Recommendation 16 – Proposed Social Sector Fund: Sector Consultation and Financing

This letter addressed to member of Parliament Eric Lefebvre, Vice-Chair, Standing Committee on Finance and co-signed by PFC, Community Foundations of Canada and Imagine Canada was sent individually to all members of the Standing Committee on Finance, Minister of Finance and National Revenue François-Philippe Champagne and his Chief of Staff, Jean-Philippe Arseneau, and Secretary of State (Canada Revenue Agency and Financial Institutions) Wayne Long.

It expresses support for stronger investment in the charitable and non-profit sector’s shared infrastructure and capacity. The letter calls for meaningful sector consultation on the proposed Social Sector Fund before decisions are made about its purpose, governance and financing. It also raises concerns that a levy on foundation assets or a tax on foundation investment income could reduce the resources available to charities and communities.

October 20, 2026

Eric Lefebvre, MP
Vice-Chair, Standing Committee on Finance
House of Commons
Ottawa, ON K1A 0A6

By email: eric.lefebvre@parl.gc.ca

Re: Recommendation 16 – Proposed Social Sector Fund: Sector Consultation and Financing

Dear Mr. Lefebvre:

We are writing to express concern regarding Recommendation 16 of the House of Commons Standing Committee on Finance’s pre-budget recommendations, which proposes the creation of a Social Sector Fund to strengthen the capacity and shared infrastructure of Canada’s charitable and non-profit sector.

This recommendation reflects growing recognition of the barriers nonprofits and charities face in building capacity, advancing shared priorities, and sustaining infrastructure for collective action. Shared infrastructure is essential to the sector’s ability to work effectively, collaborate, and respond to evolving community needs. We strongly support greater and sustained investment in this foundational capacity.

Our primary concern is that the recommendation advances a particular approach before meaningful sector consultation has established the fund’s purpose, priorities, governance, or financing. We are also concerned about the proposed mechanisms to finance the fund: a levy on foundation assets or a tax on foundation investment income.

We believe the development of any potential Social Sector Fund requires meaningful and impartial consultation with the charitable and non-profit sector, including philanthropic organizations that steward resources for communities and critical societal issues. Any such process must fully explore the purpose, priorities, governance and sustainable financing of a fund, as well as other approaches to strengthening sector capacity, before changes to the Income Tax Act are pursued.

Foundations and other philanthropic organizations have a long history of investing in the capacity of the charitable and non-profit sector. Beyond granting, they support organizational development, community data, convening, collaboration, shared infrastructure and long-term community leadership. Our own organizations are examples of this commitment. The question is therefore not whether sector capacity matters, but how we can best increase investment in that capacity while increasing, or at least preserving, the resources already committed to charitable causes.

The proposed financing mechanisms also raise significant concerns. Philanthropic charitable assets reflect the generosity of donors who have entrusted resources to institutions that are mandated by law and federally regulated to respond to charitable needs and opportunities. A mandatory levy or tax would effectively direct charitable resources toward priorities determined through federal government policy rather than by the charitable organizations entrusted with stewarding them. This would cross a troubling line, with potentially lasting implications for the autonomy of civil society.

Taxes or levies collected by the government would also displace foundation funding that would otherwise flow directly to charitable organizations and community priorities. At a time when communities across Canada are facing significant pressures—from affordability and housing to food security, social isolation and growing demand for community services—regulatory changes that risk reducing the resources available to charities to respond to immediate, persistent and emerging needs should be avoided.

This is particularly important as the Government of Canada considers the broader policy environment governing the charitable sector, including the recently announced consultation on the modernization of the federal framework for the charitable sector and the five-year review of the Disbursement Quota, expected in 2027. We strongly encourage an evidence-based and collaborative approach that recognizes the diversity of Canada’s charitable sector and carefully considers the real-world implications of policy changes for organizations and communities.

We share the Committee’s ambition for a strong, resilient and well-equipped charitable and non-profit sector. We encourage the Government to build on that ambition by engaging the sector in developing an approach that strengthens shared capacity while preserving civil society’s independent and democratic decision-making and ensuring that more—not fewer—resources ultimately reach communities.

We would welcome the opportunity to participate in those conversations and help develop an approach that strengthens both Canada’s charitable sector and the communities it serves.

Sincerely,

Jean-Marc Mangin
President & CEO
Philanthropic Foundations of Canada

Bruce MacDonald
President & CEO
Imagine Canada

Andrea Dicks
President
Community Foundations of Canada