What is a disbursement quota and does my registered charity have to meet one every year?

A disbursement quota is a minimum amount that federal law requires a registered charity to spend each year on its own charitable activities or on gifts to other qualified organizations, calculated with reference to the value of the charity's investment and other property not used directly in its charitable work. It exists so that donated funds and accumulated assets actually get used for charitable purposes over time, rather than sitting indefinitely in reserves.

The disbursement quota is a federal requirement under the Income Tax Act, administered by the Canada Revenue Agency, and applies to every registered charity — it is separate from, and layered on top of, the corporate rules that apply to your organization under provincial law if you are also an Ontario not-for-profit corporation. The precise calculation and the applicable rate can change, so a charity should confirm the current figure with its accountant or the CRA's guidance rather than relying on a number from a prior year.

Falling short of the disbursement quota does not automatically trigger revocation, but the CRA can take enforcement action, including penalties, against charities that persistently fail to meet it. Charities that are consistently under-spending should get advice on remedial options before a shortfall becomes a pattern.