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Why a New Managed Model for Government Grant, Incentive and Loan Programs is Good for our New Economy

February 17, 2021

Why a New Managed Model for Government Grant, Incentive and Loan Programs is Good for our New Economy

Synopsis
4 Minute Read

After focusing for many months on responding to the COVID-19 crisis, our governments are now beginning to transition economies to a post-pandemic world. To help businesses restart and get people back to work, federal, provincial and territorial governments are making public investments to support the recovery and build a strong, more resilient economy.

After focusing for many months on responding to the COVID-19 crisis, our governments are now beginning to transition economies to a post-pandemic world. To help businesses restart and get people back to work, federal, provincial and territorial governments are making public investments to support the recovery and build a strong, more resilient economy.

Grant, incentive and loan (GIL) programs are a key part of this transition. These government programs are intended to support businesses and communities with funding for capital investment, company expansion, hiring, training, research and development, technology adoption and other means to ramp up economic activity.

Recently, governments have been increasing their GIL offerings to quick start economic renewal. At the same time, in a volatile, disrupted pandemic environment, these initiatives present the government entities responsible for delivering them with significant challenges. A growing list of priorities, coupled with constrained resources, makes it arduous to get GIL programs up and running quickly and efficiently.

These complex programs must be designed, automated, administered and evaluated within tight timelines to help businesses, workers, economies and communities’ benefit from urgently-needed support. Moreover, in a fiscally tight environment, resources must be deployed cost effectively to deliver desired outcomes.

This is why a third-party managed model of government grant, incentive and loan programs has rapidly become a best practice model. 

There are a couple of variations of this model. A comprehensive approach involves contracting the complete planning, management, delivery and evaluation of a GIL program to a third-party service provider. The provider is accountable for outcomes and manages the tasks and risks of program delivery.

There is also a hybrid model where the government entity and the service provider divide responsibilities for design, automation, administration and evaluation. Government and provider share the responsibilities of program delivery.

Both models provide significant value within one or all of the four major components of GIL program management.

Design – The effective design of a GIL program involves aligning processes, operating models, resourcing, tools, performance and risks with defined and measurable outcomes. An experienced service provider can design a program for optimal accountability, transparency and objectivity. This delivers transparent decision-making criteria and efficient systems and resourcing.

Automation – A third-party provider tasked with successfully delivering a GIL program will review current processes and map out best practice processes that are rigorous and efficient. Providers can optimize program delivery with advanced digital technologies for processes, customer relationship management, reporting, monitoring and evaluation. This strengthens service levels, transparency and reporting and facilitates timely, informed decision making. 

Administration – When administering a GIL program, including marketing, due diligence, disbursements, repayments, monitoring and reporting, a service provider will aim for rigor and efficiency. Using an external resource for administration reduces or eliminates the need for internal staffing for these tasks and thereby lowers costs. 

Evaluation – A third-party provider will assess the extent to which program objectives have been met by developing outcomes analytics and conducting program and value-for-money reviews. This equips government with a truly objective assessment and eliminates potential conflicts of interest.

Throughout the management and delivery of a GIL program, an independent service provider also supplies impartial oversight that reduces the risk of errors and the potential for fraud. Ultimately, this enhances a program’s overall return on investment on multiple levels, including direct, indirect and induced economic impacts.

To realize the full ROI potential when evaluating potential service providers for a managed GIL program model, consider the following criteria.

  • Experience designing and delivering programs for governments and arms-length organizations that have government mandates or funding
  • Familiarity with best practices related to oversight, administration and reporting of the disbursement of public funds for defined purposes
  • Expertise developing comprehensive frameworks, robust policies, effective controls, efficient processes and practices, and thorough reports and audits for organizations that are required to steward grant, incentive and loan programs
  • A diverse team of qualified specialists with capabilities and expertise to provide accounting systems, project tracking database, financial and operational controls, communication technology, file storage and archiving, security, risk management and business continuity plans and systems

As a new economy takes shape in Canada, having a reliable partner to deliver critical grant, incentive and loan programs promises to be rewarding for governments, and communities, from coast to coast. To learn more about Grant, Incentive and Loan Programs and how MNP can help contact Jen Hayes, Partner, Consulting at [email protected].

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