Budget 2022: A Step Forward and New Opportunities for Collaboration with the Nonprofit and Charitable Sector

Budget 2022: A Step Forward and New Opportunities for Collaboration with the Nonprofit and Charitable Sector

April 07, 2022
News

For the second year in a row, nonprofits and charities have been meaningfully included in the federal budget. The unabated increase in demand for services from charities and nonprofit organizations since the start of the pandemic, combined with the nonprofit sector’s determined advocacy, has elevated the need for action to ensure that Canadians have access to these vital services. We are hopeful that a new “floor” has been established for the nonprofit sector’s inclusion in federal budgets going forward. While charities and nonprofits are not mentioned in each section of the budget, we note that there are organizations in the nonprofit sector working in virtually all of the budget priority areas, from environment, to childcare, to housing affordability. This only emphasizes the importance of having a strong and vibrant nonprofit sector to push forward Canada’s priorities. 

In Budget 2022, we noted progress on several key sector priorities:

A positive step toward direction and control reform

Together with our allies in the nonprofit sector, Imagine Canada has long advocated for changes to the rules that govern the way that charities are able to partner with and provide funds to non-charities. We were pleased to see the budget proposal to “amend the Income Tax Act to allow a charity to provide its resources to organizations that are not qualified donees, provided that the charity meets certain requirements designed to ensure accountability.” The Budget explicitly notes that the government intends to implement the spirit of Bill S-216, The Effective and Accountable Charities Act, a piece of legislation we fully support. This is an encouraging step forward on one of the nonprofit sector’s key policy priorities and we look forward to learning more about the details of how the government intends to implement its proposal. In addition we offer to work with the government to ensure confidence that charitable dollars are being used in an accountable and transparent way to enable investments in many underfunded communities.

An increased disbursement quota will improve the sector’s funding environment

Following consultations with the charitable sector in 2021, Budget 2022 proposes to introduce a new graduated disbursement quota for charities. For investment assets exceeding $1 million, the rate of the disbursement quota will increase from 3.5% to 5%. The proposed changes will come into effect on or after January 1, 2023 (depending on the charity’s fiscal period). We are pleased to see the government's commitment to a five-year review period and to improved data collection. During these review periods we urge the government to proactively engage the sector in the review, consider additional measures such as a fully tiered system and to seek the perspectives of organizations outside the legal and foundation communities (i.e. grantees and potential grantees). 

Other measures of interest to the sector

Additionally, Budget 2022 included numerous initiatives that will impact parts of the nonprofit sector and that our allies have advocated for. These include $50 million in additional funding for the Supporting Black Canadian Communities Initiative, which aims to build the capacity of Black-led and Black-serving organizations. Imagine Canada strongly supports funding that addresses the core needs of charities and nonprofits and hopes to see similar funding opportunities for various parts of the sector in the future. We are also pleased to see measures that address inequities in the nonprofit sector’s funding environment. 

Some other measures that will impact parts of the sector include: 

  • $625 million for an Early Learning and Child Care Infrastructure Fund. 
  • An additional $190.5 million investment in the Indigenous Community Support Fund to help Indigenous communities and organizations mitigate the ongoing impacts of COVID-19
  • Funding to support the new Special Representative on Combating Islamophobia. 
  • $29.6 million to support the co-development of an Indigenous Climate Leadership Agenda.
  • $85 million to support the new Anti-Racism Strategy and National Action Plan on Combating Hate. 
  • $100 million to support the implementation of the Federal LGBTQ2+ Action Plan.
  • $272.6 million to support the implementation of an employment strategy for persons with disabilities through the Opportunities Fund. 

New possibilities for collaboration

While Budget 2022 included several important steps forward, there is still work to be done to strengthen the nonprofit sector and ensure that it is able to continue to offer its invaluable programs and services and improve quality of life in our communities. We look forward to continuing to work with the government and the opposition to advance the sector’s other key priorities, including creating a home in government for our sector. 

This year’s budget investment and legislation advancement can ‘unlock’ new possibilities for the work of nonprofits and charities and we hope these organizations are able to further their activities to support communities at the grassroots level, and use these investments to catalyze recovery and capacity-building. 

"Continually improving the operating environment for Canada’s charities and nonprofits requires that the sector and the federal government work together over a sustained period of time. Budget 2022 includes a number of long standing measures that Imagine Canada, working alongside other sector organizations, have been urging the government to address. We are encouraged that progress has been achieved on a number of fronts." Bruce MacDonald, President & CEO, Imagine Canada