Cet article est présenté dans sa version originale anglaise.
On 15 December 2022, legislation received royal assent that changed Canada’s disbursement quota — the minimum amount registered charities must spend each year on charitable activities or gifts, calculated on assets not used directly in their work. For fiscal periods beginning on or after 1 January 2023, the rate remains 3.5 per cent on the first $1 million of such property and rises to 5 per cent on the portion above $1 million.
Rules of this kind can appear arcane. Yet they express something fundamental about the relationship between charitable wealth and the communities it exists to serve.
Two legitimate goods in tension
Endowed foundations hold assets so that they can support communities not only today but for generations. Communities, meanwhile, have pressing needs now. A disbursement quota is, in effect, the point at which society balances these two legitimate goods: permanence and urgency.
The 2022 change nudged that balance, for larger endowments, toward the present. For many foundations, the practical effect was modest; for the sector as a whole, it signalled an expectation that accumulated charitable resources flow steadily outward.
What it means for smaller organisations
Most small charities hold nothing like $1 million in investment assets, and the higher rate does not apply to them. The change nevertheless matters to them indirectly. Greater disbursement by larger foundations can mean more grant funding available to community organisations — provided those organisations are visible, credible and ready to apply.
That readiness is where support organisations can help: clear governance, sound financial records, well-articulated projects and relationships with funders cultivated before a deadline appears.
A broader reflection
I find it helpful to think of charitable assets as water held behind a dam. Some reserve is prudent; without it, drought would be ruinous. But water that never flows nourishes nothing. Good stewardship, whether of an endowment or of a small organisation’s modest reserve, lies in knowing how much to hold and how much to release.
This reflection is general in nature and is not legal or tax advice.
Cet article est un commentaire et une réflexion personnelle, et non un reportage d’actualité. Les faits et chiffres proviennent des sources publiques indiquées ci-dessous; les opinions exprimées sont celles de l’auteur.
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