The Royal Canadian Legion, which has lobbied to open the Last Post Fund to modern-day veterans, has had meetings with Finance Department officials, including the minister, Jim Flaherty.
The group organized a letter-writing campaign asking the government to enrich the fund and loosen the criteria, which largely restricts eligibility to veterans of the Second World War and Korean War.
Gordon Moore, the Legion's Dominion Command president, says it's scandalous the fund had to undertake a private donation drive to bury as many as 29 veterans, whose families were denied support.
"We've been trying to point this out to (the federal government), and I think somebody has finally turned the light switch on," Moore said.
"What we're waiting for is them to come back and say this is the process we're going to go through for those vets who are falling through the cracks."
A spokesman for Veterans Affairs Minister Julian Fantino notes the government has made improvements to the fund, but wouldn't comment on the talks.
"We will continue to work with veterans groups to ensure the Canadian Funeral and Burial program remains one of the best in the world," Joshua Zanin said in an email.
The government was put on the defensive last year when it was revealed the fund, meant to assist with burial costs and a headstone, had rejected two-thirds of the requests put before it in the previous five years.
In the spring, the federal budget increased the amount of money available for funeral expenses, but did not loosen the eligibility criteria, which have not been revised in decades.
The rules generally exclude modern-day soldiers who served during the Cold War and in Afghanistan. There's also a means test that says a qualifying veteran's estate must total less than $12,010.
The parliamentary budget office crunched the numbers on the changes from March and found the agency is expected to spend less than a third of what it was allocated.
Budget office researchers estimate only $18.4 million of the additional $65 million set aside for the Last Post Fund will be spent in the coming five years.
The report pointed out that since the program is geared toward a dwindling population of Second World War and Korean War veterans, there will be less need.
Moore said roughly 500 veterans are dying in poverty each year. Despite that, the Last Post Fund found itself unable to spend $2 million a year and was returning the appropriation to the federal treasury.
Since it began canvassing for private donations two years ago, the fund received about $93,000, said retired major-general Ed Fitch, a vice-president with the fund.
With fewer older veterans and more ineligible ones entering the system, the agency is between a rock and a hard place.
"The crunch is coming, and quite frankly, we're running out of donation money," said Fitch.
The organization, in some respects, is being forced back to its roots, prior to the First World War. Established in 1902 as a charity to bury homeless veterans, the federal government took over funding after the calamity of the Great War when it was faced with massive social unrest over the treatment of ex-servicemen.
Veterans groups see the declining interest in the fund through the same lens as the recent court filing, where federal lawyers declared that the government had no extraordinary obligation to care for wounded. The stand was taken as a defence against a class-action lawsuit by Afghan veterans.
As part of a promise made to troops on the eve of the Battle of Vimy Ridge, former prime minister Robert Borden, declared that the country would always take care of its war dead and wounded.
Before the changes last spring, the federal government contributed only $3,600 toward the funerals of destitute ex-soldiers, a figure substantially lower than what some social-service departments pay for the burial of the homeless and those on welfare.
The current entitlement can run up to $7,376, depending on a veteran's income. Other expenses, including a coffin or urn, ceremonial services, death notices and transportation costs, also became eligible for reimbursement.
Also on HuffPost