By Mark Blumberg and Helene Mersky

On April 7, 2022, Canadian Finance Minister Chrystia Freeland introduced Budget 2022: A Plan to Grow Our Economy and Make Life More Affordable for the Liberal Government of Justin Trudeau.


The budget dealt with many big issues surrounding Canada’s COVID-19 recovery and housing etc. It also touched on many different issues that affect charities. We will focus on some of the matters, particularly affecting charities, and their regulation, but there is a lot in the 304 pages of the Budget.

The two largest changes to the regulation of charities are first some changes to the disbursement quota and secondly changes to the rules relating to how Canadian charities can deal with non-qualified donees including non-profits that are not charities and foreign charities.

Disbursement Quota

In terms of increasing the disbursement quota, the Liberal government essentially provided an increase but listened to foundations and some would say did the absolute minimum that they could get away with. They have announced that they will have a graduated increased disbursement quota. The disbursement quota for charities with “investment assets” under $1 million will remain at 3.5 percent. For charities with “investment assets” over $1 million, it will increase from 3.5 percent to 5 percent. However, this only applies to charities that have over $1 million; will only be effective in 2023; and will only apply to the portion of the “investment assets” over $1 million and not the amount below.

The Budget also announces that “The Canada Revenue Agency will also improve the collection of information from charities, including whether charities are meeting their disbursement quota and on information related to investments and donor-advised funds held by charities.” It will be interesting to see what the CRA comes up with. Presumably, the funds allocated in the Budget are for increased collection of information. The Budget specifically mentioned increased information collected on investments and donor-advised funds. As we have discussed in our submissions to the Finance Committee, there is a lot more that needs to be done in terms of transparency when it comes to charities.

Dealing with non-qualified donees

The second major initiative is revamping the rules for Canadian charities dealing with non-qualified donees. Qualified donees are groups that can issue official donation receipts such as registered charities. Non-qualified donees are groups that cannot issue official donation receipts such as individuals, Canadian non-profits that are not charities, and almost all foreign groups and businesses. Often it is helpful for a Canadian charity to work with or hire a non-charity to do certain charitable or other work.

The Budget provided limited information on this proposal, but a subsequent Budget Implementation Act provided some more clarity. It appears that certain proposed legislation (Bill S-216, the Effective and Accountable Charities Act) passed by the Senate and is currently in the House of Commons dealing with “direction and control” requirements will be overridden if it is ever passed. We had significant concerns with S-216 and it appears that the government might have also had some significant concerns with S-216 otherwise they could have waited and allowed it to pass. Instead, the Liberal government has brought in these proposals. The Budget change will allow group to use “direction and control” if they wish or the new rules — whichever is most useful for the individual charity and its circumstance.

“Budget 2022 proposes to allow charities to make qualifying disbursements to organizations that are not qualified donees, provided that these disbursements are in furtherance of the charity’s charitable purposes and the charity ensures that the funds are applied to charitable activities by the grantee.” Essentially these “qualifying disbursements” need to be within the charity’s purposes and the funds are applied to “charitable activities” by the “grantee”.

At the moment, Canadian charities can conduct their charitable activities by making gifts to qualified donees or carrying out their own activities by using staff or volunteers or hiring an intermediary. The Budget proposes adding another category of “qualifying disbursements”.

Qualifying Disbursements must:

  • Be in furtherance of the charitable purpose of the charity;
  • Exclusively applied to charitable activities in furtherance of a charitable purpose of the charity;
  • Meets prescribed conditions;
  • Have a written Agreement with numerous requirements;
  • Involve a pre-grant inquiry with on grantee including identity, prior history, practices, activities, and areas of expertise of the grantee organization and its directors, officers, and like officials;
  • Involve ongoing monitoring and periodic reports;
  • Have a final report; and
  • Have remedial action, if necessary.

Unfortunately, until CRA provides guidance on this topic, there will not be certainty as to what the rules are. Although we may be comfortable relying on CRA guidance, some charities and their legal counsel may challenge the rules in court, and it may take a decade or two to understand the full impact of these changes.


Mark Blumberg and Helene Mersky are lawyers at Blumberg Segal LLP in Toronto. To find out more about legal services that Blumbergs provides to Canadian charities and non-profits please visit Blumbergs also maintains Canada’s largest charity information portal at with up to 19 years of information on every Canadian registered charity. The portal is free and the aim is to increase transparency in the Canadian charity sector. This article is for information purposes only. It is not intended to be legal advice. You should not act or abstain from acting based upon such information without first consulting a legal professional.

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