HUMA Committee Meeting

STANDING COMMITTEE ON HUMAN RESOURCES DEVELOPMENT AND THE STATUS OF PERSONS WITH DISABILITIES

COMITÉ PERMANENT DU DÉVELOPPEMENT DES RESSOURCES HUMAINES ET DE LA CONDITION DES PERSONNES HANDICAPÉES

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, May 11, 2000

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[English]

The Chair (Mr. Peter Adams (Peterborough, Lib.)): Colleagues, we will begin. As you know, we're continuing our inquiry into HRDC grants and contributions. In fact, we are getting towards the end of that inquiry.

Before I introduce our witnesses today, I would like to mention to you that next Tuesday, at our regular time, our meeting will deal with some NGOs, non-governmental organizations, involved in the grants and contributions schemes.

On Wednesday next we have an additional meeting at 3:30 p.m., at which our principal witness will be the Honourable Claudette Bradshaw, the Minister of Labour, and that's at the request of the committee.

On Thursday we will have the Honourable Jane Stewart as our principal witness once again. After that, we proceed to the development of our report, which, as you know, has to be tabled by June 1, 2000.

Today I would like to introduce to you our witnesses, but the question we're dealing with, as we've said ourselves, as I understand it, is that we're trying to think of how to improve the system, how to draw something from the problems that the internal audit identified. The question we're dealing with today is, what tools are available to ensure accountability, and can these be applied to the administration of grants and contributions by the federal government? How can the new technology provide information to donors—in this case, the government—and the public about administration as well as effectiveness? And finally, what is the cost of such things?

Our witnesses have very kindly agreed to address those matters, and we do appreciate it. We have with us Dr. Gillian Kerr.

Gillian, we appreciate your coming here. Gillian is a consultant. Perhaps she'll describe what she does and what her background is when she begins.

Then we have, with Charity.ca—

Am I getting that right?

Ms. Susan Brekelmans (Charity Liaison Officer, Charity.ca): It's Charity.ca.

The Chair: Okay. From Charity.ca, we have Susan Brekelmans, who is the charity liaison officer. From the University of Toronto, we have Audrey Cheung, who is the director, of research grants, research services.

We do welcome you all here. If it's all right with you, we'll proceed in the order on the agenda. We normally have the presentations first, and then we follow them all with the questions.

Dr. Gillian Kerr.

Dr. Gillian Kerr (Individual Presentation): Thanks.

I'm a psychologist. I've worked with over a dozen human service funders in the U.S. and Canada. I'll give you a little bit of my background so you'll know where my comments are coming from.

I've worked with about 14 human service funders in the U.S. and Canada, and every single one of them has asked for help in giving money out to achieve more social impact. Every single one of them needed better information systems, so none of them were able to track effectively where the money was going and how to deal with them, which is one of the reasons I've moved into information technology from psychology and evaluation. However, I've also been an external evaluator for several HRD programs, so I know HRD fairly well.

I want to make a couple of points. I'll cover them quickly and then we can get into them in the discussion.

The first point is that HRD is not alone in this problem. As I said, all our scale funders have a terrific amount of difficulty in tracking funding. Part of that is because we know effective human service funding is holistic. You have to look at a person's whole context. To be able to track what goes to youth, what goes to the youth kids, what goes to the youth parents, how to track geographic area as well as community, as well as problems, as well as intervention, is a huge problem. Every funder and every government department has different definitions of each of these variables, and they all track them differently.

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[English]

The other reason HRD is not alone is because it's not alone in being a funder in the non-profit sector. Canada has about 76,000 registered charities. That alone represents an enormous public investment, just in terms of tax write-offs.

But most of those charities have multiple funders. Many of the agencies I've worked with have over 20 funders, each of whom ask for different funding forms. Because the funders really don't understand or appreciate the amount of overhead it takes to run a decent information system, the result is terrible data. The data that come out of there aren't worth much for most of the agencies. It also makes it impossible for any funder to track what's going on and to consolidate it so that funders are unable to use that information for social policy, for outcome research, for evaluation, or anything else.

It's a wonderful time to start dealing with this problem. This is an incredible opportunity to fix the system for the Canadian charitable sector, as well as for the different levels of government, at the same time, to develop information tools that can benefit charities, as well as making the whole sector more accountable and more transparent to the public.

I'll make just a couple of minor points, and we can get into any of these in more detail.

Obviously, when funders ask for too little information, they can't provide public accountability on where the funds have gone. They can't perform any analyses of social programs and impacts, and that always results in a poor use of public resources across the board. However, whenever there's a public acknowledgement of this—and there is with every funder—the reaction is panic. The way funders panic is they clamp down and ask a whole lot more questions of the agencies, and the whole system freezes.

So when you start looking at the cost across the system and what's happening to small agencies because all their funders are panicking, from the United Way to private foundations to government funders, things really grind down.

One of the answers is to start requiring the same kind of information. Things like addresses should be the same across the board. Things like revenue should be the same across the board, to decrease the administrative load and make analysis easier.

Another thing that panic does is make it very easy to ask for funds. More and more, funders want charities to work with private sector partners.

I worked for a high-tech firm. I've been in the non-profit sector for 25 years. I did not have time to fill out funding forms. They were so awful that I would turn down the opportunity to work with an agency because the paperwork was too onerous. Even when the funding forms were okay, the decisions took about four or five months to make. By that time, I was doing something completely different. The turnover of my staff was... We just didn't have the tools to be able to do it in the first place.

So it's not enough to get accountability. You have to ask information in a way that gets you where you want to go. That means you have to have a decision-making process that supports the outcomes you want, and that's the context of a good information system.

Finally, what I would really encourage you to think about is an integrated information system, probably on the web, having parts of it public and available to the public and parts of it private and available to funders, and start developing standardized definitions of common data elements so that agencies don't have to fill out the same things over and over again in different ways, but also so that you can instantly grab huge amounts of information about where money is going, where it's being spent, where it's being invested, and what kind of impact it's having.

The Chair: Thank you very much, and thank you in particular for keeping so much to the points we raised.

I think we have an agreement here that we'll change the order and go next to Audrey Cheung of the University of Toronto, and then to Susan Brekelmans.

So, Audrey, you're next.

Ms. Audrey Cheung (Director, Research Grants, Research Services, University of Toronto): My name is Audrey Cheung. I'm the director of research grants at the University of Toronto. At this time, I manage grants administration staff as well as research accounting, ethical review staff, and information technology staff.

At the University of Toronto we manage over $140 million in research funding per year and roughly an equivalent amount of donations money. We have approximately 2,500 faculty members, who we refer to as principal investigators, who have primary fiduciary responsibility for managing this money. We receive money from over 1,000 research-sponsoring agencies, whether they are government or corporations.

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I want to start off with a brief definition of accountability from the point of view of an institution that receives money. Accountability means spending on the right thing—only on goods and services that are necessary for the undertaking and that are permissible under the sponsor agencies' terms and conditions.

Second is spending the right amount. Sponsors provide budgets that cannot be exceeded and sometimes provide budget categories that dictate what kinds of items can be bought. We are also interested in assuring that the best price for the best quality of goods or services is achieved.

The third point is spending at the right time. Sponsoring agencies quite often provide project start and end dates, and we do not want to permit spending prior to a project start date and certainly not spending after a project end date.

The last point is that accountability means being able to report on and defend all of our activities.

So the overall requirement is that everyone has to do the right thing, and we believe there are software tools that support these kinds of activities.

Going back to who needs to do the right thing, in any institution, and particularly at the university, there are a number of activities that have to take place to support accountability: the negotiation of terms and conditions; the communication of those terms and conditions to all of the staff who might be involved in managing these funds; and reporting activities, whether financial or the conduct of activities, back to the sponsor agency—and this group of activities is usually undertaken by more than one part of an organization, which supports accountability with respect to the segregation of duties and putting in a structure where there are checks and balances on all of our activities.

Someone else—and generally for us it's a faculty member—has primary responsibility for undertaking the funded activity and authorizing project commitments and expenditures. This is the individual who has primary fiduciary responsibility to ensure that all expenditures are necessary and permissible, that goods and services have actually been received to our satisfaction, that they are being paid for at the right price and at the right time, and that they do not exceed the budget.

Our faculty members are also responsible for conducting the activity in a responsible, competent, and ethical manner.

The chairs of our departments are responsible for supervising our faculty members in all of the activities that are undertaken. So they have overall responsibility for conduct from an ethical point of view as well as from a financial point of view.

We have other individuals who review expenditures prior to recording them to ensure they are compliant with the sponsor agencies' guidelines.

Lastly, we have individuals who record the expenditures on our financial information systems.

So all of these individuals need tools to do their jobs, and given that this is more than one person, there needs to be an effective way of communicating what the responsibilities are with respect to terms and conditions of grants that may come from any one of a thousand research sponsors.

The first tool I will talk about is our research information system. Basically, this system is the management information system component. We also have a financial information system that allows us to track financial activity.

The research information system tracks all funded awards, and in summary, the research information system identifies if, when, where, and how funding can be accessed and who has access to it. We track all funded awards.

The system identifies who has primary fiduciary responsibility, overall responsibility; what the terms, conditions, and restrictions are—time restrictions, budget restrictions, type-of-expenditure restrictions—as well as who has responsibility for financial reporting and who has responsibility for reporting on the activities; what the eligible expenses are; and what expenses are ineligible.

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The tool we developed is an online tool that is accessible to staff members throughout the university and can be used to support their management activities.

Our financial information system allows for the segregation of accounts so that individual researchers can review activities that relate to a particular grant. The institution can report and be audited on the financial activity for an individual grant and we can report back to the sponsor agency on the financial activity.

At the University of Toronto, we have an integrated system. Our research information system is integrated with our financial information system. As I said before, our research information system summarizes all of the terms and conditions with respect to grant administration. Some of those terms and conditions translate to information on our financial information system, and this is done on a shared basis. This includes the identity of who has primary fiduciary responsibility, where the funding is, budgetary restrictions, and some of our other financial terms and conditions.

The financial information system provides information on the financial status of awards. It is also the place from which we derive our financial reports for our research-sponsoring agencies.

I'll give you a couple of examples of how integrated systems support integrated processes.

On our financial information system, you're not able to record commitments or expenditures that exceed the budget. In that case, you can look to the research information system to identify what the reason is. It may be that a researcher has exceeded their budget for a particular year or exceeded the budget for a particular project.

The next process is to identify another eligible source of funding for a particular expenditure, and the research information system allows for an easy search for other eligible sources of funding.

In cases where an invoice may be recorded against the financial information system and is rejected, either because the funds are no longer available or because the expenditures were incurred prior to a start date or after an end date, the research information system tells the user why the particular transaction has been rejected, and then once again, assists in the identification of other sources of eligible funding.

The other benefit of integrated systems is that you can access the financial information system and the research information system all in one platform, so there's a common look and feel. It reduces the amount of training to use the systems and therefore becomes less of an obstacle to using the tools at hand.

In summary, I'd like to say that integrated systems and integrated business processes to support accountability activities require three things: people power, time, and money. It costs money to develop and support these systems. It also costs money to staff universities to be able to carry out all of these functions competently.

So I want to make a plug for indirect costs. The university has made some great strides in terms of the recovery of indirect costs to support our activities in recent months. We look toward the federal government as well. In fact, my own vice-president has done quite a definitive report to start the discussion on this.

Thank you.

The Chair: Thank you, Audrey.

Of course, this is another matter, but I am familiar with the report you mentioned, and I might later on discuss indirect contributions, but not right now.

Ms. Audrey Cheung: Okay.

The Chair: Next is Susan Brekelmans, who—I'll say it correctly this time—is the charity liaison officer of Charity.ca.

Susan.

Ms. Susan Brekelmans: Hi. I'm Susan Brekelmans.

Before I joined Charity.ca, I worked in the literacy field. I coordinated Peter Gzowski's golf tournaments for literacy, so I've been involved with receiving HRDC grants.

But now I'm with Charity.ca, and we're brand new. We started in January. We're the new face of giving. That's our motto. We exist to benefit charities and the donors that support them.

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Charity.ca is an easy-to-use, low-cost, online resource for charitable giving in Canada. We are the first Canadian charity donation portal. We're actually a “vortal”, or vertical portal. It's an Internet information gateway that will provide Canadians with a comprehensive list of charities from which they can choose, and it will allow them to donate online using their credit cards.

We provide to charities an alternate source of fundraising. It's cost-effective and allows them to administer donations that come through the website very easily.

Charity.ca is a Canadian company. It was developed here in Canada in Toronto. Richard Ivey, the philanthropist and businessman, is the founder of the company. Charity.ca is a project of the NRG Group, which is an Internet incubator based in Toronto.

We offer instant, simple e-commerce to charities. There are no equipment or set-up charges, so a charity can experiment with e-commerce easily. They can also put a Charity.ca link on their own websites, which will allow them to take donations, via our site, from theirs.

It's a full-service solution that provides donations collecting, e-tax receipts, donor tracking, and data management. We're open seven days a week, 24 hours a day. It's an inexpensive fundraising method. Our transaction fee is 8%, which is lower than other fundraising methods. At the moment, the average cost to raise a dollar is 26¢, so we figure 8¢ on the dollar is not bad.

We provide e-tax receipts approved by the Canada Customs and Revenue Agency. That reduces the amount of staff time needed for receipting, which is a very labour-intensive process.

We also provide publicity and awareness to the sector. We're rolling out a marketing and advertising campaign at the end of the summer, and we'll be promoting charities on our website on an e-zine that will appear on the front page.

We'll also provide charities with information about the donors who give to them, but also more general information in terms of patterns of giving and demographic information about donors who give on our site.

What we offer to donors is easy and convenient giving anytime, anywhere—informed giving, which is very important. We held a couple of focus groups with some donors and learned from them that they want increased accountability from the charitable sector. We're providing them with a comprehensive and easy-to-use directory of charities and events, with a standardized template and coding structure, so a potential donor can compare apples to apples, looking at revenue and expenses, programs, size of the organization, etc. We also hope at some point to make available online the T3010 information returns.

Another appealing feature of Charity.ca is managed giving. Much like an online self-directed RRSP, Charity.ca allows an online portfolio of giving. Donors can set up a list of their favourite charities and return to the site at any time to donate and track their donation history. They'll also have access to news updates and a calendar of special activities and events for their favourites.

As I mentioned earlier, we're providing information and inspiration through our online magazine. We'll also provide instant disaster relief. Hours after a flood or an earthquake, we will have on the site a list of the charities collecting for that crisis, allowing donors to give instantly.

As I mentioned, I worked in literacy before, and literacy is a real low-tech part of the charitable sector, so I experienced first-hand the digital divide. We know that only 35% of non-profit organizations have Internet access and estimate that fewer than 5,000 have an Internet presence. Fewer than 500 have e-commerce capabilities, so Charity.ca offers them a way of getting online.

Charities are more and more aware of the need to get online and appeal to donors and supporters. A recent survey in the U.S. showed that 4 in 10 Americans are likely to use the Internet to find information about charitable organizations. They said a lack of information about charities and uncertainty about where to find the information stops them from giving.

We essentially offer a solution for charities in search of donors and donors in search of charities.

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Later this year we will be providing the service in both official languages. We're going to be opening a French site called Charité.ca.

We'll lower the cost of fundraising and donations management for charities, increase their visibility, and provide information and choice to donors. It's a new economy solution.

Thank you.

The Chair: Susan, thank you very much.

I was interested in your history with Peter Gzowski and his literacy program. He's now the Chancellor of Trent University, which is in my riding. He's proving to be a very successful chancellor.

I have a list. It begins with Paul Crête. Then we will proceed to Bryon Wilfert, Rey Pagtakhan, Larry McCormick, and Judy Sgro.

Paul Crête.

[Translation]

Mr. Paul Crête (Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, BQ): My question is specifically directed to Dr. Kerr. The system at HRDC is profoundly ill. Some grants are not allocated to their intended recipients. For instance, a grant which was supposed to go to the riding of Rosemont went to the riding of Saint-Maurice. A $ 700 000 grant which was meant to create jobs only served to transfer jobs..

We also became aware of some major administrative problems because they were disclosed, among other things, following the internal audit. And it is recurrent, since internal audits had identified the same problems in 1991 and 1994. As it involves public funds, it is also strongly suspected that they may have been used for partisan purposes.

In such a situation, how can you, Dr. Kerr, speak of fixing the system as you did a moment ago? What are the basic elements which you think might make it possible to fix it? Can it be done? What are basically the elements which would be needed to make sure to put a stop to what has existed and has been institutionalized since 1991 and 1994 and is still going on, so that, when an assessment is done five years from now, the result will be entirely different? What should be done to rectify the system really in depth?

[English]

Dr. Gillian Kerr: That's a great question. I've been on a crusade for the last 12 years, working with different funders to try to solve this problem. When I was at the United Way of Greater Toronto, I set up the allocations information system to give money to 200 agencies, which is tiny compared to HRDC. It's still the only United Way system in Canada that does that, because you really have to understand what you're trying to do. You have to understand what the outcomes are as an allocator, as a funder. You have to understand who you want to give money to and why. Then you have to change the processes into software. That's something Audrey talked about as well.

A really good example, if members of the committee want to see a grants-making software on a large scale, is MicroEdge in the U.S. It is one of the best and is used by many major foundations. Their information system plugs into existing accounting and financial systems to make sure people don't have to start from scratch. It includes things like a correspondence module to make sure people are sending the right correspondence back and forth to funded agencies. It has a board or committee management module that makes sure the senior decision-makers get the reports at the right time and the decisions are fed back into the funding process. It has financial tracking components.

There are many modules to a good funding system that all have to be integrated and tested over many years. My first recommendation would be to look at one or two of the best top-notch, off-the-shelf programs and maybe get those organizations to look at the federal funding scene and talk about the kinds of modules that need to be done. That's the first thing.

Second, because HRDC is such a major funder and the federal government funds across the country, you have the capacity to develop standards that everybody else will use. I mentioned this before. You cannot fund well without a common data dictionary. So the administrative load and the duplications and inefficiencies that come out of different definitions are unbelievable. HRDC could take a highly public and very needed role and say, “Come on, guys. Let's just figure out what elements all funders need to be able to fund well and set that up across the country in a really good system that can be accessed by every funder, including public donors.” This is why Charity.ca is interesting.

Individual donors often need the same kind of information to make informed decisions as funders need. You need to have excellent process people as well as technology people. We can get into more detail later about any of those specifics.

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The Chair: I would remind the witnesses that our members have a certain amount of time, and that time includes your replies. This is not to cut you off, Gillian, but just bear the members' interests in mind.

Paul Crête.

[Translation]

Mr. Paul Crête: Mr. Chairman, since all the time allocated to the opposition seems to be at my disposal, I will probably have plenty of time to ask my questions.

What you are saying is interesting, Dr. Kerr. I would like to ask a question of both Mrs. Cheung and you. I think that our current system has the two major shortcomings a management information system can have. On one hand, it can publish 12 000 pages which do not contain any detailed information and can be questioned easily and, on the other hand, it cannot provide any precise information on a specific case. I believe these symptoms indicate that the system is very ill since, instead of giving us topnotch information on a specific case, it can only deliver a large quantity of paper.

That is what I understand from what you just said. Should the federal government not state, right from the start, that it wants to solve that organizational problem? There has to be a political will to do it.

As Mrs. Cheung said earlier, it would require time and money. If I understand correctly, those would be the pillars supporting any effort to rectify the situation. Is it not also true that, when a situation is tragic and serious, as it currently is, it becomes even more necessary to have time, money and clearly identified powers to be able to find a solution?

In that sense, we are drawn back to the recommendations made by Deloitte & Touche, namely that the areas of responsibilities have to be clearly established. What are your thoughts on this?

[English]

Dr. Gillian Kerr: I think you're right. There are three things that need to happen. Political will is the first. There has to be an awareness of the magnitude of the problem and a willingness to approach it in an integrated way.

The second thing is that there are very significant investments in time and money to get this fixed and to make sure it's fixed for the system as opposed to just for HRD's narrow needs.

The third is timing. The cost of this kind of massive information technology is less than it's ever been. This is wonderful timing to put in a solution that will be public and transparent because of tools such as the Internet.

[Translation]

Mr. Paul Crête: I would like to know whether Mrs. Cheung wants to make any other comments on the question I asked. Would you have any other comments on this topic?

[English]

Ms. Audrey Cheung: Funding agencies and recipients of funds have complementary problems. We're all part of the same process. We have complementary needs for software tools to support our accountability responsibilities.

SAP is the vendor of the software we have used to manage our grant funds. I just wanted to let you know that SAP is looking at software tools that will help to support funding agencies. This is a pilot project that they have on their list. The University of Toronto is participating in this pilot project in terms of helping them to define the requirements for this and reviewing the ongoing process.

They're doing this in a two-stage approach. They're developing a grants management tool for other institutions. We have a customized tool that is based on SAP technology that SAP is developing, something that's broader and that will be used by major universities in the United States, Canada, and all over the world. Because they recognize that the needs are complementary, they've also had a lot of demand from the U.S. government as well as the Canadian government, potential customers, and charitable institutions like the Kellogg Fund down in the States, all of which have similar accountability and process needs.

The second phase of their particular project is to develop a grants management module for funding organizations.

The Chair: Paul Crête, very briefly.

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[Translation]

Mr. Paul Crête: Mrs. Cheung, I would like you to give us some explanations on the way the accountability principle is implemented in your institution. You mentioned earlier the responsibility of the researcher. Are they responsible for any extra spending? Where does the responsibility lie?

In a university, some people are elected; for example, the chancellor is chosen by the community. I would like you to elaborate a little on the accountability process, to enable us to know whether we could use it as a model to rectify the shortcomings which have been identified at HRDC.

[English]

The Chair: I regret that this will need to be a fairly short response.

Ms. Audrey Cheung: Okay.

The Chair: You could perhaps come back to it later on.

Ms. Audrey Cheung: The researcher has primary fiduciary responsibility to ensure that all project expenditures are eligible according to the sponsor guidelines. The research information system, which identifies the relevant restrictions on grant expenditures, is an online tool with 24-hour availability that allows them to make the right decisions. Before they commit to a particular good or service, they're able to see if it's allowable.

The financial information system provides accurate and timely financial reporting, which tells the researcher if he has the money to make the commitment.

The Chair: Bryon Wilfert.

Mr. Bryon Wilfert (Oak Ridges, Lib.): Thank you, Mr. Chairman.

With the last couple of presentations we had, I said it was too bad they hadn't appeared earlier because we have spent so much time on the disease and not enough time dealing with the necessary cures. Unfortunately, it looks like we're the only ones who are interested in the cure, other than my friend Mr. Crête. We have a deadline of June 1 for a report, which hopefully will make some specific recommendations. Certainly the discussion this morning has been informative in terms of some of the tools.

Dr. Kerr, you have indicated that in your past activities you had some dealings with HRDC in terms of grant contributions. I'll just start off very quickly with the whole issue of the administrative problems that HRDC has encountered. In your view, is there any particular reason that has occurred, given the types of systems that are in place? What specific advice would you give us with regard to fixing the problem?

I wonder if you have reviewed the six-point plan. There's been a lot of talk today from yourself and from Ms. Cheung and others regarding the whole issue of integrated systems. Some of the things that have been mentioned here seem so obvious that they defy any logic. Having standardized data...

I'm still on the board, but I used to chair an information and volunteer organization that provided volunteers. We received money from all sorts of third parties, which is a major problem for us as the government because many of our third parties are the private sector. So we are often in with the provinces and the private sector. Of course, how they may approach a particular funding issue may be different. The fact is that in terms of monitoring, it's a major problem.

I would make one other comment, and you can maybe respond to this. As a government, we want to ensure accountability and transparency. Ms. Cheung particularly emphasized the number of elements there, which I thought was most interesting. Given that we have a 20,000-plus department of staff and a budget of over $60 billion, and given the fact that contributions and grants are certainly an important element... You talk about 78,000 charities across the country and other organizations. What tools would you suggest would be helpful that you could apply on this larger scale, given your experience?

Dr. Gillian Kerr: That's a complex question. Let me move back and ask what HRD is trying to achieve. You always start with the outcomes. HRD is trying to promote social change at a grand level, on a grand scale. That's the kind of investment you're talking about.

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We need three activities in order to do that well. The first is you have to identify the success factors. If you're trying to get people employed, what kinds of things are more likely to get people employed? That is a research question. Like the health care system, if you're looking at a new drug or a new intervention, you put a lot of money into very good research and you have up to here to develop the success factors.

Then when you understand that, you say, how do you implement it? What are the indications and contraindications? This is how you standardize the service delivery. That's another kind of information system. Then you say, how do we actually give it out? That's a management information system, where you're actually getting the heart medication out to the public. You don't ask corner drug stores to do longitudinal studies on whether aspirin helps heart attacks. That belongs up here.

What I see at HRD and with most other funders, as a psychologist with a background in evaluation, is that you get it all mixed up. You're trying to do the longitudinal research studies at the local corner store, instead of up here where you need the good research. You're asking insufficient information on the management information scale. You don't know where the money is going or where to track it.

You need a layered approach with some really clear idea on what you're trying to achieve and good feedback systems that let you know when you're going in the right direction and when you're going in the wrong direction. The health care system does this fairly well compared with the human service system. So I would start with that.

I'll stop right there to let you ask more questions.

The Chair: Bryon Wilfert.

Mr. Bryon Wilfert: Through you, Mr. Chairman, Ms. Cheung, you talked about integrated information systems and the ability in terms of tracking, which is really important. That clearly is one of the difficulties we have had. We have had files that either haven't had the right data or have been devoid of data, period. You've had some experience in terms of these third parties. The fact is that in our case it's not just the federal government and client X. It may be the federal government with client X and with Y and Z also as contributors. What happens in terms of that monitoring?

Ms. Audrey Cheung: The information systems enable us to track all research awards as well as the terms and conditions. On a summary level we're able to track research awards based on areas of responsibility. So if you're a chair, you can see all of the research grants for any particular sponsor for everyone in your department. At the institutional level we can track research grants by sponsoring agency, industrial group, type of agreement, that kind of thing.

In addition, I'd just like to share some information about the information systems of our federal research granting councils—CIHR, SSHRC, and NSERC. They as well have the ability to do that kind of thing. CIHR is launching their web-based tool in June, but certainly NSERC and SSHRC have the ability to provide that information via the web. That's of use to recipient institutions like myself, as well as to gather statistics in lobbying for improvements in the research funding environment and political framework. It's very useful in terms of transparency. You can see every single grant NSERC has given out last year or in the last five years. You see who it has been given to, what is the title of the research, and who has been given primary responsibility.

The Chair: Bryon, very briefly.

Mr. Bryon Wilfert: Through you, Mr. Chairman, in deference to my chair here, what are the flags that come up if in fact there is a breakdown in terms of dealing with some of these third parties who may not be able to fulfil their obligations, which may in fact come back on your shoulders?

Ms. Audrey Cheung: Can you just elaborate on what kind of breakdown you're talking about?

Mr. Bryon Wilfert: Yes. You and others have committed and say one of those third parties is no longer able to deliver. How do you flag that, and what steps do you take in order to deal with the issue of a pullout of funds?

Ms. Audrey Cheung: The first sign of a problem with a third party is that they aren't able to pay on time. At that point, research administration staff as well as the researcher contact the third-party agency and discuss whether they are able to continue to deliver on their financial commitment. Where they are not able to do so, it is our responsibility to report to the first funding agency that a partner is not able to meet their obligations. Then the granting agency indicates to us whether they would like to proceed with the project and would allow us to find a replacement matching partner within a reasonable amount of time. We've seen agencies go either way.

• 1200

The Chair: Next is Rey Pagtakhan, followed by Larry McCormick, Judy Sgro, Paul Crête, Bonnie Brown, and then the chair.

Mr. Rey D. Pagtakhan (Winnipeg North—St. Paul, Lib.): Thank you, Mr. Chair, and thank you for your presentation.

In the interest of time I will suggest the following points as a way to effective management and administration of grants and contributions. At the end of my enumeration I would like a general view from you as to whether indeed these categories of approach would be useful and productive. They are that payments must meet financial and program requirements, that there ought to be a check and correction of problem files as they are found, that we must equip and support staff, that there ought to be accountability that results are really in short all true, that where necessary get the best advice available from the experts, and that we must report the progress to public and staff. How would you look at those categories of action?

Ms. Audrey Cheung: I'd say that they are all equally important. Particularly in the selection of the types of grants to fund, it is very important to get the experts in the field to make the evaluation. I think it's very important to get third-party participation in the selection of the grants to fund.

Mr. Rey Pagtakhan: Thank you.

Dr. Kerr.

Dr. Gillian Kerr: I would agree with all of those, and I would add elegance. I would add that the system should meet many different requirements in a way that is as elegant as possible in the amount of administrative load for every level, including the agencies and the funders.

Mr. Rey Pagtakhan: Thank you, Doctor. That is certainly very reassuring.

My specific question to Dr. Cheung is, how long have you been online at the University of Toronto?

Ms. Audrey Cheung: We've been online for five years.

Mr. Rey Pagtakhan: Over the period of five years, have there been any complaints on the part of the staff or the researchers as to whether indeed there had been any level of red tape and bureaucracy within the system?

Ms. Audrey Cheung: In actual fact, the integrated system approach has done two things: it has allowed us to streamline our administrative services, and it has provided one-stop shopping for a researcher for any kind of problem solving. Actually, it's our researchers who compliment us the most on this. It has also helped us to be extremely efficient and effective with the small staffing resources we do have.

The CIHR is going to result in an 85% increase in funding over what the MRC had, and they are actually going to audit. With this increased money and increased accountability requirements, including external audit, we're at the breaking point now in terms of our administrative systems. In taking in this new funding and having increasingly higher levels of accountability requirements, we are finding it very difficult to take on the incremental amount of accountability activities.

Mr. Rey Pagtakhan: During the five-year lifespan of your program, have there been any external audits done or on-site visits made with regard to any number of the research activities at the university?

Ms. Audrey Cheung: NSERC and SSHRC did a monitoring visit, which was actually an auditor's visit. It was an extremely successful auditing visit. They found very few findings, which were very minor. In fact, a couple of elements of our accountability framework were referred to in their best practices document, which was shared with all NSERC and SSHRC recipient universities across Canada.

Mr. Rey Pagtakhan: That's very good to hear.

The Chair: Could I interrupt, and I'm not taking your time. Audrey, the research budget we're talking about is in the order of what?

• 1205

Ms. Audrey Cheung: At this point it's about $145 million for last year. With the introduction of CIHR, the Canada Research Chairs Program, the Canada Foundation for Innovation, as well as the complementary Ontario programs, we would anticipate in the next year an increase of almost $200 million on top of the $145 million.

The Chair: And this is a total university budget of $1 billion or $2 billion? The total university budget would be...

Ms. Audrey Cheung: It's almost $1 billion.

The Chair: All right.

Sorry, Rey. Thank you very much.

Mr. Rey Pagtakhan: Thank you, Mr. Chair.

In response to the earlier question asked by the opposition as to the basic elements for repair, you alluded to the need to define outcome, to anticipate the clients' needs, and to plug the system into the accounting or whatever department of government in this instance, and you said this will need testing over the years. For how many years will you need to test the system to be assured that in fact it is working?

Dr. Gillian Kerr: Forever.

Mr. Rey Pagtakhan: So there is a continuing need for evaluation of a given system. Having said that ideally, how soon can you develop a confidence in a given system, following its development?

Dr. Gillian Kerr: The one thing I know about technology is it always screws up. So the way I would recommend is that, as in most of these kinds of huge projects, you start with a pilot group of other funders. This is the kind of thing that should be done with partners, such as Industry Canada or major foundations, with a sector that likes technology. It could be youth employment or something like that. That would allow you to have a system that everybody, or almost everybody, likes a whole lot better.

The issue is continuous improvement. The issue is not perfection, because there's a constant strain in the trade-off between too much paperwork and not enough tracking. That pressure has to keep on constantly, and it's part of the ongoing job of the administration.

Would you like more detail around it?

Mr. Rey Pagtakhan: No, that's enough in terms of the idea.

I would like to ask Dr. Cheung something. Dr. Kerr used very strong language: “technology always...”. In medicine we do not use “always” or “never”. Has your system screwed you at least once?

Ms. Audrey Cheung: I would say it's not the system that fails us; sometimes it is the manual processes around the systems that fail us.

I want to piggyback on her comment about improvements in technology. As the technology improves, the delivery of accountability supports improves. For instance, I've described a software system. Our next step in the development of the system is to put the information out on the web. At this point our faculty members, in order to access the system, need some training and a secure ID. The next step for us is to put this information in a secure way available to them on the web.

Mr. Rey Pagtakhan: Conceptually and conceivably, by having this online system, is your system now able to be a basis on which you can integrate all the components, to the point that the data you gather will be a fruitful source of information for policy development? Can you envision that?

Ms. Audrey Cheung: I believe that's already happened. The vice-president of research and international relations published a report quite recently, and a lot of that information was based on the information we were able to gather from our research information system.

In addition, the research information system focuses on institutional information. There are other tools that allow us to take that information and aggregate it with research activity across Canada—information available from Stats Canada and information available from the three large research granting agencies. There are data-warehousing tools. We use Cognos, and we've been able to do comparisons of performance of the department of chemistry at the University of Toronto and the departments of chemistry across Canada. We've been able to do some analysis on what areas of research are funded on a national basis.

So it is possible.

Mr. Rey Pagtakhan: I have one more question, Mr. Chair.

The Chair: Rey, without taking your time again, Dr. Kerr, do you have any comment on that last remark about the policy use?

Dr. Gillian Kerr: No.

The Chair: Okay.

Sorry, Rey. Go ahead.

Mr. Rey Pagtakhan: I have one last question, and I would like everyone to respond to this.

• 1210

While hearing your answers and knowing it will take time, and that we have a system with the problems we have identified, what will your recommendation be to the committee? How shall we structure our report? What proportion of the total report should be on the identification of problems, which have been acknowledged by the minister, and how much ought to be on the solution of the problems identified? Should it be 10%, 50%, 100%?

The Chair: Witnesses, it has to be a short response. It's a good question, but we need a short response.

Dr. Gillian Kerr: That's a political decision regarding the structure of the report, but my emphasis would always be on solutions and further investments.

Mr. Rey Pagtakhan: Dr. Cheung.

Ms. Audrey Cheung: Consistent with Gillian's previous statements, you have to re-engineer the system, and within that re-engineering you have to deal with the problems that have been reported, plus problems that may not have been reported. Then the focus on solutions is going to help you get to the right solution.

The Chair: Ms. Brekelmans.

Ms. Susan Brekelmans: I think it's much more empowering to identify the challenges and move quickly to solutions that will allow the staff on the ground to really change things.

The Chair: It's Larry McCormick, Judy Sgro, Paul Crête, Bonnie Brown, and then the chair. I'm going to pick the pace up a bit.

Larry.

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): Thank you very much, Mr. Chair, and thank you, witnesses, for being here.

Your answers on that last very important question are so very important, because you mentioned, Doctor, that it would be a political decision, but we and all Canadians want this to be more than a political decision. We have pushed this, and that's why we're still here on this issue. And we do want to focus on the solutions. So thank you.

Of course, we are in this political forum for the right reasons. There have been great problems in HRD, but my concern is always the fact that HRD across this country has almost shut down until lately. The hat I wear is as a rural caucus chair, and across Canada in all areas, all provinces and the territories, we hear of people waiting for programs, grants, and contributions. So I'm glad you people are here, finally.

I want to congratulate Charity.ca. It sounds very fascinating. It is very interesting what you're doing. I've been involved in fundraising in a few other lives before this. Recently, I think last week in Ottawa, the Community Foundations of Canada met. I'm not aware of all the differences between a charity and a foundation; it gets quite involved, tax-wise and so on.

Your site information will be available to all people, even to HRD to look at, because we can all learn. But have you decided yet the scope of who you would represent on your site? For example, would you consider community foundations and—

Ms. Susan Brekelmans: We'll represent any registered charity on our site. In order to register with us, a charity must have a charitable registration number, and community foundations, public foundations, and private foundations are all registered charities.

Mr. Larry McCormick: Thank you very much.

Dr. Kerr, I have much to learn from you and your experience. You talk about how in HRD the local levels may be too involved in some decisions—and you may not have said that. I can only smile at your story that the local drugstore should not study whether the aspirin works for our heart attacks or not. I know you agree that one size doesn't fit all, and this country is so vast from sea to sea to sea. Atlantic Canada is so different from the prairies and rural Ontario and all that.

Of course, if the program is set up right and there's all this reporting, then the people who make these decisions can be in touch with all the local areas, but that's always my concern too. HRD has some great people across this country. Most of them are excellent employees. Most of them in the local areas do a real good job. Now, whether we should assist them more or not...

But I respect you, and I want to hear whether you feel that if we give more responsibilities to the people at the top they will still be able to respond to the local needs. We heard about pockets in HRD in the House of Commons. Pockets exist sometimes just within an area of a city, but the pockets in rural Canada are very different from one area to another.

• 1215

Dr. Gillian Kerr: I think this is an incredibly exciting time for funders and for governments in terms of how they can use technology to get where they need to go and become more centralized in some areas and more decentralized in others.

I'm going to use the example of travel agencies. Travel agencies are really connected to the communities they serve. You can have corner travel agencies that focus on one area. They are supported by an extremely complex and extremely expensive information system so that they can book airplanes, they can book flights—they know exactly where to find it. But all that is in the background. The clients and the customers don't get the feeling of these massive mainframes behind their local travel agencies.

I think federal funding programs can work the same way, where you can have a terrific amount of flexibility supported by a very sophisticated back end, so you get more personal instead of less, but the people don't have to keep reinventing the wheel and spending half their time doing paperwork. I also think there's a huge amount of public interest in good solutions this way, and it would establish Canada as a leader in information technology and how to do this kind of complex, locally driven and top-driven decision-making across the country.

The Chair: Larry, very quickly.

Mr. Larry McCormick: Ms. Cheung, the University of Toronto has been very successful, and you're leading the way, no doubt. But I have a question on this SAP program you're using. We have so many small universities and small colleges that need the same expertise. Is that type of program and others available, and would the University of Toronto share some of their expertise for all the right reasons?

Ms. Audrey Cheung: The University of Toronto does share its expertise quite a bit. We belong to the Canadian Association of University Research Administrators. In fact, I just came from their conference. There's representation from universities all across Canada. We were actually in Atlantic Canada at Memorial University. The purpose of the association is to share best practices, and also we help to train new research administration staff. That's particularly important in smaller universities and colleges where there isn't the amount of activity and therefore there aren't the opportunities to achieve the level of expertise that we might achieve at the University of Toronto. So a lot of that's going on.

My understanding with respect to my colleagues is that they all have financial systems. A number of them have customized research information systems—Oracle. I spoke to MIT lately because we're in an international user group for higher learning and education users of SAP. MIT has a customized research information package, and they licensed it to Oracle. Most of our universities have either bought Oracle or they've bought PeopleSoft software. So there are home-grown research information systems out there as well as packages you can buy.

Mr. Larry McCormick: Thank you very much, Mr. Chair.

The Chair: Thank you, Larry.

Judy Sgro, Paul Crête, Bonnie Brown, and then the chair.

Ms. Judy Sgro (York West, Lib.): Thank you, Mr. Chair.

I found the conversation and the information most interesting this morning. You talked about the panic that's out there, which I've certainly been hearing about, and the concerns.

One particular area that concerns me is the area in and around the disabled and the many groups that we fund there. It's one thing to talk about some of our other companies, but certainly when we're dealing with many of the disabled organizations and so on being in fear of their funding being lost altogether... What would you suggest at this point that we might be able to do to calm the fears of those organizations out there?

Dr. Gillian Kerr: That's another complex question. There are a number of different aspects of this question. One is whether or not they will continue to receive funding based on HRD's interest, and with all of the movements around responsibilities for training and so on, there's a tremendous anxiety having to do with social policy rather than accountability issues.

Focusing on accountability issues, I work with many agencies serving people with disabilities and they're all saying that all of their funders, including HRD, are grinding down with accountability. However, there is no recognition of the real overhead and administrative costs of administering these processes. So in one agency that has 23 funders and about 12 staff, one full-time staff does nothing but fill out funding proposals. It's madness, right?

• 1220

In terms of the indirect costs that Audrey was talking about, the universities have negotiated an indirect cost of about 65% on any grant. Their federal funders—and correct me if I'm wrong—have recognized that if you give a $20,000 grant for direct costs, another 65% goes to the real costs of just managing the whole thing. Funders in the social services have no concept of the cost of this, so non-profits tend to work long hours on a volunteer basis trying to make it up. They don't have the skills and training and the data is terrible.

I know I'm repeating myself, but did you want to have any more information about any particular—

Ms. Judy Sgro: No, but I think it's exactly where the concerns are. I've filled out many applications for and assisted many of the groups, and in the last few years it's as though you have to go to a professional to have them filled out. The only groups who were successful in receiving funding were ones who went and paid a portion out and had another agency do it. So we've formed another organization that was capable of filling them out.

Hearing about all of these problems with HRDC grants, really I found it quite astounding, because coming from the city... many people weren't even bothering any longer because it was just too cumbersome. Now to suggest that we were handing out money randomly; it certainly came as a major surprise that this was happening. I think the idea that we were trying to be more client-friendly in applying and making it easier for many of these organizations that do fabulous work to access the funding... I thought it was the right way to go. Always getting that balance, of course, is going to be there.

You talked earlier about the amount of paperwork required in filling out all of this. Should we be looking at simplifying the forms and not asking for redundant information all the time? How can we do this so that accountability stays number one but at the same time we want to know that we're not over... The new agency that's set up I think is wonderful, because that's exactly what I expect it would do very well. But how do we get the forms simplified and still have them accountable?

Dr. Gillian Kerr: Let me give you an example of one simple tool. Many of you may have heard about guidestar.org. It's a U.S. site. It has the public financial records for about 650,000 registered charities in the U.S., and those data are available for anybody to look at, including funders and donors. Those data are also available on an organization much like Charity.ca, called shine!.com, or something like that, so that donors can give money. These financial data are public. Revenue Canada, or the Canada Customs and Revenue Service, has already made a policy decision that they should be released. That is the kind of thing that should be the absolute core of an information system that's common across the country.

All of a sudden, you have your financial statements. That's it. You don't need to ask for any more. You can just download them. Then you could build a system where you say, okay, what else do we need? We have the address. We have the financial information. We have the directors. We have the mission statements and articles. And then you just add to an existing system so that you increase the richness and the flexibility without increasing the administrative load on the agencies. That, in a nutshell, would be the approach I'd recommend.

Ms. Judy Sgro: It certainly gives me a lot of assurance that the tools we're looking for and the improvements we want to make will happen. Terrific. Thank you very much.

The Chair: Gillian, I met recently with the Canadian Council on Rehabilitation and Work, and Judy Sgro was asking you specifically at the beginning about groups with disabilities. One of the responsibilities of this committee is that whole area. Could I ask you if there was anything special about the system you set up for them, given that they were a group representing people with disabilities?

Dr. Gillian Kerr: Yes, I worked with CCRW as an external evaluator. What I did for them was start out by assessing the objectives of the funder, in this case HRD, including talking to their funder and trying to understand not only what the paper said the objectives are but what the real objectives were, the fantasy of the funder behind the objectives, and then developed an information system that met the objectives of the funder as well as the objectives and the mission of the agency. So every piece of information we collected told the agency something that mattered to them as well as telling the funder something that mattered to them. Any piece of information that didn't drive a decision from either the agency or the funder we got rid of. Information, if it doesn't have an impact on decision-making, should be tossed out as far as I'm concerned.

Does that help?

The Chair: That's right. Thank you. I just wanted it for the record.

It's Paul Crête followed by Bonnie Brown, Rey Pagtakhan, and then the chair.

• 1225

[Translation]

Mr. Paul Crête: Mrs. Cheung told us that, to re-engineer the system, it would be necessary to identify and deal with the problems that have been reported, but to identify also the problems that have not been reported, which leads me to ask the following question: will it not take a very long time to rectify the problems in the case of the system at HRDC, where many shortcomings have been identified?

In your view, what conditions should be met for such a re- engineering to be successful, for example with regard to the protection of those employees who are already part of the existing system and could be, I think, a relevant source of information and who should therefore be protected against any lawsuit or dismissal?

I would like you to elaborate on what you think the success factors would be for such a re-engineering, especially with regard to that aspect.

[English]

Ms. Audrey Cheung: In terms of re-engineering, I think it's very important to take the time to re-engineer a process properly, because if you don't do that, the consequences will be that you will select solutions that have not been effective and that will not meet your objectives.

We've undergone this kind of re-engineering in order to achieve our integrated research information systems modules. And it does require the participation of all of the stakeholders—all of the customers and all of the clients, whether they are internal or external. It does mean we call upon some of these people to participate in a way that does not necessarily represent their own self-interest but represents the self-interest of the entire process.

[Translation]

Mr. Paul Crête: I would like you to focus on the protection of employees. For instance, at HRDC, where there are many employees, union representatives told us that the climate was somewhat unhealthy and that, for instance, people were afraid to lose their jobs if a decision was made to re-engineer the system drastically and if the real cause of the current situation had to be identified before coming up with relevant solutions.

The solutions could include all kinds of things involving the department, and people would have to be able to state their opinions about it. Would you go as far as recommending that we pass a bill or that there be a statement granting amnesty with regard to that responsibility so that we could have free access to the information those people might communicate to us?

[English]

Ms. Audrey Cheung: That's right. I would say there are two ingredients. One is that it takes very senior sponsorship, and in some cases it takes the person at the top to overcome perhaps the silos of departments within an organization. It takes a high level of communication throughout the organization of the importance of this activity and to be able to defend the recommendations of this particular group.

[Translation]

Mr. Paul Crête: When the person—not you, Mr. Chairman—who is at the top of the pyramid, who makes the final decisions and who would be in a position to implement the changes, is the same one who was in charge when majors problems were detected, under what conditions will they be able to correct the situation? Will they be able to do it?

If they were able to do it, what steps should they take for the desired effects to happen eventually? To be clearer about it, could a minister in charge of HRD keep holding that responsibility and make the necessary changes if she had been there already when the situation came to light? What should she do to acquire the credibility required to be effective?

[English]

Ms. Audrey Cheung: I think the role of the senior sponsor for the process is to enable the group that's re-engineering the process and making the recommendations to do their job. There does have to be an arm's-length relationship. The sponsor cannot direct the direction of the recommendations.

In terms of an institutional or an organizational decision on what is actually going to happen with the recommendations, there has to be a third party involved.

In terms of implementation, that has to be handed off as well to someone within the institution who has enough authority and enough resources to do the job right.

[Translation]

The Chairman: Are you finished, Mr. Crête?

Mr. Paul Crête: That is all.

[English]

The Chair: Bonnie Brown, Rey Pagtakhan, and then the chair.

• 1230

Ms. Bonnie Brown (Oakville, Lib.): It's very interesting to hear about these various systems that we might be able to reach out to, to help us. You talked about SAP, Oracle, and guidestar.org. I'm very grateful for that information.

However, in listening to you I'm struck by the difference in the recipient universe that we deal with as compared to what you deal with as you hand out money.

So, for example, at the University of Toronto your recipients are, first of all, highly educated people and for the most part dedicated to the seeking of truth. In the United Way world your recipient universe involves people who are dedicated usually to helping other people in need.

I don't know if you've ever run into this, but have you any experience with people in that rather limited universe who are trying to hoodwink the system, in other words, trying to get your money and do something else with it? That's what we're facing. That is what we need help with—people who have been caught trying to hoodwink the system.

Dr. Gillian Kerr: Whenever there's money around there are always people trying to hoodwink the system, whether they're in the non-profit or the profit world. So I know exactly what you're saying.

An issue for auditing and management information systems is to make sure that once you've made the decisions, they're being tracked, monitored, and audited appropriately.

Ms. Bonnie Brown: Do you have any experience with that from the university?

Ms. Audrey Cheung: The relatively recent experience is that NSERC is now extending the eligibility of the receipt of funding to community colleges. So this is a relatively new population with respect to the administration of research grants. There isn't the type of administrative infrastructure or expertise at the community colleges and so NSERC has taken it upon itself to do a lot of educating. In order for a community college to participate, it has to prove to the sponsoring agency that it has the accountability structures that NSERC requires. They're going through a certification process right now.

Seneca College is an example in Toronto. They have to prove that they have similar elements of accountability that would be found in a larger research organization like ourselves, with the understanding that there will be some differences there.

Ms. Bonnie Brown: I don't know if I agree with Dr. Kerr. I agree that where there's money around, people might try to hoodwink you, but I think when people's primary motivation is the helping of others, there is more inclination to have a human mistake, a lack of personnel, not the same management that you might expect somewhere else. I'm not worried a bit about the universities, because they have the funds, the 65% for administration, and all that sort of thing that a United Way agency doesn't have.

Ms. Audrey Cheung: On government contracts, we do receive 65% of the salary portion of the budget, but from our major funding agencies, 40% of our funds come from the granting councils and there is no recovery of indirect costs. In most of the new programs where there's going to be increased funding, they are all grants from federal government agencies. There is no recovery of indirect costs, yet there is external audit, there's monitoring, there's increased financial report.

Ms. Bonnie Brown: To carry on with this thought, a lot of our recipients, particularly in those programs that are being challenged, have the primary motive of making a profit, which to me separates them completely from altruistic health and social service providers, often backed up by the volunteer corps or university professors seeking the truth. Do any of you have any experience with funding the private sector to accomplish a social goal? Is that what separates us?

Dr. Gillian Kerr: There's a lot of literature on the reason for non-profits, the economic basis of the non-profit sector. Generally, non-profits tend to be prominent in areas where measurement is very difficult, because money is easy to measure, and if you're focused on money, then you tend to get pulled towards that.

That's a very important social policy question for investment as more and more services become privatized. Not incidentally, it's related to the need of having data elements that enable you to use the same tracking mechanisms for for-profit and non-profit.

• 1235

Non-profit's weaknesses tend to lie in righteous busyness. You know, they're doing something they've been doing for 20 or 30 years, and by golly, if it was good enough 20 years ago, it's good enough now. For-profits have very different kinds of weaknesses. You need good tracking and monitoring to deal with both. It just has to be tied to outcomes and to service delivery standards.

Ms. Bonnie Brown: That's another division, if I may say, between health services, which are often scientifically based, and social services. I know the etiology section at McMaster University just throws up their hands in despair over trying to analyse the value of the outcomes of certain social programs. When you get into these fuzzy areas and when you are funding people who have a different basic motive than you do, I think you're asking for trouble, although, as you say, there will be people who would take advantage probably in every sector.

Thank you, Mr. Chair.

The Chair: Can I follow up on the same thought? It seems to me that there are two types of mistake. This goes back to Gillian's remarks about what their objectives really are. It applies in the university and it applies in the social sector.

One mistake is that you don't give a grant to someone when you should have. For example, there may be a group that's suffering and the organization looks at it and decides not to give it and the suffering continues. In the university, there may be somebody who was turned down who later on, despite that, gets the Nobel Prize. Worse still, someone may be turned down and as a result does not get a Nobel Prize. That's on the one side.

On the other side, there's the mistake where you give the money to the wrong people. For example, socially it goes to them and somebody abuses the trust. Do any of you have experience in getting that money back? In either of your scenarios, do you ever know? If tracking follows it through and you discover that the grant was wrongly allocated, or perhaps it was correctly allocated but wrongly used, do you have any experience with that? What do you do then with that type of mistake?

Ms. Audrey Cheung: The only experience we've had is where researchers have complained that the administrative process... Sorry, let me backtrack.

NSERC, SSHRC, NRC, and CIHR are extremely transparent about the way the grants are to be selected for funding. They're very transparent about the process. There have been times when we have gone back to NSERC, NRC, and SSHRC and pointed out that an administrative or a process mistake has perhaps caused an unjust declining of a grant. They are very receptive to that kind of thing.

Given that the grant selection committees are staffed with experts in the field, people are generally not wrongfully rejected because of a misdiagnosis of academic excellence. Usually the problem is that there are too many academically excellent research projects and not enough funding to spread around.

The Chair: I would suggest to you, Audrey, that there are other cases where the field is unfashionable at the moment. The people in the committee tend to be mainstream people.

Gillian.

Dr. Gillian Kerr: Very large funders have different portfolios of investment. If you think of it as determining investment strategies based on your objectives and based on who you're investing in, you can see there are different costs and different follow-ups that you do for different kinds of investments.

For example, you might invest only in blue chip agencies. These are large organizations with really fantastic financial tracking systems. You know they're reliable, you know they do things right, which means that when you give them a pack of money, you need to put less of your own staff time into following up. You just do an audit once in a while.

The venture capital approach—

The Chair: It's the same, the unfashionable science case that I was describing.

Dr. Gillian Kerr: It might be madly fashionable, but the risk is much higher, so it costs more money to track. You also have to figure that you're going to lose a certain amount of money.

There are two answers to your question. One is that every large funder is going to have money that's not used exactly the way you want. You keep improving your systems to reduce that, but you also acknowledge that it's just a cost of doing business.

The exception is when there's fraud. When there's criminal activity, you have to react to that and you have to get back the money. Any time you have a non-profit and you get money back, there's generally a media firestorm and it's a nightmare, and there are political costs that have to be taken into account as well.

• 1240

The general approach is that it costs money to give money. You put different investments in, depending on the kinds of giving you're doing, and you always figure on losing a certain proportion of that money in the same way you would if you were a bank or a venture capital organization. There are bad loans and so on.

The Chair: Sorry about that, Rey.

Mr. Rey Pagtakhan: Thank you, Mr. Chair. I would like to benefit from the free consultation from our psychologist today.

Have you watched any of the proceedings of this committee on television?

Dr. Gillian Kerr: Not on television.

Mr. Rey Pagtakhan: So you have no visual knowledge.

Have any of you watched the proceedings of this committee on TV? None? My question on that therefore does not have to be asked.

The second point I would like to make is this. From the psychology point of view of human behaviour, how useful or non-useful would it be to continue to delve into the problem and not into the solution?

Dr. Gillian Kerr: In technology, a good way to react with a design when you've established the big problems is to start coming up with a solution, knowing that other problems will keep coming up as you move towards a solution. In other words, you will never have a perfect solution. The time to start building a system is now, when you have the major issues on the table. As you keep designing it and getting feedback, new information is going to come up and you're going to keep improving it.

Does that answer your question?

Mr. Rey Pagtakhan: No, it doesn't. My question is very direct. Shall we continue to discuss the problems that have been identified by the auditors and the evaluators, which now are public knowledge, or shall we focus on the solutions to the problems that have been identified as a challenge for the committee?

Dr. Gillian Kerr: My belief is that information is only useful if it drives to behaviour change in decision-making. If you have enough information to move towards decision-making and a solution, that's what I would do.

Mr. Rey Pagtakhan: Along that line, it was mentioned earlier that there could be fear among staff to report on something that is wrong within the department. That has come from one of the witnesses before this committee. However, I should also let you know for the record that when we asked the witnesses, there was no documentation of this allegation, so it remains an allegation. Under the Canadian judicial system, it has not been shown to be true.

Be that as it may, from the psychology point of view, what would be the impact if one were to pass so-called whistle-blower legislation? When you consider your response to this question, I would like you to consider the impact of this and the image it will create in a department about the continuing presence of vindictive behaviour, of a perception that the problem continues to be there. If it were to be passed, should there be a concomitant responsibility in terms of penalty were there to be a false whistle-blower? That is one approach.

The second approach, of course, is to create and sustain a system of teamwork, camaraderie, commitment to mission and goals within the department, and good human resource management.

Which of the two approaches would you recommend as a psychologist?

Dr. Gillian Kerr: To step back a minute, I have been aware of lots of anecdotes of staff demoralization at HRDC. From my perspective, if you ask a bunch of people to dig a huge hole and you give them little tiny spoons, it leads to demoralization. That's what they've been doing. They haven't had proper tools.

The whistle-blower legislation is a political issue. I wouldn't talk about that, but I do think that in a good system, in a good, complex system, there is a cultural expectation that there are lots of problems and that everybody's job is to bring up problems. People are rewarded for saying they screwed up here and they have to fix there and this is messing up and this is falling down. If there's a lot of tolerance for problems and excitement about solving those problems and the tools to help solve those problems, a lot of these issues...

Mr. Rey Pagtakhan: If you were the chief executive officer of a big company, would you ever establish a whistle-blowing regulation within your company?

Dr. Gillian Kerr: I would hope it wouldn't be necessary.

Mr. Rey Pagtakhan: Thank you.

Dr. Cheung, would you like to comment?

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The Chair: Very quickly, Dr. Cheung, if you would.

Ms. Audrey Cheung: I think perhaps it's an issue of risk management. If you don't institute a safe way for staff to report something of significant risk, then you put the organization at risk. There's a need to do it in a safe way that is very confidential. But in some cases the confidentiality has to be a rule in order to safeguard not only the people who are accusing, but also the people who are being accused of inappropriate behaviour.

Mr. Rey Pagtakhan: I have one last point, Mr. Chair.

The Chair: Rey.

Mr. Rey Pagtakhan: Is that an established tool in human resource management?

Ms. Audrey Cheung: I'm not aware that it is an established tool of human resource management.

The Chair: Thank you, Rey. That was very useful.

If I can conclude, as the chair, I have one short question, and I would like to ask Susan Brekelmans of Charity.ca first.

You mentioned your disaster scenario and how under Charity.ca's system, people will be able to find where they should allocate their moneys if there's a flood or something of that sort. It seems to me in the federal government—for example, recently we've had a true crisis in agriculture in the prairies—it is easier for us, Susan, to put those moneys together than it is for us to give them away in a meaningful, trackable way.

I think response time in our system—it's less so in a university—is very important. Where there are problems in different parts of the country, we should be able to respond very quickly. Now our problem is less, as I say, putting the money together than tracking.

Do you have a way, once they're up on your site, of knowing where those moneys that I will donate toward flood victims will go and tracking them afterwards? Could you comment on that, please?

Ms. Susan Brekelmans: What we're doing to develop our disaster page is developing relationships with international aid charities—because we're mainly dealing with international disasters—reputable organizations that have a track record and that we, in the public, can trust. So on the website we would be able to track how much money is going to those organizations, but we would rely on the organizations to provide the accountability to the public in terms of how that money is spent.

The Chair: As you know, often—international disaster would be a good example—Canada does respond very quickly. Later, when there are inquiries, perhaps it's the nature of the circumstances, but we'll discover we sent the wrong type of food or whatever. I think it's important.

We've been discussing a lot of this, but the response time is very important, and in those sorts of situations, I think you have to take a greater risk. You simply have to move and do what you can.

I'll conclude with this. What is a reasonable length of time to expect HRDC to put in place an integrated tracking system for its grants and contributions? That's one question.

Second, do any of you have any ballpark costs?

Gillian Kerr.

Dr. Gillian Kerr: I've been thinking about it. I don't think I could answer that because there are so many factors moving into it. I think what you have to do is start building a simple system that gets more complex, and it would have almost everything to do with your political will and the investment you put into it.

The Chair: Okay.

Is there anyone else? Audrey, Susan, have you any thoughts?

Ms. Audrey Cheung: I pointed to some best practices. I believe that SSHRC quite recently implemented new systems—MRC and NSERC did as well—and what we've seen as a result of the implementation of new systems is certainly quite a bit of improvement in terms of the efficiency of many of their processes and the ability to be able to track a lot of funded activities.

The Chair: Susan.

Ms. Susan Brekelmans: No comment.

The Chair: That's fine.

I didn't hear a cost there, but I assume that was deliberate.

Thank you very much.

Colleagues, before I thank our witnesses, I want to remind you once again that next Tuesday at our regular time we meet with the NGOs, in particular Al Hatton of the Coalition of National Voluntary Associations of Canada, and some others. Then on Wednesday at 3:30 p.m. we meet with the Honourable Claudette Bradshaw, Minister of Labour, and her officials. Next Thursday at this time, we meet again with the Honourable Jane Stewart, and that will be the last of our public meetings.

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On your behalf, colleagues, I would like to thank Gillian Kerr. We thank you very much. Audrey Cheung from the University of Toronto, we're most grateful, and Susan Brekelmans from Charity.ca, thank you very, very much for a most informative session.

The meeting is adjourned until next Tuesday at 11:30 a.m.