The Grant Claim That Survives Due Diligence

The sentence everyone writes

Open any funding business case — an IRAP application, a board paper, a lender package — and somewhere in it sits a sentence like this:

This funding enables a research programme we could not otherwise undertake.

It reads as harmless. It is the single most examined claim in the document once anyone with money starts asking questions, because it is a claim about a world that did not happen: what you would have spent without the grant. Nobody tests it when you apply. A board tests it a year later, when it compares your R&D line to the year before and finds the number barely moved.

The spine. Economists have measured whether public money makes firms spend more of their own on research. The best pooled answer is about 7.5 cents of extra private R&D per public dollar — small, positive, and roughly an order of magnitude below what this grant unlocks our programme implies (Dimos et al., 2022). So the counterfactual claim usually fails. The claim that holds up is the cash one: a grant relieves a financing constraint, which is what the money demonstrably does, and which no diligence process will knock down.

What the evidence actually measures

The question researchers ask is not whether the grant helped. It is narrower and harder: did the firm's own R&D spending go up, net of the public money?

Christos Dimos and colleagues pooled that literature — 598 effect estimates from 37 studies — and found both grants and tax credits produce an effect that is real and, in their word, "small": in round terms, one more dollar of public support induces 7.5 cents of additional private R&D (Dimos et al., 2022).

One of the better-identified single studies goes further. Working from a French firm panel running 1993 to 2009, Marino and colleagues found "either no additionality or substitution effects between public and private R&D expenditure" — and that the substitution is more extensive for firms with fewer than 100 employees (Marino et al., 2016, p. 1715). That is the size band most Canadian SME programmes are built for.

Why this is good news

Substitution sounds like an accusation. It is not, and the third study is the reason.

Looking at 14,825 firm-year observations of listed Chinese companies, Li and colleagues found that subsidies are "targeted at bailing out firms facing financial constraints" — not at the most innovative or the best-connected firms — and that they "partially offset the suppression of financial constraints on innovation" (Li et al., 2021).

Read that with the first two studies and the picture is coherent rather than damning. Public money reaches companies that are short of cash, and relieves the shortage. It just does not, on average, cause them to pile their own money on top. Which means the honest description of what a grant does for you is a cash-flow description — and cash flow is the thing a lender, a board and an investor all actually care about.

The two-line fix

Replace the counterfactual sentence with two lines you can evidence:

Line one — what the grant pays for. The specific work, its cost, and the share the programme covers. This is verifiable from the application itself.

Line two — what the freed cash does. Where the money you would otherwise have spent now goes: a hire, a certification, a market entry, runway. This is verifiable from your own plan.

That is it. No claim about an alternate universe, nothing that unravels when the R&D line stays flat, and it reads as more commercially literate rather than less — because a reader who knows this literature will notice that you did not overclaim.

If you genuinely are in the minority whose research budget rises because of the grant, say so and show the two budgets. That is the strongest position available, and the evidence says it is rare enough to be worth demonstrating rather than asserting.

One thing that changes the answer

Programme design matters more than programme size, and it is the lever you control when choosing where to apply.

Bellucci, Pennacchio and Zazzaro compared two nearly identical regional programmes run in the Marche region of central Italy between 2005 and 2008, against 6,067 eligible non-funded firms. The one funding individual company projects produced clear additionality — recipients out-spent, out-hired and out-patented their matched controls. The one mandating collaboration did not; those recipients "showed a decline in tangible and intangible investments compared to similar unsubsidized firms" (Bellucci et al., 2019, p. 214).

Same region, same years, same money, opposite results. So before you chase the largest envelope, read what the programme obliges you to do differently — then ask whether you would have chosen that.

What this evidence is not

None of these studies examines a Canadian programme. Marino's panel is France, 1993–2009, and excludes manufacturers under 20 employees. Bellucci's is one Italian region across four years. Li's is Chinese listed companies, which are neither small nor private. Dimos pooled 37 studies from many countries; none is identified as Canadian.

I searched four academic databases on 8 September 2026 for a firm-level Canadian evaluation and found nothing usable. That is a statement about my search, so here is the control: the same query, run the same afternoon without the country restriction, returned the French study and a second meta-regression straight away. The search works. There is no Canadian equivalent I can read.

So treat the mechanisms as transferable — dose sensitivity, design sensitivity, the SME reversal — and the magnitudes as foreign. That is a reason to write a defensible sentence, not a reason to quote a number.

Where this fits in how I work

The funding narrative is usually a Phase 07 question, and this paragraph is the one I insist on regardless of scope, because it is where a plausible document becomes a checkable one Sagentix GTM Methodology, 2026. Reading the papers rather than their summaries is most of what separates the two, and it is the part of the work that does not scale — somebody has to open the PDF.

The full delivery system runs 6–8 weeks, draws on 1,412 curated artifacts, and is priced from CA$4,500 for Phase 1 to CA$45,000 for a full go-to-market build, depending on scope — with a Phase 1 money-back guarantee (subject to terms).

Three ways to act on this

Rewrite the one sentence this week. Find the line in your current funding narrative claiming the grant enables otherwise-impossible research. Replace it with the two lines above. Fifteen minutes, no external help, and it removes the most likely place a diligence process catches you out.

Name the stack before you attribute an effect. If you hold both an IRAP contribution and an SR&ED claim, say so in the same paragraph as any outcome you credit to either. Marino and colleagues call the alternative hidden treatments — attributing to one instrument a result produced by two — which applies to your internal reporting as much as to a government's evaluation.

Bring in a structured funding-strategy pass when the stack is large enough to matter — when federal, provincial and tax-credit programmes interact, when a lender is being shown the R&D plan, or when a programme's conditions would change what you build. That is a Phase 07 engagement, and I would take it last of the three, because the first two cost an afternoon.

The grant is real money and it does real work. It just does not do the thing most business cases say it does — and the thing it actually does is easier to prove.

What does your funding business case claim the grant unlocks — and could you evidence it if someone asked this week?

References

• Bellucci, A., Pennacchio, L., & Zazzaro, A. (2019). Public R&D subsidies: Collaborative versus individual place-based programs for SMEs. Small Business Economics, 52(1), 213–240. https://doi.org/10.1007/s11187-018-0017-5
• Dimos, C., Pugh, G., Hisarciklilar, M., Talam, E., & Jackson, I. (2022). The relative effectiveness of R&D tax credits and R&D subsidies: A comparative meta-regression analysis. Technovation, 115, 102450. https://doi.org/10.1016/j.technovation.2021.102450
• Li, Q., Wang, J., Cao, G., & Zhang, J. (2021). Financial constraints, government subsidies, and corporate innovation. PLOS ONE, 16(11), e0259642. https://doi.org/10.1371/journal.pone.0259642
• Marino, M., Lhuillery, S., Parrotta, P., & Sala, D. (2016). Additionality or crowding-out? An overall evaluation of public R&D subsidy on private R&D expenditure. Research Policy, 45(9), 1715–1730. https://doi.org/10.1016/j.respol.2016.04.009