Provincial Funding Reform for Nonprofits: Presentation to the Toronto Funding Forum January 29, 2016
Overview 1. About the Ontario Nonprofit Network 2. Funding reform: What is the problem? 3. Progress to date 4. Next steps 5. Questions and discussion
About ONN Our mission A strong and resilient nonprofit sector. Thriving communities. A dynamic province. Our vision To engage, advocate and lead with – and for – nonprofit and charitable organizations that work for the public benefit in Ontario. Our policy priorities • People (labour force issues, including Decent Work, pensions, and diversity) • Governance (e.g., Ontario Not-for-profit Corporations Act) • Finance (e.g., funding reform, access to financing, social enterprise) • Systems and structures (e.g., shared platforms, data strategy) About Liz ONN policy advisor, responsible for funding reform, pensions, police record checks, and other files; previously worked for national and provincially-focused nonprofits and the federal government.
Funding reform: What is the problem?
Funding reform in two parts Part 1 - Funding levels: The “how much” • Nonprofits exhausted by doing “more with less” • Large and growing unmet needs in communities Part 2 – Transfer payment modernization: The “how” • Many opportunities to streamline processes and reduce the administrative burden — for both sectors • This is ONN’s current focus.
History & current context • Gov’ts and nonprofit sector have wrestled with the funding relationship for years. – $ from 14 Ontario ministries, dozens of financial/administrative systems – Considered an “administrative priority” but never a “hot” issue • Blue Ribbon panel (federal, 2006) – “not only is it possible to simplify [grant and contribution program] administration while strengthening accountability, it is absolutely necessary to do the first in order to ensure the latter.” • Drummond report (provincial, 2012) – “Reform funding practices in the non -profit sector to increase flexibility and reduce administrative costs by focusing on measuring outcomes rather than inputs.”
Goals of the funding reform agenda (adapted from Vision Document) • Enable both government and nonprofit organizations to spend less time on administration and more time on program delivery and improving results by: – Streamlining and standardizing administrative processes across ministries & programs. – Transitioning to predictable, stable, long-term funding for nonprofits that deliver services on behalf of government. – Creating reporting processes that are easier to navigate and focus on outcomes. – Reinvesting savings generated by streamlining processes back into communities to support a healthier and more resilient province .
Transfer Payment Agreements: Challenges (1) • The overhead myth • Private sector includes these in fees they charge. Often between 25 and 35 %. Government generally allows no more than 10 to 15 %, and has many ways of calculating allowable levels and expenditures. – Lack of consensus on legitimate admin costs & how much funder should pay; lack of recognition of value of what admin costs cover; misguided use of admin costs as a proxy for efficiency. • Grants Ontario – Limited number of ministries/programs using the portal; provides poor user experience; many technical issues. – Limited “my account” functionality; no organizational history (tombstone data or application & reporting history) provided. • Open data/Open government – Large volume of program data is collected from nonprofits “just in case” and then shelved; no aggregated data about the funded nonprofit sector is made available (even the number of transfer payment recipients is unknown).
Transfer Payment Agreements: Challenges (2) • Budgeting rules & risk management – Different budget rules across programs; inflexibility re: eligible/ineligible expenses and ability to shift funds between budget lines; lack of capital funding; inability to accumulate reserves/balance budget over 2-3 years; no coverage for severance. – Consolidated audited financial statements are ignored in place of specific program budget statements (contorted to fit eligible expenses) and separate audits. – Too much focus on compliance & control rather than risk management. • Umbrella contracts – No mechanism in place for one ministry to serve as steward of multiple agreements for multi-service organizations & community hubs. • Contract variability – Major variations across programs and ministries; contract changes mean costly legal reviews.
Timeline 2012 Open for Business report calls for “quick wins” and longer priorities on funding reform to reduce the admin burden; Ministry of Citizenship & Immigration (now MCIIT) leads with ONN on a Funding Reform Steering Committee. 2013- ONN works to advance the Funding Reform agenda: Works with MCIIT on two 14 pilots (Risk management; Budget flexibility), but progress is slow. 2014 Progress stalls; ONN asks for a revamped process; Steering Committee is “restructured” into the Joint Funding Reform Forum (JFRF), with MCIIT as co - convenor and TPAM Office (Treasury Board) leading implementation. Vision Document and Inter-jurisdictional Environmental Scan commissioned. 2015 JFRF launched. TPAM Office gets official mandate in Budget ’15. Nonprofits and government representatives encouraged by renewed willingness to effect change. New joint workplan (ONN & TPAM) undertaken.
Nonprofit JFRF members • As a network, ONN relies on our members to bring the sector’s voices to government. We have a joint government-nonprofit Funding Reform Forum that meets quarterly to address issues. Nonprofit reps include: • Maureen Fair, West Neighbourhood House • David A. Ferguson, Ottawa-Carleton Association for Persons with Developmental Disabilities • Meri Saunders, Ontario Federation of Indigenous Friendship Centres • Michelle Quintyn, Goodwill Industries, Ontario Great Lakes • Kathleen Sharpe, Ontario Cultural Attractions Fund • Debra Shime, United Way Toronto & York Region • Cathy Taylor, ONN (co-chair)
Progress to date
Recent progress • Spring 2015: • Vision document finalized and published. • TPAM Office announced in Ontario Budget 2015. • Focus group on budget flexibility held – lessons learned informing pilot projects. • Summer 2015: • Census of 2013-14 funded organizations for common business registration. • Think Tank Day on admin costs and performance-based funding approaches held. • Fall 2015: • Priorities for pilot projects agreed upon. • ONN Conference session on funding reform. • Some agreement on definition/scope of admin costs & statement of principles. • Winter 2015-16: – MaRS Solutions Lab engagement sessions with senior government and nonprofit reps. – Human Services Demonstration Projects launched – this week!
Next steps & ONN’s role
Next steps: 2016 • “Travelling road show” on admin costs (ONN with TPAM). • Common business registration process to go into effect and build toward “my account” functionality (TPAM). • Work with CPA Canada’s Nonprofit Accounting Standards group to ensure government reporting needs are met via consolidated reconciliations and audited financial statements (ONN & partners). • Launch a Grants Ontario survey/webinar-based focus group (TPAM & ONN). • Monitor and learn from Human Service Demonstration Projects (TPAM). • Integration of lessons learned into community hubs process (ONN & TPAM). • Continue seeking nonprofit input via quarterly JFRF meetings and wider consultation as needed (ONN & partners). • BOTTOM LINE: The funding reform agenda is a long haul, but we’re encouraged by progress. We need nonprofits to continue telling their funders and MPPs if this is an issue for them, so we can keep the political will to continue making progress.
Questions?
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