Feds Eye Increasing Charities’ Disbursement Quotas

With charitable foundations’ assets growing, some have called for charities’ so-called “disbursement quota” to be raised from 3.5% to as high as 10%. However, others suggest that raising the quota too high may jeopardize some foundations’ long-term sustainability, and would prefer to see a modest increase to the quota or other changes to how charities operate.

“There will be stakeholders lined up on each side of the argument,” said independent senator Ratna Omidvar, deputy chairwoman of the Special Senate Committee on the Charitable Sector. “[The government has] to try to figure out the risks and rewards on going forward on this.”

Omidvar said she favours increasing the quota but hasn’t taken a position on how high it should be. “There are a large number of primarily smaller foundations that are possibly below the disbursement quota rate or just at it, and it is these organizations that we should be concerned about,” she said. “Raising [the quota] by a few percentage points will make a big difference to the communities that are hurting.”

In the budget, the government acknowledged that most foundations “meet or exceed their disbursement quotas.” However, foundations’ “grant-making and other charitable activities have not kept pace” with the growth of their assets, the feds argued.