As many know, there were changes to the disbursement quota announced/proposed in the April 7, 2022, Federal Budget. Finance released draft changes on August 9, 2022, which showed that they were basically increasing the DQ from 3.5% on assets over $1 million dollars to 5%, and this was proposed to be implemented as of 2023.
In the Fall Economic Statement, the Federal Government reiterated their commitment to introduce the DQ changes. In Bill C-32, Fall Economic Statement Implementation Act, 2022, the changes provided an increase to the DQ and these changes have now received Royal Assent on December 15, 2022.
As we noted in a July 2022 blog:
Registered charities should plan for the changes to be coming into effect in 2023 as announced by the Budget. Although this change may really only have a real impact on less than 5% of Canadian charities, some of these charities will need to assess their current legal documents (such as articles, gift agreements, gifts acceptance policies, restricted gifts, etc.), adjust their investment policy statement, change their grantmaking budgets and, in some cases, enhance their grantmaking systems and capacity. For some groups, the change is not from 3.5% to 5%. They have not even been disbursing their 3.5% so the challenge will be greater. For some, they have only given to qualified donees but now wish to provide grants to non-qualified donees (e.g. non-charities) and there are now two systems to provide grants to non-qualified donees.
We have been assisting registered charities in planning for these types of issues, and if your charity needs assistance and you wish to retain our law firm, you can contact us.