Stream 3: Community Economic Development and Diversification guidelines

Rural innovation and growth in southern Ontario

FedDev Ontario is dedicating $100 million over the next three years, from its funding streams, for projects in rural southern Ontario that:

  • Promote business scale-up and diversification;
  • Lead to increased business, talent and investment attraction;
  • Foster innovation, technology adoption and digital connectivity;
  • Leverage local assets;
  • Connect smaller communities to the globally competitive economies.

Support is available to businesses, not-for-profit organizations, Indigenous organizations, economic development organizations, including Community Futures Development Corporations that are driving innovation and growth, municipalities and other innovation enablers located in rural southern Ontario.

Eligibility criteria:

Applicants must:

  • Meet the requirements for any one of our funding streams; and
  • Be located in rural southern Ontario.

Apply now:

Applications will be accepted on a continuous basis. Submit your Application for funding.

Scope & Objectives

The Community Economic Development and Diversification Stream aims to develop, diversify and transform local economies by promoting small business development, community innovation and strategic collaborations.

Through this Stream, FedDev Ontario seeks to enable communities to leverage their economic strengths and unique assets to:

  • Enhance business attraction, investment, retention and employment opportunities in southern Ontario communities.
  • Develop and expand collaborative efforts that strengthen regional competitiveness.
  • Support regional businesses, hubs and communities with the goal of economic diversification, integration and transformation.

FedDev Ontario will make targeted investments to support the development and diversification of communities, including those in transition or facing economic hardship and decline. These investments aim to generate sustainable, inclusive growth and help small and rural communities in southern Ontario to fully participate in, and benefit from economic opportunities.

Expected Results

FedDev Ontario is results oriented. Projects supported through this Stream, and FedDev Ontario's other programming streams, work towards achieving one or more of the following departmental results:

  • Businesses in southern Ontario invest in the development and commercialization of innovative technologies.
  • Businesses in southern Ontario are innovative and growing.
  • Communities are economically diversified in southern Ontario.


I. Eligible Applicants

To be considered eligible for this Stream, an applicant must be located in southern Ontario.

Applicants located within or in proximity to large metropolitan areas may be eligible to apply under Stream 1 or Stream 2. See guidelines for additional details.

A. Eligible applicants are not-for-profit organizations that support community economic development and/or diversification. They may include:

  • Indigenous organizations.
  • Community Futures Development Corporations (CFDCs).
  • Co-operatives
  • Municipalities and other municipal-type organizations.
  • A group or an alliance such as an industry association or consortium that is a legal entity capable of entering into a contribution agreement.
  • Business accelerators and incubators.
  • Other not-for-profit organizations, as determined on a case-by-case basis.

B. Eligible applicants are legally incorporated businesses, including Indigenous-owned businesses.

To be considered eligible for funding, applicants must demonstrate:

  • Evidence of project funding.
  • Managerial, technical, operational and financial capacity to achieve the project's stated objectives in a timely manner.
  • Evidence of opportunities for market/industry growth.
  • How the project addresses a gap, including evidence of economic opportunities for community growth and transformation, or emerging or ongoing circumstances that require a targeted response in order to maintain or support economic development or diversification.
  • A viable project plan with achievable outcomes, supported by verifiable cost estimates.

Applicants may also be required to demonstrate how their project will be self-sustaining upon the completion of the project. For project proposals that will result in the creation of a new ongoing program/service, applicants may be required to demonstrate the financial sustainability of the new program/service beyond the project completion date (i.e., sustainable business model and/or a plan for generating revenue in order to grow or maintain service levels).

II. Eligible Activities

FedDev Ontario is targeting investments structured around the following activities:

Strengthening Community Ecosystems

Projects will normally enable not-for-profit organizations to improve economic outcomes by addressing gaps or opportunities in the community, and support the advancement of underrepresented groups.

Examples of eligible project activities could include:


  • Developing and/or expanding collaborations that: connect smaller communities with larger firms or supply chains in urban centres, innovation centres, business consortia or other innovation platforms; enable communities or firms to work with post-secondary and research institutions; and/or, support small communities to attract investment to their region.
  • Business attraction, growth and retention programs and services, including supply chain development and succession planning.
  • Business incubators and accelerators addressing needs at a sub-regional or community level.
  • Supporting businesses through programs and services, including training and mentoring.
  • Development of new technologies, processes, prototypes, testbeds and/or commercially relevant technology platforms.
  • Improving the availability of risk capital in the region, including by establishing or capitalizing an investment fund.
  • The implementation of community and/or regional action plans.

Businesses Supporting Resilient Communities

Projects will normally support legally incorporated businesses that foster community economic diversification and transformation. These projects would improve productivity, capacity and competitiveness of businesses to increase employment and growth opportunities, as well as enhance the resilience of communities.

Examples of eligible project activities could include:

  • Facilities improvement or expansion to support greater economic diversification.
  • Adoption of new equipment.
  • Market development, diversification and expansion.

Other activities deemed reasonable to support the transformation and diversification for communities facing economic challenges.

III. Eligible Costs

Eligible costs for project activities may include:

  • Labour
  • Expertise
  • Non-Capital
  • Capital

All costs must be reasonable and directly related to the eligible project activities.

IV. Ineligible and/or Unsupported Costs include:

  • Any costs deemed not reasonable and/or not directly related to the eligible project activities.
  • Activities in support of regular maintenance and/or ongoing operation costs.
  • Cost incurred prior to the eligibility date as defined in the contribution agreement.
  • Costs incurred after the Project completion date listed in the contribution agreement.
  • Any cost that is ineligible under the contribution agreement.
  • Acquisition of land and buildings.

V. Ineligible Projects

  • Business-led projects that are targeted primarily at retail consumer markets will not be considered.


Preference may be given to projects that respond to issues and opportunities identified by FedDev Ontario.

Special consideration may be given to applications that support:

  • Priority sectors and clusters, or projects that reinforce Ontario's economic and innovation strengths.
  • Firms to better integrate into domestic and global markets.
  • Underrepresented groups, including women entrepreneurs, youth, Indigenous peoples, Official Language Minority Communities (OLMCs), persons with disabilities, newcomers to Canada, LGBTQ2+ communities, and visible minorities.


The Community Economic Development and Diversification stream will normally target investments that range from $250,000 to $5,000,000 per project.

  • Not-For-Profit Organizations: Applicants are normally eligible to receive up to 50 percent of eligible and supported project costs. On an exceptional basis, FedDev Ontario may consider projects eligible for up to 100 percent of eligible and supported project costs.
  • Incorporated Businesses: Applicants are eligible to receive up to 50 percent of eligible and supported project costs.
  • Indigenous-owned Businesses: Applicants are normally eligible to receive up to 50 percent of eligible and supported project costs.

For projects involving redistribution of funding, the ultimate recipients (SMEs) must provide minimum 50 percent cash contribution. The maximum disbursement of a contribution that provides funding to SMEs as their ultimate recipient is capped at a maximum of $100,000 per SME under a FedDev Ontario project with a not-for-profit organization.

Government stacking up to 100 percent is allowed for not-for-profit organizations and indigenous-owned businesses for the Community Economic Development and Diversification stream.

For incorporated businesses, total government funding (including federal, provincial and municipal) for a project cannot exceed 75 percent of eligible non-capital costs and 50 percent of eligible capital costs.

FedDev Ontario support is not intended to replace or duplicate funding available from other funding sources, including private-sector and/or government programs.

Financial assistance from government programs may have tax implications for an organization. It is recommended that applicants obtain advice from a qualified tax professional.

Disbursement of Funding

If a project receives approval, a contribution agreement will be executed with FedDev Ontario.

  • Not-for-profit applicants: funding will be disbursed based on the percentage of funding approved for eligible costs incurred.
  • Incorporated businesses: funding will be disbursed on a reimbursement basis, calculated based on the percentage of funding approved for eligible costs incurred. FedDev Ontario will not allow for advance payments to businesses.

Progress payments will be made on the basis of documented claims for reasonable eligible costs incurred or on the basis of the achievement of pre-determined performance objectives (e.g., project milestone payments) and on the costing formula to be described in the contribution agreement.

To receive funding, recipients must submit claims forms, on templates provided by FedDev Ontario, that summarize eligible costs incurred and paid within a period. Generally, the duration of these periods will be no more than once a month and no less than quarterly.


Contributions to not-for-profit organizations will be non-repayable.

Contributions provided directly to for-profit businesses will be unconditionally repayable. Repayments of contributions will be expected to commence as soon as reasonably possible, without compromising the success of the project or the organizations receiving the funding. The specific terms of repayment, including date of commencement and length of repayment term, will be determined on a case-by-case basis during the development of the contribution agreement. However, repayment will begin no later than one year following the completion of the project.

Application Process

Applications are accepted on an ongoing basis with no submission deadlines. FedDev Ontario has a single-phase application process and one Application for Funding that is used across all three streams of innovation programming.

Refer to the Application Guide for instructions on how to complete FedDev Ontario's Application for Funding. Applicants are encouraged to review the Application Guide in conjunction with these programming guidelines.

Applicants are strongly encouraged to contact FedDev Ontario prior to submitting an application. For more information on FedDev Ontario's programming streams, visit the Funding opportunities page or call 1-866-593-5505.

Multiple and concurrent project submissions from the same applicant are discouraged and may not be considered by FedDev Ontario; applicants are encouraged to prioritize project submissions.

FedDev Ontario reserves the right to initiate calls for proposals as deemed necessary to encourage applications in priority areas or sectors and to adjust the application process accordingly if needed.

Application Review

FedDev Ontario will review applications as they are received.

All applications will be screened initially for completeness. Incomplete applications will not be assessed and will be considered ineligible for funding.

All project activities must be completed by the Project completion date listed in the contribution agreement.

Complete applications are those that include all prescribed documentation containing all information needed for FedDev Ontario to complete the review. Information should be accurate, verifiable, relevant and consistent.

Complete applications will undergo a due diligence process where they are assessed against a number of factors. Assessment criteria include, but are not limited to:

  • Project's contribution to achieving the objectives and expected outcomes of the Community Economic Development and Diversification stream and government priorities.
  • Demonstrated capacity of the applicant to successfully implement the project and achieve the stated objectives. Factors to be assessed include managerial capacity, technical capacity, operational capacity and financial capacity.
  • Risks (financial, technical) and mitigation strategies.
  • Economic benefits of the project.
  • Demonstrated need for FedDev Ontario's investment and its incremental impact on the project in terms of scope, location and timing.
  • Support for inclusive growth priorities.

Reporting Requirements & Visibility Requirements

Recipients must submit to FedDev Ontario periodic reports and annual financial statements. Project reports will provide details on project results and completion of deliverables, including achievement of performance indicators and project benefits identified in the contribution agreement.

Recipients must agree that its name, the amount of the Contribution and a description of the general nature of the activities supported under its contribution agreement with FedDev Ontario be made publicly available for reasons of transparency and proactive disclosure. Recipients must also agree to co-develop a plan intended to maximize visibility of the support received as a result of the project, including but not limited to support provided to ultimate recipients (i.e., SMEs), if applicable.


FedDev Ontario reserves the right to modify these guidelines at any time without notice and may waive certain requirements on an exceptional basis.

Contact Us

Applicants are strongly encouraged to contact FedDev Ontario to discuss their application with a program officer, who will also explore other government programs that may be applicable to the project. For more information on FedDev Ontario's programming streams, visit the Funding opportunities page or call 1-866-593-5505.