Philanthropic Foundations Canada Policy Advisory on Budget 2025

Budget 2025, entitled “Canada Strong,” was tabled today by Finance Minister François-Philippe Champagne. It arrives at a moment of profound economic and geopolitical uncertainty. Framed as a “generational reset,” the budget outlines several new ideas as part of a vision for transforming Canada’s economy, reducing reliance on U.S. trade, and investing in long-term resilience, while also introducing significant “belt tightening”.

The budget recognizes the need for cross-sector collaboration to meet the challenges facing Canadians. Nonetheless there are few new avenues for philanthropy to partner with government on its investments. PFC will continue to encourage the Government to leverage its balance sheet to attract philanthropic investment. The word philanthropy does not appear in the budget. The word charities appears twice in re-confirming past decisions.

The budget includes significant cuts such as to the public service workforce and international students, maintenance of key programs such as dental, childcare and pharmacare, as well as major investments in housing, defence, infrastructure, and workforce development, alongside targeted relief for sectors impacted by US tariffs.

Budget Highlights Relevant to the Philanthropic Foundations

Key promises of note include:

Potential co-investment opportunities

Budget 2025 introduces the Build Communities Strong Fund, a long-term infrastructure initiative led by Housing, Infrastructure and Communities Canada. It commits $51 billion over ten years, plus $3 billion annually, to support diverse projects through provinces, territories, and municipalities. A Direct Delivery Stream within the fund will provide $6 billion for regionally significant projects, building retrofits, climate adaptation, and community infrastructure—requiring proponents to seek private sector investment, including via the Canada Infrastructure Bank, before accessing federal support.

Budget 2025 proposes to provide $1 billion on a cash basis over three years, starting in 2026-27, for the Business Development Bank of Canada to launch the new Venture and Growth Capital Catalyst Initiative, a fund-of-funds that would leverage more private venture capital by incentivising pension funds and other institutional investor participation.

These are major commitments, with possibility of there being opportunities for co-investors like foundations to participate.

Legislative amendments

Budget 2025 proposes a legislative amendment to the Customs Tariff to allow for duty drawback for certain goods when they are donated to a registered charity under the Income Tax Act, provided they are to be used in the organisation’s charitable programs and not re-sold in Canada. This may be relevant to some of front line charities supported by PFC members.

Budget 2025 confirms that the government has considered outstanding tax measures announced by the previous government and confirms that it intends to proceed with several measures, as modified to take into account consultations and deliberations since their release, which are primarily minor technical changes to the Income Tax Act, such as electronic communication provisions.

Investment in the CRA

While it is unclear whether the Charities Directorate or others interfacing with foundations and charities will be affected, Budget 2025 promises to modernize its administrative approach to enable greater productivity, and wind down its business units that are no longer connected to government priorities, and redirect funding to improve services and increase compliance, including those requiring human interfacing.

However, the scale of the needs and the absence of measures to strengthen the charitable sector specifically raise concerns about the sustainability of community supports to build a more resilient and equitable Canada. PFC will continue to encourage the Government in this regard.

While the budget includes substantial capital investments, it does not introduce new measures specifically aimed to strengthen the enabling environment for philanthropy. Key areas of interest include:

Disbursement quota review: No new details were provided on the promised 2027 review. PFC continues to advocate for a data-driven approach that supports philanthropic impact and precludes asset accumulation.

Granting to non-qualified donees (NQDs): The budget does not include the technical amendment we have asked for to the Income Tax Act that would enable pooled funding for NQDs. This remains a barrier to equity-focused grantmaking. However, the 2024 policy guidance on NDQs is reconfirmed.

Impact investing: Unlocking foundation capital for public benefit remains a question mark. While foundations have not been mentioned specifically, there may be opportunities for co-investment as mentioned above, which we will encourage and seek clarifications .

Sector data and intelligence: Despite calls for improved T3010 reporting and annual nonprofit sector data collection, no new funding or commitments were announced. Cuts to Statistics Canada regarding data collection that “demonstrate less relevance to Canadians” are worrying, as the significant and complex impact of charities in Canada are not well understood by the government.

Foundations as Partners in Public Policy

Canada’s charitable foundations are ready to meet this moment. As Budget 2025 outlines ambitious goals for housing, climate competitiveness, and economic transformation, foundations offer:

Flexible capital to co-invest in community-led solutions.

Long-term vision to support systems change beyond election cycles.

Trusted relationships with impactful organizations and equity-deserving communities.

Foundations can help ensure that investments reach those most affected by economic disruption, climate change, and social inequities.

Budget 2025 aims to set a new course for Canada’s economy, but it leaves critical gaps in the infrastructure that enable charities, and which is vital for a strong civil society. PFC will continue to encourage the federal government to engage more deeply with the philanthropic sector to co-create solutions that are equitable, sustainable, and community-driven. We will continue to work with our members and partners to advance policy that enables philanthropy to contribute fully to Canada’s future.

PFC will provide more insights as they become available.

In response to this budget, Jean-Marc Mangin, President & CEO of PFC said,

“Government cannot meet this moment alone. Foundations bring deep relationships, flexible capital, and long-term vision. Charities more broadly enhance social well-being, deliver essential services, foster civic engagement, and support public policy objectives through community-based initiatives. Budget 2025 could have gone further in recognizing -and activating – the value of cross-sector collaboration in the generational investments that Canada needs.”