QUESTION PERIOD — Finance
Charitable Sector
March 24, 2022
Honourable senators, my question is for the Government Representative in the Senate.
Senator Gold, I would like to address the issue of the disbursement quota for registered charities. As you know, charities are required by law to spend 3.5% each year on their own charitable programs or on gifts to qualified donees.
In last year’s budget, the government promised to launch public consultations with charities on increasing the disbursement quota. The government noted that this could increase support for the charitable sector and those that rely on its services by between $1 billion and $2 billion annually.
I noted that in its July 2021 report the government’s Advisory Committee on the Charitable Sector also indicated that one of its working groups was consulting on the matter. This, of course, is in line with one of the recommendations made by the Special Senate Committee on the Charitable Sector in 2019.
Many are calling for the minimum 3.5% to be increased in light of the fact that there has been considerable growth in the investment assets of charities and foundations in recent years. We know that the disbursement quota is higher in the United States and Australia, for example. As we recover from the pandemic, now seems to be the appropriate time to increase the quota.
Can you provide us with an update on the government’s consultations on this matter? What options are currently being considered and are discussions being held at the Department of Finance Canada to include proposed changes in the upcoming budget?
Thank you, senator, for your question.
In Budget 2021, the government announced its intention to potentially increase the disbursement quota which could boost support for the charitable sector and benefit those that rely upon its services.
I’m advised that the federal government, indeed as you alluded to, launched a consultation process to give stakeholders and interested members of the public the opportunity to provide feedback. This process ended in December 2021.
The government looks forward to sharing the results of this consultation in due course.
Thank you, Senator Gold, for that answer.
We know that most charities and foundations meet or exceed the disbursement quota, and that a reduction is available for those unable to meet the minimum amount of 3.5% due to circumstances beyond their control.
Are you able to provide us with statistics with respect to the number of charities that have been unable to meet the disbursement quota in recent years? Why are some charities unable to meet that minimum disbursement quota requirement? And what can be done to alleviate the pressure on them and have society benefit from their contributions?
Thank you, senator, for your question and for your long-standing work in support of the charitable sector, which is well known to all of us, certainly in Quebec.
I’m advised that most charities, in fact, meet or exceed their disbursement quotas but that there is a gap of at least $1 billion in charitable expenditures in our communities that exists today.
With regard to the specifics of your remaining questions, I will make inquiries with the government and report back to the chamber as soon as I receive an answer.
