Join in: Open until September 30, 2021

Supporting Canada's charities, non-profits, social enterprises, and other organizations to provide vital services to our communities, including to the most vulnerable members of society, is a key priority of the federal government. Charitable organizations work constantly to address hunger, improve socioeconomic outcomes for diverse Canadians, and keep communities connected and informed, while facing immense financial pressures.

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. Budget 2021 announced the government's intention to potentially increase the disbursement quota, which could boost support for the charitable sector, benefitting those that rely on its services.

Our objective

Through this consultation process, the Department of Finance is seeking feedback on potentially increasing the disbursement quota and updating the tools at the Canada Revenue Agency (CRA)'s disposal in order to enforce the disbursement quota rules, beginning in 2022.

Key considerations

To inform discussions, the government is issuing a background paper that outlines the existing approach and raises points for consideration on whether it continues to be appropriate. Specifically, feedback is being sought on the following:

• 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?

Who is the focus of this consultation?

The department is seeking the views of stakeholders in the charitable sector. Tax practitioners, legal experts, researchers/academics and interested members of the public are also invited to provide input.

In submitting your comments, please include:

• full name and title of official;
• name of the organization;
• type of charity (if applicable);
• organization size;
• telephone number, including area code; and
• reply email address.

Concurrently, the department will 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.

Participate through email

Due to COVID-19 public health considerations, email submissions are preferred. Send us your comments at charity-bienfaisance@fin.gc.ca with "Charities Consultation" as the subject line.

Should you wish to provide comments by mail, please direct your submission to the attention of the Tax Policy Branch.

Treatment of confidential information

Information received through this comment process is subject to the Access to Information Act and the Privacy Act. Those providing comments are asked to indicate clearly the name of the individual or the organization that should be identified as having made the submission. In order to respect privacy and confidentiality, please advise when providing your comments whether you:

• consent to the disclosure of your comments in whole or in part;
• request that your identity and any personal identifiers be removed prior to release; or
• wish that any portions of your comments be kept confidential (if so, clearly identify the confidential portions).

Should you indicate that your comments, or any portions thereof, be considered confidential, the department will make all reasonable efforts to protect this information.

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.

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)

Get in touch

charity-bienfaisance@fin.gc.ca