Canada’s charitable sector continues to face significant challenges amid rising costs and increasing demand for services, compounded by economic uncertainty and shifting global conditions. In response, experts are urging the federal government to expand tax incentives to encourage donations of private investments and real estate, a move they say could unlock billions of dollars for Canadian charities.
During the COVID-19 pandemic, many individuals and businesses reduced or halted charitable donations. Charities such as food banks, mental health organizations, and homeless shelters struggled to meet sharply increased needs while dealing with inflated operating expenses. Recent economic pressures, including tariffs and supply chain disruptions, have further strained these organizations.
A proposed policy shift draws on the success of an existing tax incentive for donations of publicly listed securities. Introduced in 1997 by the Liberal government under Jean Chrétien, this measure initially reduced the inclusion rate on capital gains from 75 percent to 37.5 percent for donations of public securities. Subsequent governments increased this benefit, with the Conservative government under Stephen Harper eliminating the capital gains tax on donated public shares in 2006 and extending the exemption to private foundations the following year.
This policy change led to significant growth in securities donations. According to Finance Canada, between 2001 and 2015, donations of securities totaled more than $6 billion and grew at an annual average rate of nearly 15 percent—well above the growth rate for overall charitable donations. More recent data indicates that from 2013 to 2023, the number of donors contributing publicly listed shares nearly doubled. An online fundraising platform report showed a 361 percent increase in the value of securities donations made through its service between 2020 and 2025.
Despite these gains, owners of private businesses and real estate have not benefited from equivalent incentives, limiting their capacity to contribute through these assets. Advocates argue that extending similar tax measures to private investments and real estate could provide new avenues for Canadians to support charitable causes. This could include individuals selling long-held family properties or private businesses to fund nonprofits focused on social services, health, education, the arts, and the environment.
Such a policy shift could also stimulate economic activity by unlocking assets that otherwise remain illiquid, potentially expanding charitable sector employment and increasing the long-term flow of philanthropic dollars. The measure, which nearly advanced under the previous government in 2015, proposed conditions including the sale of assets to an arm’s-length buyer and timely donation of proceeds to registered charities. Partial donations would see proportional capital gains exemptions.
Critics caution that the expanded exemption might disproportionately benefit wealthier Canadians. However, proponents emphasize that the primary goal is to incentivize increased giving, noting that donors typically provide donations far exceeding the value of tax savings, while charities receive the full benefit of the contribution.
The decline in publicly traded companies in Canada—from 3,520 in 2008 to 2,114 in 2024—alongside a surge in private equity holdings, highlights the imbalance in existing charitable tax incentives, which favor assets held in public markets. Expanding exemptions to private assets would align the tax framework with the evolving structure of Canadian wealth, broadening the potential donor base for the country’s charitable sector.
As Canada navigates ongoing economic volatility, experts suggest that updating charitable tax policies to include private business and real estate donations represents a pragmatic step toward strengthening community supports and sustaining vital nonprofit organizations.