T3010 Compliance for Family Foundations: 2024

By Markdale Foundations #familyfoundation, #impactinvesting, #philanthropy, #T3010, #wealthmanagement 0 Comments

T3010 Compliance for Family Foundations is an important consideration. Our family office manages several family foundations. And, there are a few things in the T3010 for 2024 that have caught our attention.

Impact Investments
Disbursement Quota (DQ) reporting
Donor Advised Funds (DAF) Reporting

Before we begin, let’s put your financial knowledge to the test with our free financial literacy quiz!

How do Impact Investments Affect T3010 Reporting?

Impact investments generate positive, measurable social and environmental impact alongside a financial return. Our family office approaches impact investing along a continuum ranging from profitable to charitable. At one extreme are profitable investments such as traditional stocks and bonds. At the other extreme are charitable gifts including grants from foundations & DAF accounts. Somewhere in the murky middle are impact investments.

Family foundations are increasingly making impact investments. But, these new types of investments bring some additional compliance and reporting challenges with them. The T3010 requires registered charities, including family foundations, to disclose the value of their impact investments and the income received from impact investments. To do this, family foundations need to tweak their bookkeeping methods so that impact investments are grouped into separate categories from other investments so their value and income can be easily determined by accountants or whoever is filing the foundation’s tax return.

And, family foundations should also consider their reporting process when making impact investments. Those investments likely won’t show up on brokerage reports. So, the diligent family foundation also needs to adapt their investment performance reporting to capture the results of their impact investments separately. So they can independently compare and consolidate impact investments with the rest of the portfolio.

Our family office provides specialized documentation, bookkeeping, and reporting services for family foundations. Fill out this free assessment questionnaire to determine if our family office services are right for you. Or, please get in touch with us by booking a complementary zoom meeting learn about how we help family foundations manage their impact investments.

Disbursement Quota (DQ) Requirements for T3010 Compliance in Family Foundations

The new disbursement quota (DQ) requirements in the T3010 form introduced a more rigorous assessment to ensure registered charities meet their financial obligations for charitable spending. As part of these updates, charities whose non-operational property assets exceed $100,000 for charitable organizations or $25,000 for foundations must now complete Schedule 8. This new section is designed to help charities calculate their required DQ based on these assets, detailing their expenditures on charitable activities and any grants or gifts made to qualified and non-qualified donees.

Donor Advised Fund (DAF) Reporting

The updated T3010 form introduces specific requirements for reporting on Donor Advised Funds (DAFs). Charities should disclose detailed information about their DAFs, including the total number of DAF accounts they manage, the overall value of these accounts at the end of the fiscal period, and the total contributions received during the period. Additionally, charities must report the total value of DAF disbursements. Ensuring transparency in how funds are supporting charitable activities.

Donor advised funds should be an important tool your family foundation is using to amplify its impact. And, there are lots of good reasons why family foundations also use Donor Advised Funds. So, family foundations should remain up-to-date when it comes to the rules surrounding DAFs in Canada.