1 The Funding Portal Submission to Finance Canada s Consultation on Contingency Fees for the SR&ED Tax Incentive Program FundingPortal.com 1
For any questions or comments regarding this submission, please contact: The Funding Portal Inc. 1 Yonge St., Suite 1801 Toronto ON M5E 1W7 Telephone (toll-free): 1-855-850-FUND (3863) Telephone (local): 416-214-7730 Email: Communications@TheFundingPortal.com Website: TheFundingPortal.com Résumé Alors que de nombreuses entreprises canadiennes sont informées de la disponibilité du programme RS & DE, trop peu d entre elles sont conscientes des modèles alternatifs de facturation des spécialistes en déclarations de revenus, et de l'existence de programmes de financement public tout aussi bénéfiques pour encourager la R-D. The Funding Portal est un nouvel organisme national bilingue offrant un accès à toutes les informations, services, outils et forums de discussion pour faciliter l'accès aux programmes de soutien de la R-D. Le Portail offre aux entreprises un accès à une vaste gamme de services de financement, y compris l'assistance d'experts dans la préparation de demandes de crédits RS&DE, tous offerts à des tarifs abordables et transparents. Le Portail ne s'oppose pas à ceux qui utilisent des honoraires conditionnels, mais est fier d'offrir une solution alternative efficace et peu coûteuse pour les entreprises de toutes tailles et de tous secteurs d'activité industrielle à travers le pays. 2
Contents Executive Summary 3 About The Funding Portal.........4 Discussion 5 Conclusion... 7 Appendix 1 Funding Portal Services.... 8 Appendix 2 Funding Portal Prices for Select Services....... 10 Executive Summary The Funding Portal Inc. (TheFundingPortal.com) is Canada s national bilingual one-window gateway for the business market to all information, services, tools and dialogue to facilitate access to R&D and growth financing. The Funding Portal has aggregated more than 4,000 sources of federal, provincial and municipal public funding disbursing an estimated $24 billion into the business market each year and more than 500 sources of private matching funds, including venture capital. The Funding Portal also generates unique data on Canada s industrial support programs and produces a suite of data products and management information reports for government and industry. The Funding Portal is grateful for this opportunity to share its views on the impact of contingency fees on the effectiveness of the Scientific Research and Experimental Development (SR&ED) tax incentive program, and congratulates the Government of Canada on its important efforts to support innovation. The Funding Portal supports open access by tax filers to a variety of billing models for thirdparty tax preparer services, including contingency-based billing to open transparent upfront fees. Given the prevalence of contingency-based billing, and the high cost of the contingency model to applicants and, arguably, to taxpayers and government, The Funding Portal provides the applicant marketplace with an open transparent upfront highly-affordable posted fee model, using today s Web 2.0 tools and solutions. Fees are paid by applicants, like most professional services, and not by governments using taxpayer funds. The Funding Portal provides the one-window gateway that was called for in the 2011 Jenkins Panel Report to information and services in respect of all federal R&D funding programs, as well as municipal and provincial industrial support programs funds for R&D, and sources of private matching funds. In that context, applicants can learn more about SR&ED as well as thousands of other potential sources of R&D funding--and work with select funding experts and tax 3
professionals serving on the Portal s Roster, and have access to a flat fee model posted on the Portal s shopping cart. Using contemporary Web 2.0 communications tools including secure online workroom, secure digital filing channel, shopping cart for online posting and payment of fees, and a digital ScoreCard for assessing claims in advance of filing and a national bilingual roster of funding professionals in all major city centres, The Funding Portal provides the SR&ED applicant market with a modern application service, using today s online tools, and an open upfront billing model borne by the market not taxpayers. About The Funding Portal The Funding Portal Inc. is a Canadian private corporation that operates a national bilingual onewindow gateway for the business market to all information, services, tools and dialogue to facilitate access to R&D and growth financing. Backed by some of Canada s best business brands, the Portal has aggregated more than 4,000 sources of federal, provincial and municipal public funding disbursing an estimated $24 billion into the business market each year, and more than 500 sources of private matching funds. The Funding Portal: Serves as a direct communications channel to SMEs, entrepreneurs and CFOs, Improves market awareness and open transparent funding processes, Assists applicants to improve compliance with complex and varied funding processes, Through its suite of concierge services, improves funding outcomes for applicants and funders, and Encourages the market to move to more open and consistent practices. The Funding Portal works in collaboration with government, and partners with firms that can provide high quality affordable online services and solutions to assist companies to realize their funding and growth objectives. Law firms like LaBarge Weinstein that have developed and deliver Startup-in-a-Box, Financing-in-a-Box, and Ask an Expert fast affordable legal and advisory tools delivered through the Portal. Like MERX, the online bid portal, and Teranet, the online land registry interface, The Funding Portal creates a one-window digital platform for business to find and secure public and private R&D and growth funding. The Portal s online concierge services are delivered through a national bilingual Roster of Funding Experts using the Portal s unique online tools and solutions. Find It, Apply for It, Score It and Leverage It: four easy steps to get from I sure would like to know how to get some of that government funding to My company got financed! The Portal s online learning tools include webinars, headline news, The Funding Report, its free weekly online newsletter distributed in partnership with FinancialPost.com, and a weekly 4
broadcast segment produced by BNN, the Bell Media Business News Network, reaching tens of thousands of business people each week. The Funding Portal also generates unique data on Canada s $24 billion industrial support infrastructure. The Portal s suite of data products and management information reports for industry and government provide mission-critical information that has been wholly missing to date in allocating resources and navigating within Canada s industrial support infrastructure. The Portal s comprehensive Program Data ( Who funds what ) and Awards Data ( Who receives what) are unique. The Portal s Analytics Panel provides stewardship and insights in rendering the data into reports that are now being sought after by industry and government. Panel members include: Georgina Steinsky-Schwartz (Toronto), Chair, National Advisory Council, The Funding Portal Inc; Leo Lax (Montreal/Ottawa), CEO, Skypoint Capital Corporation & GP, Naavon Angel Fund; and Dr. Bev Dahlby (Calgary), Professor of Economics, University of Alberta. About this Submission This Report was prepared by The Funding Portal staff with direction provided by The Funding Portal s National Advisory Council, including its Chair, Georgina Steinsky-Schwartz. Ms. Steinsky-Schwartz has served as a Deputy Minister in the Government of Canada and as a senior executive within the corporate sector (BCE and Manulife) and non-profit sector (Imagine Canada). Her work has been aimed at improving the operational effectiveness of public, private and non-profit organizations. She is a recipient of the Public Policy Forum Award for improving the quality of government in Canada. Discussion This submission will address two main points of interest identified in Finance Canada s Consultation regarding the Impact of Contingency Fees on the Effectiveness of the SR&ED Tax Incentive Program: the variety of different billing practices employed by SR&ED performers, and the positive impacts achieved by SR&ED performers. As noted in the Government s Consultation document, the SR&ED tax program is Canada s single largest federal program supporting industrial R&D, providing over $3.6 billion to businesses last year. However many businesses rely on third-party tax preparers charging contingency fees to prepare their applications. The size of these contingency fees varies, and can in some cases represent a significant portion of the credit paid by government. This practice raises questions about the cost-effectiveness of the program in meeting its objectives to support R&D. The Funding Portal supports an open market for SR&ED tax preparers to apply the billing structure of their choosing. Its own practices demonstrate a passion and commitment for 5
providing the innovation market with a more contemporary service, accessible through a onewindow Web-enabled gateway as called for in the Jenkins Panel Report on Federal R&D, and providing an open upfront billing model that will reduce costs for applicants and eliminate both the perception and the reality that these professional fees are being borne by taxpayers out of funds designated for R&D. In Summer 2011, The Funding Portal launched a national bilingual one-window gateway for the business market to all information, services, tools and dialogue to facilitate access to R&D and growth financing. The Portal aims to provide businesses with access to a wide-range of expert financing services, including expert assistance in preparing SR&ED tax applications, all offered at open and affordable prices. The Funding Portal delivers these low-cost concierge services to all types of businesses through advanced Web 2.0 tools and a Roster of seasoned funding experts located across Canada. All members of the Portal s Funding Roster employ the Portal s billing practices, which are to charge flat and transparent fees. Businesses seeking assistance with their SR&ED tax application have access to five relevant innovative and efficient services offered through the Portal: Find It, Ask-a-Funding-Expert, Askan-Accountant, Apply for It and Score It. These are but five services offered to businesses, for the complete range of Funding Portal Services, please see Appendix 1. Find It is a free service for all Canadian businesses through which they can search a unique database of over 4,000 federal, provincial and municipal government grants, contributions and tax incentives. Through this service businesses can in minutes learn more about the SR&ED program, access insight on the program shared by other Portal members, and also compare the program with other relevant sources of funding. Ask-a-Funding-Expert is the Portal s most popular service. It allows businesses to experience a one-hour consultation with a funding expert to discuss their funding options or the intricacies of a certain program, such as SR&ED, for the cost of $250. Similarly, businesses seeking further tax or accounting advice can seek a one-hour consultation with an Accountant for the same price. Apply for It is a service which provides businesses with expert assistance to efficiently produce a compliant application to a grant, contribution or tax incentive program. Clients work with an assigned expert within a Secure Online Workroom to complete their application and gain access to online tools, templates and best practices. This service not only assists businesses in preparing compliant applications, thus lowering administrative costs for the government, it also provides businesses with the necessary knowledge to prepare their own SR&ED applications on a go-forward basis. The costs for Apply for It are based on how much funding the business is seeking however this is done through a transparent tier-system rather than on a percentage-basis or on a success-basis. The rationale behind the Portal s tier-system is that it provides clients with the best of both worlds: an open and transparent price with no surprises and it also allows them to 6
purchase the service level they require at the lowest cost possible. An application to receive a return under $100,000 will mean significantly less work than one for over $10,000,000, and this is reflected in the Portal s prices. Similarly, the Portal s Score It service employs tiered pricing. The Score It service allows businesses to cut their consultancy fees even further by giving them the option of preparing their own application and simply having it reviewed by a funding expert prior to its submission to the Canada Revenue Agency (CRA). Please see Appendix 2 for The Funding Portal s complete pricing structure for the abovementioned services. Along with providing Canadian businesses with centralized access to a range of alternative lowcost services to traditional third-party tax preparers, the Portal also improves awareness of the SR&ED tax program and accessibility to complimentary public funding programs. The Portal s online learning tools include webinars, headline news, The Funding Report, its free weekly online newsletter distributed in partnership with FinancialPost.com, and a weekly broadcast segment produced by BNN, the Bell Media Business News Network, reaching tens of thousands of business people each week. Through its Web 2.0 services, The Funding Portal can allow Government to achieve considerable operating efficiencies. The Jenkins Panel Report on federal support for R&D made clear that governments need to make public funding more accessible to the applicant marketplace through a portal-type solution. The Funding Portal s solutions for funders are highly applicable not only to this Consultation on the effectiveness of the SR&ED Program, but may be highly applicable to the work of the new federal Cabinet Subcommittee on Government Administration and Efficiency. Funding Portal solutions for funders include a Secure Digital Filing Channel for digital application filing, and a national bilingual 1-800 voice/data help service providing the business community with one-window access for questions about public funding programs. These services are specifically aimed at reducing the administrative burden for government funders and improving efficiency. The Funding Portal also generates unique data on Canada s $24 billion industrial support infrastructure. The Portal s suite of data products and management information reports for industry and government provide mission-critical information that has been wholly missing to date in allocating resources and navigating within Canada s industrial support infrastructure. The Portal s comprehensive Program Data ( Who funds what ) and Awards Data ( Who receives what ) are unique. The Portal s Analytics Panel provides stewardship and insights in rendering the data into reports that are now being sought after by industry and government. Conclusion 7
While many Canadian businesses are informed of the availability of the SR&ED tax incentive program to support R&D and innovation, too few are aware of alternative billing models for thirdparty tax preparers, or the rich array of other federal, provincial, municipal and private sources of funding. The Portal provides a disruptive change model, providing alternatives to contingency fees, and building awareness and access to a wider array of industrial support. Appendix 1 All Funding Portal Services (September 2012) Service Funding Report RSS Feeds Webinar Data & Analytics Reports Ask-a-Lawyer Ask-a-Funding Expert Ask-an-Accountant Description A free weekly newsletter on public funding news, announcements and trends distributed every Tuesday morning. Feature articles can also be found on a weekly basis in The Financial Post. Daily RSS Alerts on public funding news specific to industry sector or location. The Funding Portal offers a range of webinars and training programs to provide organizations with the latest information on government funding opportunities and how to secure funding. Data reports on Canada's $24 billion public funding marketplace. A collaboration between The Funding Portal and the LaBarge Weinstein LLP business law firm to assist companies to address the legal issues required to secure funding or financing. A one-hour consultation with a public funding expert to enhance an organization's financing strategy. A collaboration between The Funding Portal and reputable Canadian accountants to assist companies to address accounting issues related to business ownership or administration. 8
Startup-in-a-Box Financing-in-a-Box Find It public funding Find It private financing Apply for It Score It Leverage It A collaboration between The Funding Portal and the LaBarge Weinstein LLP business law firm to assist early-stage companies to quickly and cost-effectively transform themselves into a venture corporation that can attract industrial support funds and private financing. A collaboration between The Funding Portal and the LaBarge Weinstein LLP business law firm to assist companies to present a package of investor documents into potential investors and to close financing. Free Find It search engine instantly finds the right government funding or tax credit programs for a company s growth or R&D objectives. The Find It search engine instantly identifies over 500 private financing funds from across Canada, including venture capital, private funds, bank loans, and angel funds. Expert assistance from The Funding Portal to efficiently produce a compliant application that will stand out to funders. Public funding experts evaluate draft applications prior to their submission to government funders in order to optimize compliance. Leverage a business or project forward along the commercialization continuum. 9
Appendix 2 Funding Portal Prices for Select Services (September 2012) Service Return sought by Price Business (Client) Find It Public Funding Any Free Ask-a-Funding-Expert Any $250 Ask-an-Accountant Any $250 Apply For It Under $100,000 $2000 $100,000 to $1,000,000 $3000 $1,000,000 to $10,000,000 $5000 More than $10,000,000 $10,000 Score It Under $100,000 $500 $100,000 to $1,000,000 $1000 $1,000,000 to $10,000,000 $2000 More than $10,000,000 $5000 10