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This website was created by the OECD Observatory of Public Sector Innovation (OPSI), part of the OECD Public Governance Directorate (GOV).

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Impact Canada

Impact Canada is a whole-of-government effort that deploys outcomes-based policy and program approaches. It features a novel set of rules, processes, and supports to allow the Government of Canada to support innovative methods like challenges, pay-for-success funding, and behavioural insights, which previously faced significant barriers to adoption. Through these systems-level changes, the Government can now apply these approaches to produce better outcomes for citizens and create greater public

Innovation Summary

Innovation Overview

Impact Canada was established to provide a vehicle for the Government of Canada to enable innovative policy and programme approaches to be applied across federal organisations. The initiative had two main antecedents. The first was a systematic review of Government of Canada funding rules and barriers that inhibited more innovative approaches from taking place, and the second was a Government of Canada directive on experimentation, which required federal departments to allocate a certain portion of funding towards experimental and innovative delivery approaches to improve outcomes for citizens. It was announced in the federal government’s 2017 Budget. Impact Canada sought to implement within a Canadian policy and legal context models that had been deployed in other contexts, such as Challenge Prizes led by Nesta in the UK and internationally, behavioural insights applications as developed by the Behavioural Insights Team in the UK, and pay-for-success funding efforts led by organisations like Social Finance UK and Social Finance US. A comprehensive review of Canada’s innovation landscape by the OECD has helped serve as a foundational piece of research to guide and target efforts of Impact Canada.

Impact Canada established a way for federal departments to allocate funding to innovative and experimental efforts, which are co-designed by the multi-disciplinary Impact and Innovation Unit’s Centre of Expertise, which resides in the Privy Council Office of the Government of Canada (18 core staff). The initiative established a “Terms and Conditions” to enable innovative policy and program approaches across all government departments, such as challenges, pay-for-success funding, and behavioural insights. For the first time, the Government could allocate its funding to paying on outcomes (contingencies), as opposed to paying for inputs or activities. Impact Canada also emphasises the use of impact evaluations and experimental and quasi-experimental impact measurement, and creates possibilities for more intentional allocation of resources to evaluate impact. These rule changes permitted an opening up of innovative approaches, where in two years the Impact Canada portfolio has grown to over $720 million CDN of outcomes-based funding programs (challenges, pay-for-success) and over ten significant behavioural insights trials across economic, social, and environmental policy areas of top-priority for the Government of Canada.

Impact Canada initiatives have a broad set of beneficiaries. In the first instance, federal departments and organisations are now able to test outcomes-based approaches, which they were previously inhibited from undertaking under normal funding rules. For example, Impact Canada provides flexibilities for challenges like Canada’s Smart Cities Challenge and the Clean Tech Impact program, which funds a number of challenges to drive clean growth.

The supports provided by the Impact and Innovation Unit in the Privy Council Office enables greater systems-level coherence in the application of these approaches. It also allows the government to mitigate implementation risks by drawing on the expertise of a central team of practitioners with significant experience in this field to co-design efforts with implementing departments. The Impact and Innovation Unit also helps to translate lessons learned to inform program refinements and to foster whole-of-government learning. Impact Canada features a digital platform to post challenges and other initiatives to encourage innovators to participate across government departmental mandates to open up the problem solving process to a wider set of potential collaborators.

At its current phase, Impact Canada is assessing the early results of its efforts and putting in place systems to capture lessons learned and impact data. Given that the previous baseline for the Government of Canada in applying challenges, pay-for-success, and behavioural insights at scale was very small before Impact Canada was launched, a significant effort is being placed on understanding the impact of these efforts. In particular, this includes understanding what key insights could be used from project-level efforts to inform broader policy using various knowledge generation and impact assessment techniques.

Innovation Description

What Makes Your Project Innovative?

Impact Canada is innovative for two key reasons.

The first is that it enables a new system, led from the centre of government, of pursuing innovative and outcomes-based funding approaches that were previously inhibited by rules and processes, and limited expertise to support effective implementation.

The second is that Impact Canada takes a specific focus on its role in supporting innovation, which is to apply new insights, resources, technologies, or approaches that can be demonstrated to improve outcomes for the public. Impact Canada is a vehicle whereby the Government of Canada can test innovations and generate evidence of which efforts work best to create greater public value in areas of high priority (e.g. linked to Government of Canada Budget or Ministerial Mandate Letter commitments). Specifically, Impact Canada initiatives focus on achieving greater value for money and generating sustainable solutions at scale that can measurably improve people’s lives.

What is the current status of your innovation?

Impact Canada, launched in 2017, is at the implementation phase. Early progress indicators are being tracked for this initiative, and are demonstrating, for example: that a range of new innovators are being attracted to government-led initiatives; that improvements in engagement and outreach are occurring; and that focusing on outcomes in funding and program design can also help streamline processes and improve the perception that governments are full of “red tape”.

All challenge projects are still in the field (with a number concluding by 2021). A number of behavioural insights projects have concluded and are showing positive results. New projects across all Impact Canada streams are in development. Impact Canada will be undergoing a comprehensive assessment, in 2022.

Innovation Development

Collaborations & Partnerships

Impact Canada’s prioritises multi-sectoral partnerships to address important policy issues for Canadians. For example, Impact Canada: works with an Advisory Committee of experts; is building communities of practice within the Government of Canada and other jurisdictions on outcomes-based approaches; collaborates with leading global innovation organisations and key industry, Indigenous leaders and non-profit stakeholders; and integrates academic experts into behavioural trials.

Users, Stakeholders & Beneficiaries

First-order beneficiaries are government organisations previously inhibited from pursuing outcomes-based approaches. This opens up new opportunities to collaborate across sectors with non-traditional partners to co-design solutions to complex policy challenges. Citizens and stakeholders are the ultimate beneficiaries as programs focus on improving outcomes (e.g. helping lower-income families save for education, driving breakthrough innovations to grow more resilient clean technology firms).

Innovation Reflections

Results, Outcomes & Impacts

Within two years a dozen challenges and pay-for-success funding projects totalling over $720 million CDN have been launched and ten significant behavioural insights projects have been undertaken, with a number of other efforts under development.

Impact Canada tracks performance information at a portfolio level to assess the relevance of its flexible authorities, knowledge diffusion, and partnerships leveraged through its efforts. It also uses robust impact measurement approaches at the initiative level, such as randomised controlled trials for behavioural insights interventions, as well as a challenge impact assessment that uses administrative data and statistical matching techniques to create comparison groups. This is supplemented by project level information captured by partner departments (e.g. did a challenge prize focused on housing supply innovations lead to greater affordability).

Challenges and Failures

Creating new funding and program delivery approaches required a significant amount of time to research, design, and implement within a bureaucracy with entrenched systems. In spite of high-level calls for greater innovation and reducing barriers to innovative funding and service delivery approaches, a clear path to implement these approaches was not evident, which led to the creation of Impact Canada.

As the federal system becomes more familiar with these approaches and as early projects are now demonstrating generally positive and policy-relevant results, traction is increasing. These approaches also require governments to take a more active approach to problem definition and stakeholder engagement than typical public servants might be used to, which may be a result of an engrained risk aversion within public organisations. A Centre of Expertise housed in a Central Agency of government appears to help mitigate internal capacity issues.

Conditions for Success

A significant success factor has been developing a whole-of-government system for implementing outcomes-based approaches approved by Canada’s Treasury Board. This includes a set of innovative programming Terms and Conditions and establishing the Impact and Innovation Unit Centre of Expertise within the Privy Council Office of Canada. The approach has been solidified in core Government of Canada decision-making processes like federal Budgets and Ministerial Mandate Letters, and has helped implement core Government of Canada priorities. This has helped address what was a previously challenging innovation environment, where rules and systems barriers often inhibited the development and implementation of outcomes-based efforts. Impact Canada is showing that innovative policy approaches can be developed according to high methodological standards and that the appetite of departments and federal organisations to deploy such approaches is higher than previously understood.


In general, it appears that there is significant interest in the Impact Canada approach from other governments. This may be because it adapted existing proven models from other jurisdictions for outcomes-based policy and program approaches and successfully adapted them to a Canadian context. It could also be because Canada has taken a whole-of-government effort that links policy to implementation, and draws from a Government of Canada commitment to implementing a directive on experimentation, which is applicable in all federal organisations.

Within Canada, there is further space for the initiative to scale and grow, and have a larger impact across the federal system. Initial efforts have also seen the potential to partner with other orders of government in Canada’s federated system, including provinces, territories, municipalities and Indigenous organisations and governments. A binding constraint will be the size of the Impact and Innovation Unit core team and allocated resources.

Lessons Learned

Lessons learned and impact assessment efforts are now underway for Impact Canada. As Impact Canada is at an early phase of implementation, some key insights to date are:

Developing solutions to tackle complex problems requires a significant amount of research and define problems before identifying and developing suitable interventions. This requires a realistic project development time frame to be put in place at the outset. Impact Canada designed a process flow for implementing outcomes-based approaches that includes five key steps: understand, design, test, implement, and evaluate + scale. This process has been refined over time based on lessons learned from actual project implementation.

Another key insight is that maintaining a high level of internal rigour in project design, implementation, and evaluation helps build credibility within the bureaucratic system and builds confidence that innovative methods are effective at tackling core policy problems, and are not “faddish” or marginal to core government priorities. This can also demonstrate how this level of rigour may be applied to other, more traditional program and service delivery approaches. Linking innovation efforts to core priorities of the Government appears to have helped promote further scaling of these approaches as well as in attracting high-quality partners outside government.

Finally, there is value in codifying lessons learned and documenting both outcomes-level and process-level successes and setbacks. The Impact Canada Centre of Expertise has emphasised impact assessment as a key priority. Its layered approach includes publishing case reports of Impact Canada projects (e.g. behavioural insights trials, challenge prizes), conducting intensive qualitative research, as well as leveraging administrative data to assess impact of interventions using experimental and quasi-experimental techniques that increase data quality while lowering reporting burden and costs to participants.

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