Federal Budget Includes Two Important Initiatives to support the Nonprofit Sector

FRANÇAIS

On Thursday, April 7, the Federal Government tabled Budget 2022: A Plan to Grow Our Economy and Make Life More Affordable. The charitable sector is specifically referenced, noting: “Budget 2022 will make it easier for Canada’s charities to do their important work and ensure that Canadians—and people around the world—can benefit from their generosity”.

“The proposed changes in Budget 2022 are encouraging steps toward a more collaborative charitable landscape across Canada, providing meaningful opportunity to increase resources to, and partnership with, traditionally under-supported organizations,” said Aaron Sanderson, MA, CFRE, ACFRE, chair of the AFP Canada Government Relations Committee.

Among several significant funding announcements, Budget 2022 includes two important proposed changes:

1. Increasing the Disbursement Quota from 3.5% to 5% for registered charities with assets of exceeding $1 million. This shift was alluded to in Budget 2021 where it was noted: “This could potentially increase support for the charitable sector and those that rely on its services by between $1 billion and $2 billion annually” (“6.3 Building Stronger Communities” Budget 2021). AFP Canada has advocated for this important change – a stance summarized in our policy position. This provision is welcomed during such a critical time of recovery for Canada’s charitable sector.
    
2. Amending the Income Tax Act to allow charities to fund organizations other than “qualified donees”. To qualify, a charity must meet certain accountability requirements (to be disclosed). The proposed amendment is meant to reflect Bill S-216, which AFP Canada supported and was introduced by Senator Ratna Omidvar. This change to a seven-decade old rule provides an opportunity for charities to create and deepen partnerships with community organizations, including social enterprises, co-ops, and equity-seeking groups without charitable status. At a global level, Canadian charities would now be able to contribute to pooled international funds for humanitarian crises with this provision. AFP Canada previously shared an article on this topic from The Philanthropist Journal. (Update: following the budget announcement further details were released which have caused concern in charitable sector regarding the government’s proposed changes to direction and control.)

“If adopted, these changes hold the potential for increased equity, cooperation and funding across Canada”, noted Sanderson

Budget 2022 also includes several provisions specifically supporting the recovery of Canada’s Performing Arts and Heritage Sectors. They include an additional $50 million to “compensate Canadian arts, culture, and heritage organizations for revenue losses due to public health restrictions and capacity limits”.

For additional analysis on the budget, read more from our partner, Imagine Canada.