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Guide on Grants, Contributions and Other Transfer Payments


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2 Introduction

2.1 Purpose of the Guide

This Guide is designed to help managers and staff make informed decisions for creating and managing transfer payment programs within the federal government. While the Guide is primarily aimed at those officials who manage transfer payments daily, it also targets those who must correctly choose between initiating procurement contracts and transfer payments, who design and seek approval for creating transfer payment programs, who ensure existing and new programs are communicated effectively to potential beneficiaries, who manage or ensure accountability for transfer payments, and who report to management and Parliament.

Based on a life-cycle approach developed by the Office of the Auditor General (OAG), the Guide identifies the key attributes for properly managing transfer payments. The life-cycle approach refers to a transfer payment program's normal cycle, from its creation and implementation to its evaluation. These attributes are:

  • choosing the right funding instrument;
     
  • establishing clear performance expectations;
     
  • ensuring there are precise program eligibility and assessment criteria;
     
  • ensuring fairness so that every eligible Canadian has the opportunity to apply;
     
  • undertaking due diligence;
     
  • choosing worthy projects;
     
  • paying out funds for the agreed purposes;
     
  • resolving project and program performance problems quickly;
     
  • reporting to management that demonstrates a good knowledge of program performance; and,
     
  • collecting money promptly that is owed to the Crown.1
     

2.2 Content related to the Policy on Transfer Payments

This Guide should be read in conjunction with the Treasury Board Policy on Transfer Payments (TP policy). It does not provide new policy directives but does elaborate and interpret policy and procedural requirements.2 Where the Guide uses the directive "must," it does not create a new obligation but rather reflects an existing obligation under the policy.

The Guide also draws on the requirements of other policies and TB guides that are relevant to managing transfer payments, including topics such as evaluation, internal audit and financial management accountability.

2.3 Conventions and definitions

2.3.1 Conventions

In this Guide, "transfer payments" and "transfer agreements" are used as generic terms for grants, contributions and other transfers when there is no need to differentiate them.

The term "departments," unless stated otherwise, also refers to agencies delivering federal transfer payments.

This Guide uses the words "transfer programs" to designate programs that are entirely devoted to transfer payments. This term and the Guide also apply to programs containing at least one distinguishable transfer payment component.

2.3.2 Definitions

The following definitions apply to this Guide (although other documents or publications may give these expressions a slightly different meaning).

Guide

Definition

Comments and examples

Applicant
(requérant)

An individual or organization that seeks to enter into a transfer agreement with a department.

Example: A not-for-profit organization seeking contribution funding to create a shelter for the homeless.

Audit
(vérification)

A management tool that provides independent, objective assessment linked to results.

A management audit assesses the overall management and activities of a program or part of it.

A financial audit can assess the financial statements' fairness or include all aspects of a specific transfer agreement.

Beneficiary
(bénéficiaire)

An individual or organization that directly benefits from a recipient's activities but is not party to an agreement with the recipient or ultimate recipient.

Example: Jobless workers who have been taught a new trade by an initial recipient under a transfer agreement

Monitoring
(monitoring)

Monitoring refers to the financial and operational control exercised by program officers over contribution recipients during the life of the agreement.

Financial and operational monitoring is covered in Section 9 of this Guide.

Outcome
(issue)

An external consequence attributed to an organization, program, etc. that is considered significant in relation to its commitments. Outcomes may be described as: immediate, intermediate or final, direct or indirect, or intended or unintended.

Examples: lower unemployment rate, health improvement for a targeted group, increased industrial activities or productivity, enhanced foreign trade.

Output
(operational)
(extrant opérationnel)

The result of an operational process.

Examples: the production of a monitoring report, the signing of an agreement, the release of payments.

Output (program)
(extrant programme)

Direct products or services produced through program activities and delivered to a target group or population.

Examples: New jobs created, shelters for homeless, research reports, seminars, direct support to social or economic activities.

Participant
(participant)

A generic term designating any person, group or organization that applies for or receives transfer funds or directly benefits from these funds.

Participants can be applicants, recipients, beneficiaries and third parties (See definitions of these terms in this table).

Recipient
(destinataire)

An individual or organization that has entered into a transfer payment agreement with a department.

Examples:

  1. A company that has a contribution agreement with a department to hire 15 non-qualified jobless workers and teach them a trade. In return, the department reimburses 50% of the wages paid for six months;
  2. A social worker who receives a $10,000 grant to support research on the increase of violence among high school students.

Result
(résultat)

In this Guide, this term includes both output and outcome when it is not necessary to distinguish between them

 

Sub-agreement
(accord auxiliaire)

An agreement between a recipient and an ultimate recipient.

Example: A Tribal Council as recipient agreements with an Indian Band as ultimate recipient to provide services to Band members (beneficiary).

Third Party
(tiers ou tierce partie)

The policy regards a third party as the initial recipient of a transfer payment agreement, which in turn disburses funds to an ultimate recipient.3

However, the legal definition of "third party" in Black's Law Dictionary is "one not a party to an agreement or to a transaction but who may have rights therein."

Ultimate recipient
(destinataire final)

An individual or an organization that has entered into an agreement with a recipient to carry out the objectives of the original transfer payment agreement.

Refer to the example under Sub-agreement.

In this guide, the terminology used to identify the various parties involved in transfer payment agreements varies from the policy. This is due to the discussion of more complex relationships than are treated in the policy. The chart below provides examples of how these terms are used.

Parties Involved Þ

i.e. Department

e.g. University

e.g. Researcher

Terminology used in TP policy Þ

 

third party or initial recipient disburses the funds to an ultimate recipient

ultimate recipient or ultimate beneficiary

Terminology used in Guide Þ

 

recipient

ultimate recipient


Parties Involved

i.e. Department

e.g. University

e.g. Researcher

Terminology used in TP policy Þ

 

ultimate recipient does not disburse the funds to another party

no reference in the policy

Terminology used in Guide Þ

 

Recipient

beneficiary (no funds are received directly but a benefit is attributed to this party)


Parties Involved

i.e. Department

e.g. Company

Terminology used in TP policy Þ⇒

 

initial or ultimate recipient

Terminology used in Guide Þ

 

recipient


Parties Involved

i.e. Department

e.g. Tribal Council

e.g. Indian Band

e.g. Band members

Terminology used in TP policy Þ

 

third party or initial recipient

ultimate recipient or ultimate beneficiary

no reference

Terminology used in Guide Þ

 

recipient

ultimate recipient

beneficiary



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