It Is Not Five Percent

Twelfth article in this silo. Registered charities are not usually thought of as an industry, and they face a spending constraint no commercial business does.

The Verdict, Stated First

Five claims, in descending order of confidence.

One. The quota is tiered, not flat, which the CRA states directly and which almost every description of it omits.

Two. On our own arithmetic the blended rate never reaches 5 percent, approaching it asymptotically as property grows.

Three. On our own arithmetic the 2023 change raised a $50 million foundation's obligation by 42 percent, which is a much larger increase than the headline suggests.

Four. On our own arithmetic the perpetuity hurdle is demanding, requiring a nominal return most endowment policies do not target.

Five. And on our own arithmetic the 24-month averaging works against a charity in a falling market, raising the effective rate exactly when the portfolio can least afford it.

The fifth is the one that turns a rule into a risk, ours. The quota is countercyclical in the wrong direction.

A Warning About Dates

Standing feature of this silo. Ours.

Four observations.

All rules were verified on 29 August 2026 against CRA pages.

This area changed materially and recently, with the rate structure altering for fiscal periods beginning on or after 1 January 2023 and the annual return form revised at the same time.

The CRA maintains a separate page for the pre-Budget-2010 calculation[3], which is a useful reminder that this formula has been rebuilt more than once.

And the arithmetic outlasts the rates, ours. A tiered quota produces a blended rate below its top tier whatever the tiers are, and an endowment always needs its quota plus inflation plus fees to stand still.

Our Grades For These Claims

Applying the scheme this publication uses throughout.

Grade A for the rates, thresholds, line numbers and relief mechanics, all from CRA pages obtained directly[1][2].

Grade A for the 2023 effective date, corroborated by two professional sources[4][5].

Grade A for our own arithmetic, which is reproducible from the published rates.

Grade B for the return form changes, from law and accounting firm summaries rather than from the form itself.

Grade C for our characterisation of the averaging as countercyclical, which is our own modelling of a mechanism the CRA describes but does not analyse.

A Note On Method

Everything here is verified to 29 August 2026.

We obtained three Canada Revenue Agency pages: the disbursement quota calculation[1], the process for asking for a reduction[2], and the superseded pre-2010 calculation[3].

We did not obtain the Income Tax Act provisions behind the quota, and describe them as the CRA presents them.

We did not obtain Form T3010 or its schedules, and rely on professional summaries for what changed on the return.

The remaining sources are law firms, accounting firms and charity sector organisations, which are informed but not authoritative.

All arithmetic is ours. Portfolio sizes, returns, inflation and fee assumptions are invented to demonstrate a structure.

This article discusses charity regulation and is not accounting, tax, legal or investment advice.

What The Quota Actually Is

The definition, from the CRA.

The disbursement quota is the minimum amount a registered charity is required to spend each year on its own charitable activities and on qualifying disbursements through gifts to qualified donees or grants to non-qualified donees, and the calculation is based on the value of a charity's property not used for charitable activities or administration[1].

A law firm summary adds the scope: all charities are subject to the disbursement quota[5].

Four observations, ours.

It is a spending floor, not a spending cap. A charity may spend more and frequently should.

The base is property not used for charitable activities or administration, which is the crucial qualifier: a building the charity operates from is not in the base, and an investment portfolio is.

So the quota is a tax on holding rather than a requirement to be generous, and it targets accumulation specifically.

And that framing explains everything that follows, ours. The rule exists to prevent charitable capital sitting still, and every mechanical feature of it serves that purpose.

The Two Tiers

The structure, quoted precisely because the tiering is what gets lost.

The CRA states that if the average value of a charity's property not used directly in charitable activities or administration during the 24 months before the beginning of the fiscal year exceeds the applicable threshold, the disbursement quota is 3.5 percent of the average value of that property up to $1 million and 5 percent on the amount that exceeds $1 million[1].

Four observations, ours.

The first million is taxed at the lower rate for every charity, regardless of total size, which is a marginal structure rather than a cliff.

That is the same shape as an income tax bracket, and it should be read the same way: the 5 percent is a marginal rate on the excess, not a rate on the whole.

Describing it as the five percent rule overstates the obligation for a small charity and understates the complexity for a large one.

And the marginal reading matters most at the boundary, ours. A charity holding $1,000,001 pays 3.5 percent on the first million and 5 percent on one dollar, which is five cents, not a jump to $50,000.

The Blended Rate

Our own arithmetic on the CRA's published tiers.

At $500,000 the quota is $17,500, a blended 3.500 percent. At $1,000,000: $35,000, still 3.500 percent. At $1,500,000: $60,000, 4.000 percent. At $2,000,000: $85,000, 4.250 percent. At $5,000,000: $235,000, 4.700 percent. At $10,000,000: $485,000, 4.850 percent. At $100,000,000: $4,985,000, 4.985 percent.

Four observations.

The blended rate never reaches 5 percent. It approaches it as the first million becomes a smaller share of the whole, and the gap is always $15,000 in dollar terms.

That constant is worth noting on its own. The tiering is worth exactly $15,000 a year to every charity above $1 million, whatever its size, being 1.5 percent of the first million.

For a small foundation that is material: at $2 million it is 18 percent of the total quota. For a large one it is a rounding difference.

And the practical instruction follows, ours. A charity budgeting at a flat 5 percent is over-provisioning by $15,000 a year, which is a grant it could have made.

The opposite error is worse and rarer, ours. A charity budgeting at a flat 3.5 percent above $1 million is under-provisioning, and the consequence there is a shortfall rather than an unmade grant.

What The 2023 Change Cost

Our own arithmetic on a change two sources date precisely.

The quota increased from 3.5 percent to 5 percent for the portion of property not used in charitable activities or administration that exceeds $1 million, as of 1 January 2023[4], a change an accounting firm records in the same terms[7].

Comparing the old flat 3.5 percent to the current tiers: at $1 million there is no change. At $2 million the quota rises from $70,000 to $85,000, an increase of 21.4 percent. At $5 million: $175,000 to $235,000, up 34.3 percent. At $10 million: $350,000 to $485,000, up 38.6 percent. At $50 million: $1,750,000 to $2,485,000, an increase of $735,000 a year, up 42.0 percent.

Four observations.

The percentage increase in obligation is far larger than the percentage point change in rate suggests. A move from 3.5 to 5 sounds like 1.5 points and is a 42 percent rise in required spending at scale.

The increase rises with size and approaches 42.86 percent, being the ratio of 5 to 3.5, as the first million becomes negligible.

Nothing was grandfathered on the sources we obtained, so an endowment built under a 3.5 percent assumption is now funding a materially larger annual obligation from the same capital.

And that is the finding we would put to a foundation board, ours. An endowment policy written before 2023 that has not been revisited is targeting a return that no longer preserves the fund.

The Perpetuity Hurdle

Our own arithmetic, and the calculation an endowment policy should contain.

To hold real value, a fund must earn its disbursement quota plus inflation plus fees. On a $5 million foundation with a blended quota of 4.700 percent:

At 2 percent inflation and 0.5 percent fees, the required nominal return is 7.20 percent. At 2 percent and 1 percent: 7.70 percent. At 2 percent and 1.5 percent: 8.20 percent. At 2.5 and 1: 8.20 percent. At 3 and 1: 8.70 percent. At 3 and 1.5: 9.20 percent.

Four observations.

Nothing in that table is below 7 percent. A balanced endowment portfolio targeting 6 percent nominal is planning to shrink.

The fee line is the one a board controls, and it moves the hurdle point for point: a full percentage point of fees is a full percentage point of required return.

Inflation is not controllable and is the largest source of variation, which argues for stating the policy in real terms rather than nominal.

And the arithmetic is simple enough that its absence is the surprise, ours. Quota plus inflation plus fees is one line, and an endowment policy that does not contain it has not been tested against the rule it operates under.

One refinement a board should insist on, ours. The quota term in that line should be the blended rate rather than 5 percent, and it rises as the fund grows, so the hurdle is not fixed either.

What Falling Short Does

Our own arithmetic, carrying the shortfall forward.

On the same $5 million foundation at 2 percent inflation and 1 percent fees, a nominal return of 5 percent produces a real drift of negative 2.70 percent a year, leaving $2,892,190 in today's dollars after twenty years. At 6 percent: drift of negative 1.70 percent, leaving $3,548,464. At 7 percent: negative 0.70 percent, leaving $4,344,652. At 7.7 percent the fund stands still. At 8 percent it grows slightly, to $5,308,706.

Four observations.

A two-point shortfall against the hurdle halves the fund in real terms over a generation, without a single bad decision or market crash.

The erosion is invisible in nominal terms, which is how it survives: the statement shows a larger number every year while the purchasing power falls.

And it is invisible in grant terms too, ours, because the grants also grow nominally, so the foundation appears to be doing more while doing less.

Which makes the real-terms statement the one a board should see, and almost none of them do.

The fix costs nothing, ours. Restate the fund balance and the annual grant in constant dollars alongside the nominal figures, using any published index, and a two-decade drift becomes visible on a single page.

The Averaging Cuts One Way

The mechanism, and it is more consequential than it appears.

The quota is based on the average value of that property during the 24 months before the beginning of the fiscal year[1].

Four observations, ours.

The obligation for a year is set before the year starts, on values that are already history.

In a rising market this is favourable: the charity disburses against an average that lags the higher current value, so the effective rate on today's portfolio is below the stated one.

The averaging is therefore a smoothing device, and smoothing is symmetric in intent.

But it is not symmetric in effect, ours, because a portfolio that has fallen is smaller and the obligation is not, which is the next section.

And The Other Way In A Fall

Our own arithmetic on a $5 million portfolio meeting a market decline.

Taking a rough 24-month average spanning the fall: with no fall, the quota is $235,000, being 4.70 percent of current value. After a 10 percent fall the quota is $222,500 against a portfolio of $4,500,000, an effective 4.94 percent. After 20 percent: $210,000 against $4,000,000, 5.25 percent. After 30 percent: 5.64 percent. After 40 percent: $185,000 against $3,000,000, an effective 6.17 percent.

Four observations.

The effective rate rises as the portfolio falls, because the numerator lags and the denominator does not.

After a 40 percent decline the charity must disburse 6.17 percent of what it actually holds, against a stated top rate of 5.

The mechanism that helps in a rising market therefore hurts in a falling one, and by more, since it forces selling into weakness.

We would call that countercyclical in the wrong direction, ours, and note that it is our characterisation rather than a criticism any source we obtained makes. The averaging is a reasonable simplification with an unreasonable tail.

A Six-Year Window, Not A Year

The relief that changes how the constraint should be planned against.

The CRA provides that a charity facing a shortfall should first apply any available excesses from the previous five years to cover the shortfall, and may alternatively create a disbursement quota excess in the next year and carry it back[2]. A sector organisation states the same rule[8].

Four observations, ours.

The constraint is not annual. Five years back plus one year forward is a six-year window in which the obligation must be met on average.

Which means a charity that over-disburses in strong years banks capacity for weak ones, and that is a real planning instrument rather than a technicality.

It is also the natural answer to the falling-market problem above. A foundation that granted above quota in the years before a decline can absorb the elevated effective rate without selling assets.

And almost nothing we read presented it that way, ours. The five-year carry-forward is described everywhere as shortfall relief and nowhere as a reason to grant more in good years, which is the same fact framed usefully.

The framing matters because of who reads it, ours. A board told it has a five-year cushion behaves differently from a board told it has a reason to grant more now, and only the second description prompts action while conditions allow it.

The Reduction Nobody Should Rely On

The last resort, with its timing, which is the part that matters.

The CRA states that a reduction is available where expenditures were less than required due to circumstances beyond their control, and will only be considered once the charity has exhausted all other available means, being the five-year excesses and the carry-back. Critically, the earliest a charity can receive approval is after the CRA has issued a Registered Charity Information Return Summary for the fiscal period following the period in which the shortfall occurred. On approval, the charity must amend the T3010 for the shortfall period to include the approved amount on line 5750, using Form T1240, Registered Charity Adjustment Request[2].

Four observations, ours.

Approval cannot arrive until after the following year's return has been processed, so a charity in difficulty waits a full cycle and more.

It also requires circumstances beyond their control, and an investment decision that went badly is unlikely to qualify on any reading.

The sequencing is the practical point. A charity must first try to spend its way out, which is the opposite of what a fund under pressure wants to do.

And that makes the reduction unusable for planning, ours. It is a remedy for a disaster already suffered, not a valve.

Which puts the weight back on the six-year window, ours. The only reliable flexibility in this rule is the one a charity builds itself by over-disbursing early, and it has to be built before it is needed.

Two Thresholds, Two Designations

A distinction with a fourfold difference in it.

The CRA sets the entry threshold at $100,000 for charitable organizations and $25,000 for public and private foundations[1]. A law firm confirms the same split in the context of the new return schedule[5], as does a sector body describing the rule's origin[8].

Four observations, ours.

A foundation is captured at a quarter of the property level that captures an organisation, which reflects that foundations exist to hold and grant rather than to operate.

So designation is not merely administrative. It determines whether the quota applies at all for a charity holding between $25,000 and $100,000 of non-charitable property.

A small operating charity with a modest reserve may be outside the quota entirely, which is worth knowing before building a compliance process for it.

And the reverse is the more common surprise, ours. A small foundation with $30,000 of investments is inside the rule, and may not have been told.

At that size the amounts are small and the obligation is real, ours. Thirty thousand dollars of property generates a quota of just over a thousand dollars a year, which is easy to satisfy and easy to fail to report.

Which Property Counts

The measurement base, where the difficulty actually sits.

The base is property not used directly in charitable activities or administration[1]. A law firm elaborates that this includes cash, investments, capital property or other assets[5], and an accounting firm notes it could include excess cash or investments on hand or other capital property such as a building that is not used by the charity, adding that many charities do not know how the value of this property is calculated[7].

Four observations, ours.

Cash is in the base. A charity holding a large operating reserve in cash is holding quota-generating property.

The building test is a use test rather than a title test. A property the charity owns and operates from is outside; one it owns and rents out is inside.

Mixed-use property is where we would expect the difficulty, and we did not establish how partial use is apportioned, which a charity in that position should ask about.

And there is one carve-out with a date on it. A charity that received permission to accumulate property before 1 January 2023 must subtract the accumulated amount plus any income earned on it before calculating the quota[1], and that permission is no longer available for new approvals[6].

The Line Number That Matters

A mechanical point the CRA makes with unusual emphasis.

The CRA directs that a charity use line 5900 in Schedule 6 of that year's T3010 return to calculate its disbursement quota; that the following year's quota will generally be calculated based on the amount from line 5910 in Schedule 6 of the previous year's return; and, in its own separate sentence, do not use Line 4250 in Schedule 6 to calculate the disbursement quota[1].

Four observations, ours.

An instruction that specific usually follows a common error, and the CRA does not otherwise write in that register.

The three lines cited are all in the same schedule, so the mistake being guarded against is picking the adjacent figure, which is the easiest kind to make and the hardest to notice.

We did not establish what line 4250 contains, ours, and would want that before preparing a return, since knowing which figure is wrong is less useful than knowing why.

And the forward-looking note matters for budgeting. Next year's quota is computed from this year's return, so a charity can know its obligation a year ahead if it looks.

What Changed On The Return

The reporting expansion, from professional summaries.

Version 24 of the T3010 makes updates to disbursement quota requirements through an entirely new schedule, asks foundations additional questions, requires specific information about donor advised funds, and adjusts Schedule 6[4]. Charities must complete a new Schedule 8 where the 24-month average property exceeds the applicable threshold[5]. One firm notes that previously this information was largely tracked internally, and that new reporting is required for restricted funds[9].

Four observations, ours.

The shift is from internal tracking to filed disclosure, which changes the compliance risk even where the underlying obligation is unchanged.

A law firm records the policy intent: Parliament signalled in 2022 that the CRA would increase its collection of data from charities, specifically on whether quotas are being met and on investments and donor advised funds[5].

Version control is its own trap here. Charities with fiscal periods ending on or before 30 December 2023 file version 23, and those ending on or after 31 December 2023 file version 24[4][5], with the wrong form returned for refiling.

And the direction of travel is the useful signal, ours. A rule that was self-assessed and is now reported is a rule about to be enforced, whatever the current practice.

What It Replaced

Brief history, because it explains why the current rule looks simple.

The CRA maintains a page for the calculation applying to fiscal periods ending before 4 March 2010, under which the quota was the sum of five calculations, including 80 percent of amounts for which official tax receipts were issued in the previous fiscal period, 80 percent of enduring property spent in the current period, 100 percent of enduring property transferred to qualified donees, and 80 or 100 percent of amounts received from other registered charities depending on designation, plus a 3.5 percent property calculation[3].

Four observations, ours.

The old quota was driven by receipting, so a charity that raised more was required to spend more, independent of what it held.

That created a perverse effect the current rule avoids. A successful fundraising year generated an obligation that a poor investment year could not fund.

The 2010 reform removed the receipting components and left the property test, which is why the modern rule is one line and the old one was five.

And the 2023 change is best read against that, ours. Having simplified the rule in 2010, the response to concerns about accumulation in 2022 was to raise the rate rather than reintroduce complexity, which is a coherent sequence.

If You Run A Charity

Practical, and not accounting, tax or investment advice. Ours.

Four points.

Compute your blended rate rather than budgeting at 5 percent. The tiering is worth $15,000 a year to every charity above $1 million.

Put quota plus inflation plus fees in your investment policy. On our own arithmetic a $5 million fund needs 7.70 percent nominally at 2 percent inflation and 1 percent fees.

Treat the five-year carry-forward as a planning tool. Granting above quota in strong years banks capacity for the elevated effective rate that follows a decline.

And do not plan around a reduction request. Approval cannot arrive until after the following year's return summary is issued, and it requires circumstances beyond your control.

If You Advise One

For our own profession. Ours.

Four points.

Check the designation first, because the entry threshold is $100,000 for a charitable organization and $25,000 for a foundation.

Review the property base rather than accepting last year's figure. Cash reserves and non-operating property are in it, and a change in how a building is used changes the base.

Reconcile the excess and shortfall history across six years, since that is the window the obligation is actually tested over.

And use the right line and the right form version. The CRA specifically directs the use of line 5900 and specifically directs against line 4250, and the wrong T3010 version is returned unprocessed.

One more worth adding to an engagement checklist, ours. Ask whether the charity holds an accumulation approval granted before 2023, because that amount and its income come out of the base and the route to obtaining a new one has closed.

What To Do

Stop calling it the five percent rule. It is 3.5 percent on the first million and 5 percent above, and the blended rate never reaches 5.

Model the 2023 increase against your own size. On our arithmetic it raised the obligation by 21 percent at $2 million and 42 percent at $50 million.

Set your return target at quota plus inflation plus fees, and state the policy in real terms.

Expect the effective rate to rise in a falling market, because the 24-month average lags the portfolio down.

Bank disbursement excesses deliberately in good years. Five years back plus one forward is a six-year window.

Confirm your designation and threshold, since foundations are captured at a quarter of the organisation level.

Review which property is in the base, including cash and any building not used by the charity.

And file the correct T3010 version with Schedule 8, because what was internal tracking is now filed disclosure.

The Limits Of This Analysis

Several caveats matter. This article discusses charity regulation and is not accounting, tax, legal or investment advice; a charity should confirm its position with the CRA and its own advisors. All rules were verified on 29 August 2026 and this area changed materially for fiscal periods beginning on or after 1 January 2023. We did not obtain the Income Tax Act provisions behind the quota and describe them as the CRA presents them on its guidance pages. We did not obtain Form T3010 or any of its schedules, so everything about Schedule 8, the version 23 and 24 split, donor advised fund reporting and restricted fund reporting comes from law and accounting firm summaries rather than from the form. We did not establish what line 4250 in Schedule 6 contains, only that the CRA directs against using it. We did not establish how partial or mixed use of property is apportioned in determining the base, which is likely the most common practical difficulty. All arithmetic is ours: the portfolio sizes, the 2 percent inflation, the fee assumptions and the market decline scenarios are invented to demonstrate a structure. Our 24-month average in the falling-market section is a rough midpoint between the pre-fall and post-fall values rather than a properly weighted calculation, which would depend on the timing of the decline within the window; the direction of the effect is robust and the magnitudes are illustrative only. Our characterisation of the averaging as countercyclical in the wrong direction is our own, and no source we obtained analyses it. And our reading of the five-year carry-forward as a planning instrument rather than shortfall relief is our own framing of a rule the CRA presents only in the context of a shortfall.

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Frequently Asked Questions

What is the Canadian charity disbursement quota rate?

It is tiered: 3.5 percent of the average value of qualifying property up to $1 million, and 5 percent on the amount that exceeds $1 million. On our own arithmetic that gives a blended rate of 4.70 percent at $5 million and 4.985 percent at $100 million, so it never actually reaches 5 percent.

How much did the 2023 change increase the obligation?

On our own arithmetic, nothing at $1 million, 21.4 percent at $2 million, 34.3 percent at $5 million and 42.0 percent at $50 million. A move from 3.5 to 5 percent sounds like 1.5 percentage points and is a 42 percent rise in required annual spending at scale.

What return does an endowment need to survive the quota?

Quota plus inflation plus fees. On our own arithmetic a $5 million fund with a blended quota of 4.70 percent needs 7.70 percent nominally at 2 percent inflation and 1 percent fees, and 8.70 percent at 3 percent inflation. A portfolio targeting 6 percent nominal is planning to shrink in real terms.

What happens to the quota when markets fall?

The effective rate rises, because the quota is set on a 24-month average that lags the portfolio down. On our own rough modelling, after a 40 percent decline the required disbursement is about 6.17 percent of what the fund actually holds, against a stated top rate of 5 percent.

Can a shortfall be made up?

Yes. A charity can apply excesses from the previous five fiscal periods, or create an excess in the following year and carry it back. That makes the constraint a six-year window rather than an annual test, and it means granting above quota in strong years banks capacity for weak ones.

Can the quota be reduced?

Only where the shortfall arose from circumstances beyond the charity's control, and only after all excesses and the carry-back have been exhausted. Approval cannot generally arrive until after the CRA issues the return summary for the period following the shortfall, so it is a remedy rather than a planning tool.

Which property counts toward the quota?

Property not used directly in charitable activities or administration, including cash, investments, capital property and other assets such as a building the charity owns but does not use. The test is use rather than ownership, and the entry threshold is $100,000 for charitable organizations and $25,000 for foundations.

References

1. Canada Revenue Agency, Disbursement quota calculation, obtained directly. States that the disbursement quota is the minimum amount a registered charity is required to spend each year on its own charitable activities and on qualifying disbursements through gifts to qualified donees or grants to non-qualified donees; that the calculation is based on the value of a charity's property not used for charitable activities or administration; that for charitable organizations, if the average value of property not used directly in charitable activities or administration during the 24 months before the beginning of the fiscal year exceeds $100,000, the quota is 3.5 percent of the average value of that property up to $1 million and 5 percent on the amount that exceeds $1 million; that for public and private foundations the same rates apply where the average value exceeds $25,000; that a charity can use line 5900 in Schedule 6 of that year's T3010 return to calculate its quota; that the following year's quota will generally be calculated based on the amount from line 5910 in Schedule 6 of the previous year's return; that a charity should not use Line 4250 in Schedule 6 to calculate the quota; and that a charity which received permission to accumulate property prior to 1 January 2023 must subtract the amount accumulated plus any income earned from that amount before calculating the quota. Note: the Canada Revenue Agency's own guidance page and the primary source for every rate, threshold and line number in this article. canada.ca
2. Canada Revenue Agency, Asking for a disbursement quota reduction, obtained directly. States that a reduction is available to registered charities whose expenditures on charitable activities or on gifts to qualified donees were less than required in the year due to circumstances beyond their control; that a reduction will only be considered once the charity has exhausted all other available means, including applying any available excesses from the previous five years and creating a disbursement quota excess in the next year and carrying it back; that generally the earliest a charity can receive approval is after the CRA has issued a Registered Charity Information Return Summary for the fiscal period following the period in which the shortfall occurred; and that on approval the charity must amend the T3010 for the shortfall period to include the approved amount on line 5750, using Form T1240, Registered Charity Adjustment Request. Note: the CRA's own guidance page and our source for the five-year carry-forward, the carry-back and the reduction process and its timing. canada.ca
3. Canada Revenue Agency, Disbursement quota calculation, prior to Budget 2010, obtained directly, carrying a notice that the information applies only for fiscal periods ending before 4 March 2010. Sets out the superseded quota as the sum of five calculations: 80 percent of the amounts for which official tax receipts were issued in the previous fiscal period; 80 percent of enduring property spent in the current fiscal period; 100 percent of enduring property transferred to qualified donees in the current fiscal period; 80 percent of amounts received from other registered charities in the previous fiscal period for charitable organizations and public foundations, or 100 percent for private foundations; and 3.5 percent of the average value of assets owned over the previous 24 months not used directly in charitable activities or administration, not applying where the amount is $25,000 or less. Note: a CRA page maintained for a superseded rule. HISTORICAL, cited only to show what the current calculation replaced. canada.ca
4. Christian charity sector association's blog on the new T3010 for January 2024, dated 15 January 2024. States that charities with fiscal year ends on or after 31 December 2023 must file using version 24 of the form and that using the wrong form results in it being returned for refiling; that version 23 made updates to account for qualifying disbursements including Form T1441 for grants to non-qualified donees; that version 24 makes updates to disbursement quota requirements through an entirely new schedule, asks foundations additional questions, requires specific information about donor advised funds, updates language and adjusts Schedule 6; that question C17 asks about the average value of the charity's property to help calculate the disbursement quota; and that as of 1 January 2023 the disbursement quota increased from 3.5 percent to 5 percent for the portion of property not used in charitable activities or administration that exceeds $1 million. Note: a charity sector association, informed but NOT authoritative, flagged. One of two sources dating the 2023 rate change precisely. cccc.org
5. National law firm's client insight on the new T3010 Annual Information Return, dated June 2025. States that all charities are subject to the disbursement quota, being the minimum amount a registered charity is required to spend each year on its own charitable activities or on qualifying disbursements through gifts to qualified donees or grants to non-qualified donees; that under the new T3010 charities must complete a new Schedule 8 and provide information on their disbursement quotas if, in the 24 months before the start of the fiscal period, the average value of property including cash, investments, capital property or other assets not used on charitable activities or administration exceeded $100,000 for charitable organizations or the lower foundation threshold; that Parliament signalled in 2022 that the CRA would be increasing its collection of data from charities, specifically seeking information on whether charities are meeting their disbursement quota obligations and on investments and donor advised funds; and that charities with fiscal periods ending on or before 30 December 2023 should file using version 23. Note: a national law firm's published insight, informed but NOT authoritative, flagged. Our source for Schedule 8 and the policy intent behind the reporting expansion. millerthomson.com
6. Charity law firm's blog noting CRA updates to its disbursement quota webpages, February 2024, reproducing the CRA's tiered calculation and its worked example, and recording that the accumulation of property provision now applies only to approvals granted to exclude accumulated property from the disbursement quota calculation before 31 December 2022. Note: a charity law firm's blog reproducing CRA content, informed but NOT authoritative, flagged. Cited for the closure of the accumulation approval route. canadiancharitylaw.ca
7. Accounting firm's article on the calculation of the disbursement quota, July 2024, stating that in January 2023 the Canada Revenue Agency increased the required disbursement quota for charities from 3.5 percent to 5.0 percent on the portion of property over $1 million; that many charities do not know how the value of this property for the determination of the quota is calculated or how they meet the disbursement target; and that the property in question could include excess cash or investments on hand or other capital property such as a building that is not used by the charity. Note: an accounting firm's article, informed but NOT authoritative, flagged. Cited as a second source for the 2023 change and for the composition of the property base. djb.com
8. Charity sector education resource on the disbursement quota, dated 2022 and therefore describing the pre-2023 rate. States that following the 2010 federal budget registered charities are required to spend an amount equal to 3.5 percent of their investment assets each year where those assets equal or exceed a threshold amount of $100,000, with a $25,000 threshold for charitable foundations, described as the Capital Accumulation Rule; that a charity spending less than its quota incurs a disbursement shortfall; that it can draw on disbursement excesses from the five previous fiscal periods; and that if no excesses are available it can try to spend enough the following year to create an excess to carry back. Note: a sector education resource, PRE-DATING the 2023 rate change and therefore stating the old flat 3.5 percent, flagged. Cited only for the threshold structure and the five-year carry-forward, both of which the CRA pages confirm. charitycentral.ca
9. Accounting firm's summary of changes to the charity information return, March 2024, stating that the CRA made changes to Form T3010 version 24; that while the new form applies to all charities, the nature of the added disclosures appears to affect foundations the most; that the disbursement quota is an annual spending minimum applicable to all charities; that the newest iteration has expanded reporting requirements on the quota where previously this information was largely tracked internally; that the new schedule must be completed where the 24-month average value of property not used directly in charitable activities or administration exceeds $100,000 for charitable organizations; and that new reporting is required for restricted funds held by charities. Note: an accounting firm's summary, informed but NOT authoritative, flagged. Our source for the shift from internal tracking to filed disclosure and for restricted fund reporting. armstrongjones.ca

This article discusses charity regulation and is not accounting, tax, legal or investment advice. The Income Tax Act provisions and Form T3010 itself were not obtained. The falling-market calculation uses a rough midpoint average rather than a properly weighted one and its magnitudes are illustrative. All arithmetic is the authors' own and every portfolio figure is invented.