DQ increase: “A 10%, 5-year increase adds billions to the charity economy”

(June 9, 2020) The latest research from The Charity Report shows an q increase of 10% in the disbursement quota* – a DQ increase of 10% – over five years would generate billions of new money for the charity economy. 

The past two decades have borne witness to a growing gap between the rich and poor, between the wealthy and the needs of civil society.

As the wealth of private foundations grows, our country and its people are being weakened by homelessness, racism, poverty, violence against women, feelings of alienation among disenfranchised youth, lack of support for people experiencing mental illness, and the unanswered call for redress and ongoing support to our Indigenous communities. 

“We thought it was time to look at current numbers about what a DQ increase might actually mean,” says Charity Report editor in chief Gail Picco.

“The call for charitable foundations to increase their disbursement is getting louder, and there’s lots of numbers being tossed out, but until now, we’ve had no real sense of how much funding a 10% increase in the disbursement quota would generate. I know in my discussions with foundation executives, they’ve said that ‘3.5% is a floor, not a ceiling’ and that most foundations give over the current DQ anyway, so regulation wouldn’t change much.”

“That’s why we undertook our own research of the charity economy. This report deals with private foundations only. Further research will be issued in intelligence reports.”

For Accumulated Assets: Canada’s Private Foundations, The Charity Report identified Canada’s 500 largest private foundations by the amount of their assets, as disclosed on their 2018 T3010s. The top 245 private foundations accounted for 97% of the assets of the top 500 private foundations, so they were made the focus of further study, and categorized by the percentage of their disbursements. 

The report’s basic findings include: 

• The combined assets of Canada’s top 245 private foundations were 42 billion in 2018
• The top 10 private foundations in Canada held 29.8 billion in assets in 2018, which exceeded the 2018 budgets of the four Atlantic provinces combined (28.9 billion)
• One foundation had assets of 23 billion in 2018
• The top 245 private foundations issued 7 billion in tax-creditable receipts between 2009 and 2018

If the disbursement quota was raised to 10% for 5 years: 

• The 28 private foundations currently disbursing between 0% and 3.5% could inject an additional 11.5 billion into the charity economy 
• The 76 private foundations currently disbursing between 3.5% and 5% could inject an additional 2.4 billion into the charity economy 
• The 76 private foundations currently disbursing between 5% and 10% could inject 529 million into the charity economy 

Private foundations currently disbursing between 10% and 25% would not be affected by a 10% DQ increase.

Overall, the study found that, over five years, a 10% increase in the disbursement quota could generate an additional 14.4 billion from the top 245 private foundations alone.

“The events of the last two weeks have highlighted systemic racism. This, on top of the COVID 19 pandemic, has stripped away the façade of equality and underscored the wealth gap,” Picco says. 

“In the equity context, we wanted to follow the charitable dollars subsidized by Canadian taxpayers, understand the bottom line, and ask the question does the status quo represent the charity sector Canadians want?“

Download the full report here Accumulated Assets: Canada’s Private Foundations.

*The disbursement quota (DQ) is the minimum calculated amount that a registered charity is required to spend each year on its own charitable programs or on gifts to qualified donees, such as other registered charities, according to Revenue Canada. In Canada, the DQ is 3.5%.