Until recently, Foundations registered with the Canada Revenue Agency were required to disburse a minimum of 3.5% of their assets to organizations, in order to maintain their good standing with the federal agency. That quota has been increased to 5%, and it’s great news for the sector.
Traditionally, the minimum disbursement quota amount that had to be granted annually was a low 3.5%, for the portion of property which registered entities didn’t use in charitable activities or administration over $1 million. Note that this refers only to larger funders, which have assets over $1 million. Those with property that is not used in charitable activities or administration under $1 million, smaller funders, would continue to distribute up to 3.5% of their total annual assets.
It’s good news for environmental charity the Association for Canadian Educational Resources, which relies on Foundation grants to sustain its programs. “We welcome the Government’s increase to the minimum amount that large foundations must disperse – more funding for environmental groups like us,” said Madelyn Webb, a board member with the environmental education organization based out of Mississauga.
The changes begin on or after January 1, 2023. While some believe that an increased disbursement quota could impact their ability to meet future goals, others believe that this change will allow much needed funds, which are locked in Foundation assets, to positively impact communities. Great news for organizations who have been struggling following the downturn of donations and support during the COVID-19 pandemic.
We welcome this change and encourage organizations to take advantage of our Prospect Research service, where we conduct detailed research to compile a report. The report outlines which funders would be the best fit and may be the strongest prospect for organizational programs. With funders poised to grant as much as 5% of their assets, a foundation like the Donner Canadian Foundation ($155 million in assets), which previously gave $3.9 Million in annual gifts, will give approximately $6.2 million – a significant increase (based on 2020 T3010 data). All the more reason to have a custom prospect report completed, to outline suitable prospects which can give more money to fund your organization’s work.
To learn more about how this change might impact your organization and how we can support you with our Prospect Research service, you can reach out to us by emailing info@dogoodfundraising.ca or by using the “Contact Us” form on our website.
