What is the disbursement quota?

The quota exists to stop charitable money sitting idle. A charity that raises funds and spends them on programs the same year clears it without noticing. A foundation holding an endowment does not, which is why the quota is really a rule about foundations.

How it is calculated. The base is the average value, over the previous 24 months, of property not used directly in charitable activities or administration. Investments, mostly. The quota is 3.5% of the first $1 million of that base and 5% of the rest. It applies once that property passes $25,000 for a foundation or $100,000 for a charitable organization.

What counts toward it. Spending on the charity's own charitable programs, gifts to other registered charities and qualified donees, and grants to non-qualified donees made under the rules that took effect in 2023. Administration and management costs do not count.

What happens at the margins. A charity that spends more than the quota can carry the excess forward five years or back one. One that falls short can draw on past excesses. Continued shortfalls can lead to revocation, and a charity can ask the CRA to reduce its quota for a year.

What it tells a funder. Two things, both modest. First, the quota is public. A foundation that holds enough property to trigger it files Schedule 8 with its T3010, which shows the amount required, the amount disbursed, and the excess or shortfall. Second, it is a minimum. Meeting it says a foundation is compliant. How far above it a foundation spends says something about what the foundation is for, and that is a question you can ask a foundation directly.

Questions people also ask

Did the disbursement quota change recently?

Yes. For fiscal periods beginning on or after 1 January 2023, the rate on property above $1 million rose from 3.5% to 5%, and administrative costs stopped counting toward the quota.

Does the disbursement quota apply to donor advised funds?

At the level of the foundation that holds them, not fund by fund. The sponsoring foundation must meet the quota on its property as a whole. An individual donor advised fund has no quota of its own under the Income Tax Act, though many sponsors set their own minimum.

How much did Canadian foundations spend in 2024?

Blumbergs' analysis of 2024 T3010 filings puts combined spending by public and private foundations on charitable activities, gifts to qualified donees and grants to grantees at $17.1 billion, against combined assets of $193.6 billion. Among the foundations that filed Schedule 8, 14% of public and 24% of private foundations showed a shortfall.

Can I see whether a foundation met its quota?

Sometimes. Schedule 8 is part of the public T3010 return, but by Blumbergs' count fewer than half of foundations filed one for 2024, so for many the answer is not visible.

What was the 80/20 rule?

An older requirement that charities spend 80% of receipted donations on charitable activities. It was repealed in 2010 and is often confused with the disbursement quota.