Consultation on Boosting Spending by Charities in Our Communities

Current status: Closed

Every year, charities are required to spend a minimum amount on their charitable programs or on gifts to qualified donees. This is known as the “disbursement quota” and it ensures that charitable donations are being invested into our communities. In Budget 2021 the government announced its intention to potentially increase the disbursement quota, which could boost support for the charitable sector, benefitting those that rely on its services.

This engagement process gave stakeholders and interested members of the public the opportunity to provide the Department of Finance with feedback on potentially increasing the disbursement quota and updating the tools at the Canada Revenue Agency (CRA)’s disposal to enforce the disbursement quota rules, beginning in 2022. The consultation ran from August 6, 2021 to December 2, 2021. Thank you to everyone who participated.

Key questions for consideration

To inform discussions, the government issued a background paper that outlines the existing approach and raised points for consideration on its continued appropriateness.

Specifically, the department sought views on the following questions:

• Should the disbursement quota be raised to produce additional funding for charities, and to what extent?
• Would it be desirable to increase the disbursement quota to a level that causes foundations to gradually encroach on investment capital, and would it be sustainable in the long-term for the sector?
• What additional tools (e.g., monetary penalties or other intermediate sanctions) should be available to the CRA to enforce the disbursement quota rules?
• Do the relieving and accumulation of property provisions continue to be useful for charities?
• Do the existing carry-forward provisions strike the appropriate balance between ensuring the timely disbursement of funds and allowing foundations to make large gifts on a more infrequent basis?
• Are there any temporary changes to the disbursement quota that should be considered in the context of the COVID-19 recovery?

Concurrently, the department indicated it would engage with the Advisory Committee on the Charitable Sector, an advisory body made up of representatives from the charitable sector that provides advice to the government on important and emerging issues facing registered charities.

What's next?

Feedback received through this consultation will be considered alongside input from the Advisory Committee on the Charitable Sector to help inform decisions on potentially increasing the disbursement quota and updating enforcement tools. While this formal consultation has now concluded, Canadians are welcome to share their ideas and comments with the Department of Finance at any time.

Related links

• Government launches consultations on boosting charitable spending in our communities
• Background paper: Considerations for increasing the disbursement quota
• Budget 2021: Boosting Charitable Spending in Our Communities
• Advisory Committee on the Charitable Sector (ACCS)