Spend-down Charitable Funds
Until 2010, the disbursement quota provisions in the Income Tax Act mandated that charities handle donations in one of two ways: for immediate use or held as long-term endowments through the “10-year gift” capital hold mechanism. These binary rules drove donor and charity behaviour. The 2010 reforms provided charities with greater flexibility regarding the acceptance and use of funds. They have also transformed the way major donors plan their philanthropic legacies.
After the Golden Age: An Argument for “Spend-Down”
Until 2010, the disbursement quota provisions in the Income Tax Act mandated that charities handle donations in one of two ways: for immediate use or held as long-term endowments through the “10-year gift” capital hold mechanism. These binary rules drove donor and charity behaviour. The 2010 reforms provided charities with greater flexibility regarding the acceptance and use of funds. They have also transformed the way major donors plan their philanthropic legacies.
Annulled Charities
Annulment is one of those antiquated words the whispers “convenience” and “pragmatism”. Failed or incomplete marriage? Divorce not an option? A Church-granted annulment will set both partners free. Annulment is also a term in the Income Tax Act that applies to registered charities and registered amateur athletic associations. It’s rarely used, and the rules, as with marriage, are forgiving and practical.