Preparing for the Federal Review of Charity Tax Rules and the Disbursement Quota

Executive Summary

The federal government is expected to consult on modernizing charity tax rules in 2026–27 and review the disbursement quota in 2027. Budget 2026 presents an immediate opportunity for input. PFC is preparing to ensure these processes are informed by evidence, foundation experience, and the needs of the communities and organizations they partner with and support.

PFC’s work combines policy development through the Philanthropic Impact Task Force, research and data, government relations, and member engagement. A new foundation investment survey will launch in fall 2026, alongside direct engagement with government and regional discussions with members.

Member participation will be essential to identifying practical impacts, unintended consequences and policy opportunities. PFC’s objective is to advance recommendations that strengthen community impact, support effective philanthropic practice and preserve charitable resources over the long term.

Background

The federal government has announced plans to modernize Canada’s tax rules for charities, with consultations beginning in 2026–27. It is also expected to review the charitable disbursement quota in 2027.

While the scope, timing and relationship between these processes remain unclear, PFC has been preparing to ensure that federal policy is informed by evidence, the operational realities of foundations, and the needs of the communities and organizations they support.

This is an important opportunity for PFC and its members to help shape the government’s understanding of the sector before policy options are finalized. A strong, coordinated and evidence-based contribution from the philanthropic community will be essential to ensuring that any changes support community impact, effective philanthropic practice and the long-term availability of charitable resources.

What we currently understand

In Budget 2022, the federal government committed to reviewing the disbursement quota after five years. The 2026 Spring Economic Update also announced the government’s intention to modernize charity tax rules. And consultations for Budget 2026 are underway.

PFC understands there are three forthcoming opportunities we want to inform:

a likely consultation on administrative tax policy issues in 2026
a review focused on the disbursement quota, expected in 2027
Budget 2026, which remains an important opportunity for input and influence

Why this matters

Government will need credible evidence and practical insight into how foundations support communities, advance priorities shared with government, and how different policy approaches could affect both foundations and the organizations and communities they fund.

Any review could have significant implications for:

the funding available to communities and charitable organizations
foundation investment and granting strategies
administrative and reporting requirements
the long-term sustainability of philanthropic assets

PFC has an important role in bringing our network’s experiences and perspectives together and translating them into clear, constructive and policy-ready recommendations. Our members are central to that work. The quality and influence of PFC’s contribution depends on members sharing their experience, data, questions and concerns.

PFC’s positions will continue to be informed by evidence, diverse perspectives, government intelligence and careful consideration of the potential effects of different policy approaches. Consistent with our policy agenda, and the positions and recommendations we have been clearly and consistently sharing with government and our network since the last disbursement quota review in 2021, our objective is to advance ideas that support community impact today while protecting the ability of philanthropic resources to serve communities over the long term.

PFC’s approach

PFC’s work brings together four connected areas: policy development, data and research, government relations, and engagement with members and sector partners.

1. Philanthropic Impact Task Force

The PFC Board established the Philanthropic Impact Task Force in November 2025 to guide PFC’s consideration of the disbursement quota and related policy issues. Its work includes:

reviewing research, data and perspectives from across the sector
examining implications for foundations, communities and charitable organizations
considering related regulatory and reporting issues
assessing the objectives and potential impacts of different policy approaches
identifying areas of agreement, concern and uncertainty
developing recommendations for consideration and approval by the PFC Board

Board-approved recommendations form the basis of PFC’s public policy and government-relations positions.

2. Data and evidence

PFC continues to draw on administrative data, policy analysis and research we have undertaken in recent years to address persistent evidence gaps.

We have also accelerated the development of our foundation investment survey, which will launch in fall 2026. The survey will provide current Canadian evidence on foundation assets, investment practices and related considerations.

The findings will inform policy development and engagement with members and government. Member participation in this survey will be particularly important. Our last survey was published in 2021, with data from 93 foundations. Strong participation will improve the credibility of the evidence available to PFC and help demonstrate the range of realities across the foundation sector.

3. Government relations

PFC has been deepening its direct engagement with the federal government through its own relationships and networks and with support government relations advisors. This work includes:

seeking clarity on the scope, timing and sequencing of the government’s work
identifying the departments, agencies and political offices shaping the process
engaging officials and political staff while gathering intelligence on emerging priorities and policy options
coordinating with sector partners where shared messages or joint advocacy would strengthen the sector’s influence
developing recommendations that align with government priorities, sector needs and PFC’s broader policy agenda

4. Member and sector engagement

Member input will be central to PFC’s work. PFC is creating several opportunities for members to share their perspectives, test emerging policy considerations and help shape PFC’s recommendations.

Engagement will begin with an online town hall in late August or early September to pressure test key elements of our submission to the federal pre-budget consultation.
In-person discussions are being planned across the country:
- Vancouver, late August 2026: Around the Victoria Forum
- Winnipeg, September 2026: Special PFC member CEO breakfast during the PFC Conference
- Calgary, early October 2026
- Montreal, early November 2026
- Toronto, fall 2026

Timing and locations may change as the federal process becomes clearer. Additional engagement opportunities may be offered throughout 2026 and 2027, including surveys, focus groups through existing channels such as the PFC CEO Support Group, and meetings with elected officials and senior public servants, including at events such as our CEO Retreat.

What we need from members

PFC’s ability to influence this process depends on the strength, breadth and credibility of the perspectives we bring forward. We are asking members to:

participate in the online town hall before the September 8 pre-budget consultation deadline
join an in-person regional discussion where possible
share examples of how the disbursement quota, investment rules and reporting requirements affect your foundation’s decisions and operations
identify unintended consequences, administrative inefficiencies and policy opportunities that PFC should consider
contribute relevant data, research or analysis that may inform the Task Force’s work
keep PFC informed of related conversations you are having with government, advisors or sector partners
encourage appropriate colleagues, including finance, investment, granting and governance leaders, to contribute where their expertise is relevant

Members do not need to have a developed policy position to participate. Practical experience, questions, areas of uncertainty and differing perspectives will all help PFC develop recommendations. A well-informed and coordinated voice can help government understand both the opportunities and the risks associated with different policy choices.

Together, PFC and its members can help ensure federal policy reflects foundation experience and strengthens the contribution of philanthropy to communities across Canada.