Earlier this month, GIV3 and Ipsos asked Canadian adults how quickly they felt donated dollars should be used for charitable services (versus holding funds in endowment in perpetuity).
Tax dollars at play
For every dollar donated to a charity or charitable foundation, the donor is given a charity tax credit to help reduce her/his income tax. These tax credits come from the public purse and are funded by all taxpayers. However, many Canadians are not aware that once the donation is received by the charitable organization, and the tax credits are issued, there is no requirement for the money to be used in any timely manner.
The current rule is that 3.5% of the money must be used each year for charitable purposes, and the remainder can be held in investments to grow. This 3.5% is referred to as the minimum Disbursement Quota (DQ), which applies to all registered charitable organizations.
Over the past several years, thought-leaders in the charitable sector have been lobbying the federal government to increase the required minimum DQ. They would like to see more charitable dollars used sooner to address homelessness, food insecurity, environmental damage, health services, and so many other charitable missions. They feel that taxpayers should get to see the use of their tax dollars within their lifetime and not held in perpetuity decades into the future.
This support is widely spread across the country, across different age groups, and high-income households (which are more likely to be charitable donors)
The 10-15 year timeline is much sooner than what the current 3.5%-5% Disbursement Quota would affect. The data implies the DQ should be above 10%.
Download the full report here.