Research Findings

A Rising Tide?

Early evidence on disbursement quota change

April 20, 2026, 1pm ET, Virtual

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Topics covered

  • Background
  • Methodology
  • Impact of the changes
  • Next steps
  • Questions

Background

What is the disbursement quota?

  • Minimum amount charities are required to spend each year on:
    • own charitable activities
    • provision of supports
  • Based on the value of property not used for charitable activities or administration
    • average value over 24 months prior to beginning of the fiscal period
  • Applies to operating charities with more than $100,000 and foundations with more than $25,000 of non-charitable property

Growth of foundations

Advocacy around the DQ

  • During pandemic many called for increased foundation disbursements to support organizations and communities facing increased demands
    • had previously been calls to increase the DQ, but pandemic was the key catalyst
  • Government announced a public consultation process in Budget 2021
    • consultations ran through the Fall of 2021
    • new measures announced in Budget 2022

How have the rules changed?

  • Charities with more than $1 million in non-charitable property are required to disburse at a higher rate:
    • 3.5% of the first $1 million
    • 5% of the amount above $1 million
  • Qualifying disbursements
    • own charitable activities
    • gifts to qualified donees
    • grants to non-qualified donees
  • Fiscal periods starting on or after January 1, 2023
    • commitment to review after five years

Methodology

Analytical approach

  • Focus is identifying affected charities and assessing their behavioural changes
    • behaviour of charities not affected by changes out of scope
  • Intent is policy evaluation
    • hews as closely to how the policy functions as possible
    • based on data as reported
  • Not an assessment of compliance with new measures
    • impossible to completely assess with preliminary data

Units of observation

  • Individual foundations
  • Fiscal period based, not calendar-year based

Units of observation

  • Individual foundations
  • Fiscal period based, not calendar-year based

Identifying in-scope foundations: Step 1

  • Focused on foundations with more than $1 million in property not directly used in charitable activities

Identifying in-scope foundations: Step 1

  • Focused on foundations with more than $1 million in property not directly used in charitable activities

Identifying in-scope foundations: Step 2

  • Compared disbursement rate immediately prior to the change to what it would have been if the new requirement had been in effect
    • calculations accounted for over- and under-contributions over previous five fiscal periods

Identifying in-scope foundations: Step 2

  • Compared disbursement rate immediately prior to the change to what it would have been if the new requirement had been in effect
    • calculations accounted for over- and under-contributions over previous five fiscal periods

Identifying in-scope foundations: Step 2

  • Compared disbursement rate immediately prior to the change to what it would have been if the new requirement had been in effect
    • calculations accounted for over- and under-contributions over previous five fiscal periods

Identifying in-scope foundations: Step 2

  • Compared disbursement rate immediately prior to the change to what it would have been if the new requirement had been in effect
    • calculations accounted for over- and under-contributions over previous five fiscal periods

Identifying in-scope foundations: Step 2

  • Compared disbursement rate immediately prior to the change to what it would have been if the new requirement had been in effect
    • calculations accounted for over- and under-contributions over previous five fiscal periods

Identifying in-scope foundations: Step 2

  • Compared disbursement rate immediately prior to the change to what it would have been if the new requirement had been in effect
    • calculations accounted for over- and under-contributions over previous five fiscal periods

Impact of the changes

Assessing the impact

  • Unlike when identifying in-scope foundations, we assess of the impact of the changes looking only at annual year-over-year changes
    • do not factor in over- and under-contributions over previous five fiscal periods
    • have to do this in order to see change over such a small period

Impact on qualifying disbursement rates

Divergence from new required rates

Annual qualifying disbursement rates by measures of asset size

Monetary impact

  • Overall, disbursements among in-scope foundations increased by $711 million.
    • about a third of the total year-over-year increase in disbursements
    • 97% of this increase due to higher disbursement rates

Monetary impact

  • Overall, disbursements among in-scope foundations increased by $711 million.
    • about a third of the total year-over-year increase
    • 97% of this increase due to higher disbursement rates

Changes to disbursement patterns

Impact on foundation assets

Next steps

What do we know?

  • How much foundations have increased their disbursements to meet the new requirements
    • variation by key categories
  • How disbursement patterns have shifted
  • Correlation with shifts in foundation asset levels

What don’t we know?

  • Sustainability of disbursement levels
    • don’t have a good understanding of investment portfolio composition, rates of return, risk management, etc.
  • Beneficiaries of higher disbursement levels
    • need better understanding of grants to non-qualified donees
    • data quite incomplete and needs to be laboriously constructed
  • Relationship with overall charitable giving

Advocacy & engagement

  • Planned government review process
  • Sector engagement

Questions and discussion

Report download

https://imaginecanada.ca/en/research/rising-tide-disbursement-quota