What is the 10-Year Grant for First Nations?
The New Fiscal Relationship (NFR) 10-Year grant is a funding mechanism that provides more flexibility and predictability in how a First Nations government, Tribal Council, or First Nations-led service delivery organization uses its funding to address their needs and priorities. Most programs which provide core funding are covered under the grant.
The 10-Year Grant allows First Nations to:
- Better manage finances over a longer period to meet changing community needs;
- Keep unspent funds (no clawbacks of surplus funds at year end);
- Reduce the amount of reporting and resources needed to manage your finances; and
- Permit easy transition to the First Nations Fiscal Management Act (FMA).
Funding escalator announced in Budget 2021
Canada’s 2021 confirmed funding for a new annual NFR Grant escalator starting in 2021-22. Escalation will be based on inflation and the population of each community, but a minimum of two per cent annual growth will be provided to ensure that First Nations within the grant receive stable and predictable funding.
How is the FMB involved?
Indigenous Services Canada and the Assembly of First Nations (AFN) co-developed the NFR 10-Year Grant. This was a recommendation in the report “A New Approach: Co-development of a New Fiscal Relationship Between Canada and First Nations.”
The FMB’s and finance practices were selected by Indigenous Services Canada and the AFN as the framework that should be used in the NFR Grant.
As part of a memorandum of understanding dated November 6, 2018 between the FMB, the Minister of Indigenous Services Canada, and the Minister of Crown-Indigenous Relations, the FMB accepted the role of evaluating whether a First Nations government that expresses interest in a 10-Year Grant meets the eligibility criteria.
The FMB uses its 10-Year Grant Eligibility Policies and Guidelines to do this work. The final decision on whether a grant is offered to a First Nations government remains with Indigenous Services Canada.
How the FMB Supports First Nations During the NFR Grant Journey
- Provides advice and support, as well as access to tools developed by the FMB, during the 10-Year Grant funding application process;
- Supports the development of FALs or FABs;
- Confirms that a FAL or FAB meets the FMB’s and the grant eligibility criteria;
- Analyzes the financial performance of First Nations and confirms whether grant eligibility criteria is met;
- Prepares and issues compliance opinion reports on grant eligibility to Indigenous Services Canada (ISC); and
- Provides these services at no cost to First Nations.
Pathway to the NFR 10-Year Grant
To enter into an NFR 10-Year Grant agreement, a First Nation must meet the eligibility criteria co-developed by ISC, the Assembly of First Nations (AFN), and the FMB. There are eligibility criteria to be met.
Financial Administration Law or By-Law
The FMB will provide reports to ISC confirming that a First Nation has met the Financial Administration Law and Financial Performance eligibility criteria for the NFR Grant. ISC makes all final decisions on grant eligibility and whether to offer a grant.
In order to be eligible for the NFR Grant, a First Nation must enact either a Financial Administration Law or By-Law that meets the FMB’s Financial Administration Law Standards and that brings into force certain minimum provisions. More information on the minimum provisions can be found in ISC’s sample Comprehensive Funding Agreement model.
There are three options for Financial Administration development depending on your First Nation’s preference. The minimum standards that must be met are similar for all three options:
- First Nations Fiscal Management Act (FMA) Path: Where the First Nation will enact a Financial Administration Law (FAL) under section 9 of the FMA;
- Indian Act Path: Where the First Nation will enact a Financial Administration By-law (FAB) under section 83 of the Indian Act; or
- Inherent Rights Path: Where the First Nation will enact a Financial Administration Law (IR FAL) under their inherent law-making authority.
Following signing of the Grant Agreement, First Nations will be asked to demonstrate that these minimum provisions have been brought to life.
FMA Path: Financial Administration Law (FAL)
If your First Nation is already participating in the FMA and has a FAL, it may need to be updated to meet the grant eligibility criteria. If your Nation is listed on the Schedule to the FMA but does not yet have a FAL, one will need to be developed. In either case, a new or amended FAL must be approved by the FMB. The FMB will work with your Nation throughout the process to support development or updates.
Indian Act Path: Financial Administration By-Law (FAB)
If your First Nation operates under the Indian Act and does not wish to be added to the FMA, a FAB may be required. If you already have a FAB in place, it must be submitted to the FMB for review. Should it fall short of the minimum standards or grant eligibility criteria, it may need to be repealed and replaced with a compliant version. After its review, the FMB will provide advice to the Minister of Crown-Indigenous Relations, who is responsible for approving new or amended FABs under section 83 of the Indian Act. The FMB will support your Nation throughout the FAB development or compliance process to ensure eligibility requirements are met.
Inherent Rights Law Path: Inherent Rights Financial Administration Law
If your First Nation operates under the Indian Act but does not wish to be added to the FMA or enact a FAB, an Inherent Rights Financial Administration Law can be used instead. If you already have an Inherent Rights Law in place, it must be submitted to the FMB for review against minimum standards. Should it not meet the required standards or grant eligibility criteria, modifications may be necessary. The FMB will support your Nation throughout the development or compliance review process to ensure your law aligns with eligibility requirements.
Following its review, the FMB will provide advice to the Minister of Crown-Indigenous Relations who will be responsible for approving a new or amended FAB under section 83 of the Indian Act.
The FMB will support your First Nation through the FAB development and update process.
The FMB will provide reports to Indigenous Services Canada confirming that the NPO has met the Financial Administration and Financial Performance eligibility criteria for the NFR 10-Year Grant. Indigenous Services Canada makes all final decisions on grant eligibility and whether to offer a grant.
To ensure all NPOs have a chance to access 10-Year Grants over time, Indigenous Services Canada will issue annual calls for expressions of interest in the 10-Year Grants. NPOs who expressed interest in a previous year but did not complete the steps for qualifying, or who qualified but did not opt into the grant, must express interest again in order to be considered for next year. If the NPO met the eligibility criteria, but did not opt in, the FMB will work with the NPO to re-confirm eligibility to Indigenous Services Canada for the next year.
How to Apply
To apply for a 10-Year Grant, an interested First Nation must:
- provide a written “Expression of Interest” to your regional ISC representative
- send a copy to the FMB
- work with the FMB to enact a FAL or FAB under the FMA or Indian Act
- the FMB will confirm that that the FAL or FAB is consistent with the FMB’s standards and 10-Year Grant eligibility criteria
- provide audited for the past five years to the FMB
Please send your written Expression of Interest and audited financial statements using the form below.
Apply for a NFR 10-Year Grant
The FMB will evaluate whether the First Nation meets five Financial Performance Ratios and the NFR 10-Year Grant eligibility criteria.
The FMB will provide reports to ISC confirming that the First Nation has met the Financial Administration Law and Financial Performance eligibility criteria for the NFR Grant. ISC makes all final decisions on grant eligibility and whether to offer a grant.
To ensure all First Nations have a chance to access NFR Grants over time, ISC will issue annual calls for expressions of interest in the 10-Year Grants. First Nations who expressed interest in a previous year but did not complete the steps for qualifying, or who qualified but did not opt into the grant, must express interest again in order to be considered for next year. If the First Nation met the eligibility criteria, but did not opt in, the FMB will work with the First Nation to re-confirm eligibility to ISC for the next year.
Implementation Testing and Grant Monitoring
FAL and FAB Implementation Testing
The 10-Year Grant Comprehensive Funding Agreement signed between a First Nation and ISC requires certain minimum provisions of a First Nation’s FAL or FAB to be brought to life. As part of the Memorandum of Understanding dated November 6, 2018 between the FMB, the Minister of Indigenous Services, and the Minister of Crown-Indigenous Relations, the FMB has agreed to perform testing of the implementation of these minimum provisions using an approach co-developed by ISC, the FMB, and the AFN.
This one-time implementation testing will be performed by the FMB 12-18 months after the effective date of the 10-Year Grant agreement (or, exceptionally, as mutually agreed by ISC, the FMB, and the First Nation). The approach involves the FMB conducting a set of standardized procedures that have been agreed upon with ISC. The FMB’s report on the findings from the procedures will allow both the First Nation and ISC to determine to what extent the required FAL / FAB provisions have been brought to life. The results are intended to inform and contribute to meaningful capacity development discussions between grant recipients, ISC, and the FMB.
Implementation testing will be conducted remotely and will require the FMB to collect a variety of electronic records and interview key management personnel. This work will be scheduled at a time that is mutually agreeable and in a way that minimizes any disruption to the First Nation.
Exemption to FAL / FAB Implementation Testing for FMS Certified First Nations
Grant recipients with an FMS Certificate from the FMB will not be required to undergo the FAL / FAB implementation testing. First Nations who have an FMS Certificate have already demonstrated implementation of their FAL and compliance with the FMB’s Financial Management System Standards. This exemption demonstrates the value of FMS Certification and avoids duplication of testing.
The exemption from FAL / FAB testing for First Nations with FMS Certification will be subject to receipt by ISC of a report from the FMB confirming details about the FMS Certificate, along with a signed letter from the First Nation (to be collected by the FMB) confirming that the financial management systems related to the grant eligibility FAL / FAB provisions remain in place.
Annual Grant Monitoring
As part of the Memorandum of Understanding dated November 6, 2018 between the FMB, the Minister of ISC, and the Minister of Crown-Indigenous Relations and Northern Affairs Canada, the FMB has agreed to provide 10-Year Grant monitoring services to ISC. This monitoring approach has been co-developed by ISC, the FMB and the AFN.
Each year, the FMB will perform a limited scope review of a grant recipient’s financial performance that will include:
- review of the First Nation’s annual financial statements and accompanying ’s Report,
- a ‘roll-forward’ and recalculation of the five Financial Performance Ratios used for initial grant eligibility, and
- calculation of a preliminary risk rating to guide further discussions between ISC and the First Nation.
By reviewing the annual financial statements and the corresponding Independent Auditor’s Report, the FMB has developed a model that will identify the existence of potential risk factors. These risk factors will allow a multi-tiered approach to be used when the FMB is communicating monitoring results to Indigenous Services Canada. These tiered risk ratings are intended to inform and contribute to meaningful capacity development discussions between grant recipients, ISC, and the FMB.
The documents below contain the FMB’s Monitoring Framework and and Guidelines used to do this work.
Financial Performance Review
In order to be eligible for the NFR 10-Year Grant, a First Nation must demonstrate that it meets five selected Financial Performance Ratios.
The First Nation will need to send the FMB its most recent five years of audited financial statements. FMB staff will review the financial statements and use them to calculate five Financial Performance Ratios.
Fiscal Growth Ratio (FGR):
The FGR measures a First Nation’s ability to sustain and grow its revenues.
Thresholds – The First Nation demonstrates that its average FGR for the period under review is not lower than -5.0%.
Operating Margin Ratio (OMR):
The OMR measures a First Nation’s ability to balance its revenues and expenses to maintain operations.
Thresholds – The First Nation demonstrates that its OMR for the period under review is not lower than -5.0%.
Asset Maintenance Ratio (AMR):
The AMR assesses if a First Nation is investing enough to maintain its existing capital assets and add new assets as they are required.
Thresholds – The First Nation demonstrates that its AMR for the period under review is not lower than 100.0%.
Ratio (NDR):
The NDR measures a First Nation’s ability to manage its overall level of .
Thresholds – The First Nation demonstrates that its weighted average NDR for the period under review does not exceed 60.0% or that its NDR for the most recent year of the period under review does not exceed 60.0%.
Interest Expense Ratio (IER):
The IER measures a First Nation’s ability to manage the interest payments on its debt.
Thresholds – The First Nation demonstrates that its IER for the period under review does not exceed 5.0%.
Contact
Please contact FMB at 1-877-925-6665 or send a message below for more details about the New Fiscal Relationship 10-Year Grant eligibility criteria and getting started.
For other information or questions on New Fiscal Relationship 10-Year Grants, reach out to your regional ISC representative.