What is a charity's disbursement quota and what happens if it isn't met?

A charity's disbursement quota is the minimum share of its property that it must spend on its own charitable activities, or give to other qualified donees, each year. It exists so that a registered charity actually uses its resources for the charitable purposes it was registered for, rather than simply accumulating donations without putting them to work. The exact rate is set by CRA and can change, so it's worth confirming the current figure rather than relying on an older number.

Falling short of the quota is a real compliance problem, not a minor paperwork issue. CRA treats it as a serious matter because meeting the quota is one of the core conditions of maintaining registered status — a charity that consistently under-spends can face consequences ranging from a requirement to make up the shortfall to, in more serious or repeated cases, revocation of its charitable registration. Reasonable reserves and multi-year projects are generally permitted, since the quota is assessed over time rather than as a rigid same-year rule, but a charity's board should track its disbursement position regularly rather than discovering a shortfall only when CRA raises it.