Millions of federal dollars earmarked for multiculturalism programming are going unspent, resulting in what the government calls responsible cuts to program budgets but what critics consider a sign of a worrisome shift.

Figures from the Department of Citizenship and Immigration suggest at least $5 million a year hasn't been disbursed since 2007, and the department's marquee funding program has seen nearly 40 per cent of available funds go unused.

So the department is scaling back the amount of money it sets aside for community multiculturalism projects, despite the fact that an internal government audit suggests demand for the cash remains high and that the government itself is partly to blame for the fact it isn't being spent.

"It is irresponsible and inefficient to year after year budget spending that is not being used," Citizenship and Immigration spokeswoman Erika-Kirsten Easton said in an email.

"This also means that the funding now being allocated to the program each year will not decrease, but instead more accurately reflect what is actually being spent."

The federal multiculturalism budget has slowly been eroding since the mid-1990s and for this year, the government had originally forecast it would spend $21.3 million.

Those numbers have now been revised down to $14.3 million, according to the department's plans and priorities report.

Easton said what looks like a $7-million funding cut can be explained partially by a change in the way the government accounts for the money spent to administer programs.

But the Inter-Action budget, the department's signature granting program, is also seeing its funds scaled back.

It was set up in 2010 to support events deemed to be promote intercultural understanding, respect for democratic values or civic memory and pride.

In 2010-2011, about $14 million was spent under the program to fund 140 projects and events.

But that money represented only 63 per cent of what was set aside, according to documents from the department obtained via the Access to Information Act.

That year, 751 proposals were received, with the total value of requested funds being nine times the available cash, a 2011 audit found.

Though 567 projects were considered eligible, only 39 were recommended to the minister for approval and only 25 per cent were funded.

"The approval process for projects and events was identified by many stakeholders as the single biggest impediment to the effective operation of the program," the audit said.

"The lack of transparency and lengthy timelines associated with this process made it very difficult for program staff to manage their clients or expend their budgets."

Applications not fulfilling 'rigorous criteria'

When asked why the money was lapsing if the demand was clearly present, a spokeswoman for Immigration Minister Jason Kenney said applications just weren't up to snuff.

"Only those projects that fulfill all of the rigorous program criteria are approved for funding," Alexis Pavlich said in an email.

"These criteria are in place to ensure that funded projects provide beneficial services that are in line with the program's objectives, and provide good value for taxpayer money."

In 2011-12, about $9.5 million was spent under the program to fund 30 projects and 202 events.

For this year, the budget will be scaled back further by at least $2.5 million.

But all of the money is expected to be spent, Pavlich said.

The government has narrowed the criteria for the program in a way that's made it more difficult to access the funds, said Ratna Omidvar, who runs the Maytree Foundation in Toronto, a not-for-profit group involved in diversity programming.

"I don't think the multiculturalism program is being taken seriously any more and I worry about the nation-building aspects the program used to have," Omidvar said.

"There were a lot of problems with it, but to simply let it die down is not the route to go."

There is also an ongoing evolution in how governments thinks about multiculturalism, suggested Jack Jedwab, the executive director of the Association of Canadian Studies.

Funding model supports integration

Core funding for multi-ethnic groups disappeared in the 1980s, and the funding model shifted to supporting specific projects. In the early 2000s, the government changed its focus again, this time to support integration and settlement for newcomers.

That's forced groups working in the sector to change as well.

"The organizations out there are challenged by way of their capacity to undertake the types of projects that the multiculturalism program has identified as a priority," Jedwab said.

"Things are getting done, but they are not getting done through that program."

For example, settlement funding has risen by $400 million since 2005-06, according to the department.

The two aren't at all alike, argued Jinny Simms, the New Democrat's immigration and multiculturalism critic.

She said it's important for the federal government to play an active role in both.

"Settlement services are really there for when people arrive to help them transition," she said. "Multiculturalism is something different. It's not just for the new arrivals. It's for all of us."

Multiculturalism does remains a mainstay of how Canadians think about Canada at large, Jedwab said.

In an online poll conducted in mid-June for his organization, 43 per cent of those surveyed said their preferred image of Canada was a multicultural country with two official languages.