches

The objective of the federal Policy and Directives on Transfer Payments is to ensure that transfer payment programs are:

The directive outlines requirements for standard grant and contribution approaches, as well as four additional contribution funding approaches that departments can use for programs for Indigenous peoples. These additional funding contribution approaches are called set, fixed, flexible and block contribution approaches.

Indigenous and Northern Affairs Canada (INAC) uses these various funding approaches to manage transfer payments related to its programs.

The type of funding approach that will be used will depend on a number of factors, such as the design and nature of a program, the program authority, the duration of the program or funding agreement and the level of risk associated with entering into a funding agreement.

Recipients should contact their regional office or program sector to determine which funding approaches are available for specific programs.

What funding approaches are available?

There are five approaches that INAC may consider in the design and delivery of transfer payment programs:

Grant approach

A grant is a transfer payment that is subject to pre-established eligibility and other entitlement criteria. Recipients are not required to account for the grant, but they may be required to report on results. The grant funding approach can be used for any duration of time necessary to achieve program results. Grants are not normally subject to departmental audits but require specific Cabinet policy and Treasury Board of Canada Secretariat program spending authorities.

Set contribution approach

A set contribution is a transfer payment that is subject to performance conditions outlined in a funding agreement. Set contributions must be accounted for and are subject to audits. This is the basic type of contribution commonly used in the past and where unspent funding is returned to the department annually.

Fixed contribution approach

Fixed contribution funding is an option where annual funding amounts are established on a formula basis or where the total expenditure is based on a fixed-cost approach. Fixed funding is distributed on a program basis. It is possible under this approach to allow recipients to keep any unspent funding provided that program requirements set out in the funding agreement have been met and the recipient agrees to use the unspent funding for purposes consistent with the program objectives or any other purpose agreed to by the department.

Flexible contribution approach

Flexible contribution funding is an option which allows funds to be moved within cost categories of a single program during the life of the project/agreement. However, unspent funds must be returned to the department at the end of the project, program or agreement. The flexible contribution approach is used when:

  • the recipient has met certain assessment criteria (including results from the General Assessment)
  • a program requires a two or more year relationship with a recipient to achieve objectives and can be funded under a multi-year funding agreement
  • the recipient can redirect funding among the various cost categories of that program as established in the agreement

Block contribution approach

Block contribution funding is an option which allows funds to be reallocated within the block of programs during the agreement, as long as progress towards program objectives is being achieved. It is possible under this approach to allow recipients to keep any unspent funding provided that program delivery standards have been met and the recipient agrees to use the unspent funding for purposes consistent with the block program objectives or any other purpose agreed to by the department. The block contribution approach can be used where the recipient has met certain readiness assessment criteria (including results from the General Assessment.)

The flexible and block funding approaches involve multi-year funding agreements that can last up to ten years. Agreements of this duration are considered on a case-by-case assessment basis and require recipients to meet certain capacity and eligibility criteria. These approaches support stable, ongoing relationships and provide flexibility for Indigenous recipients in regards to the use of funding. Multi-year funding agreements also benefit Indigenous recipients by enabling them to reduce their administrative burden.

Key elements of each funding approach

Funding approach Treatment of unspent funds Redirection of funding to other programs or projects during agreement Criteria for INAC's Recovery of Funding
Funding approach Treatment of unspent funds Redirection of funding to other programs or projects during agreement Criteria for INAC's recovery of funding
Grant Can be retained by the recipient Grant is to be used for any expenditure related to the purpose, activity or initiative being funded. Recipient becomes ineligible
Set contribution Returned at end of each year
  • Funds are to be expended as identified in the funding agreement
  • Cannot be redirected to other programs or projects
Funding is unspent or spent on ineligible items
Fixed contribution,Indigenous recipients only
  • Returned annually unless used in the next year in the same program
  • Can also be kept and used in other areas if a plan outlining the activities to be undertaken with the unspent funds is approved by the department prior to use
  • Funds are to be expended as identified in the funding agreement
  • Cannot be redirected to other programs or projects
  • A plan is not provided/not approved where required,
  • Funding is not spent within timeline
  • Funding is spent on ineligible items
Flexible contribution, Indigenous recipients only Carried over each fiscal year during the agreement or the project and returned at end of agreement or project, whichever comes first
  • Funds are to be expended as identified in the funding agreement and cannot be redirected to other programs or projects
  • Funds may be redirected between cost categories in the project as defined in the funding agreement
  • Funding is unspent at the end of project or agreement
  • Funding is spent on ineligible items
Block contribution,Indigenous recipients only
  • Can be kept if used for activities in the block
  • Can also be kept for other activities outside the block if a plan outlining the activities to be undertaken with the unspent funds is approved by the department prior to use
Redirection of funding is allowed among any and all programs included in the block during the life of the agreement, subject to delivery standards being met.  
  • A plan is not provided/not approved where required
  • Funding is not spent within timeline, or is spent on ineligible items
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