Increased Disbursement Quota for Canadian Charities
How can foundations and endowments preserve their wealth?
In the latest Federal Budget for the fiscal year 2023, under the initiative “Boosting Charitable Spending in our Communities,” the government is mandating that Canadian registered charities increase their disbursement quota from the current 3.5% to 5.0% annually with the goal of deploying capital for the benefit of Canadian communities.
Thus, effective January 1, 2023, all Canadian registered charities will be required to pay out 5% of their assets not used in charitable activities or administration that exceeds $1 million. Registered charities include foundations, endowments, and trusts in Canada but the term charity will be used throughout this article.