Frequently asked questions

Why should foundations finance shared sector infrastructure?

Foundations receive preferential tax treatment under the Income Tax Act, leveraging taxpayer dollars. Having foundations help support the infrastructure fund is a direct extension of their purpose, as intended by the Act: to deliver social services as a public good.

Furthermore, the CRA reports that foundations hold more than $190 billion in assets (2024), and that total is growing rapidly. Operating charities, by contrast, have very little in passive investment assets and spend virtually all of their money each year in support of the millions of Canadians relying on them.

Would contributions to the Sector Fund reduce grants to operating charities?

Slightly. Because contributions count toward the Disbursement Quota, a small share of what foundations already grant each year would go to the Fund instead. At 0.025% of assets, a foundation with $10 million in assets would contribute $2,500, about half of one per cent of what it must already disburse each year.

GIV3 expects each dollar invested in shared capacity to return more than a dollar in value to charities, through stronger giving, volunteering, workforce capacity and efficiency.

See: Economic impact

Why shouldn’t government simply fund this infrastructure directly?

The government could, but that would mean new public spending, and funding that depends on each year’s budget decisions. Past federal efforts to support the sector have often been short-lived. A self-financing fund, independent of government, offers stable long-term funding at no new cost to taxpayers.

Why can’t foundations voluntarily create the Fund?

Some foundations already collaborate to invest in sector infrastructure, and their work helps. But there is no mechanism today to pool resources across the sector at the scale, and with the long-term certainty, that sector infrastructure requires: tens of millions of dollars a year, sustained over many years. An amendment to the Income Tax Act would create that mechanism.

Would government influence charities’ missions?

The proposal is designed to prevent that. The Fund would be governed by an independent, arm’s-length agency representing sector organizations, and financed by foundations rather than government. Nothing in the proposal gives government new influence over charities’ missions.

Is this a new tax or levy on foundations?

It would be a new requirement. The Committee set out two options: a 0.025% annual levy on unused foundation assets, or a 1% tax on foundation investment income. Under either, contributions would count toward foundations’ existing Disbursement Quota, so foundations would not have to give more in total than they do today.

See: Recommendation 16 in full

How would the Sector Fund be administered and held accountable?

The final design would be set by the federal government in consultation with the sector. GIV3 proposes:

• A membership of 30–50 sector organizations, reflecting Canada’s social sector from coast to coast to coast.
• Members elect a Board of Trustees, which appoints a Chair and hires an Executive Director.
• A professionally developed national strategic plan, approved by the Board, guides all investments.
• Performance is measured against the plan’s goals for effectiveness and efficiency, and reported publicly.
• A mandatory five-year federal review. If the Fund is not working, it should be wound down.

Who would collect contributions, and what would it cost?

GIV3 proposes that the CRA’s Charities Directorate calculate and collect contributions using foundations’ annual T3010 information returns, and pass the funds to the new Sector Fund Agency each year. Administration costs could be covered from the Fund itself, so there would be no new cost to taxpayers, or absorbed into the CRA’s current operating budget.