The upcoming review of Canada’s disbursement quota will reopen familiar questions about how much capital should move out the door each year, but if the sector debates only the percentage that must be granted, it leaves untouched a much larger question: what is the rest of the capital doing while it waits?
Every day, the social sector confronts problems that are immediate, complex, and deeply human. Young people are struggling with mental health. Families are being priced out of housing. Food banks are carrying unsustainable demand. Communities are navigating climate disruption, affordability, inequality, and the unfinished work of reconciliation all at once.
The work is urgent. The resources are finite. And yet, one of the sector’s most powerful tools is often underused, overlooked, or disconnected from mission: its capital.
At a time when every dollar matters, we need to look beyond what we fund and ask how our money itself is working. Is it simply being held, preserved, and protected, or is it being activated in ways that advance the world we say we are trying to build? Are we doing everything we can with everything we have? The answer, when you look at the data, is no. Not even close.
In 2024, Canadian registered charities reported $101.4 billion in short-term investments on their T3010 returns: GICs (guaranteed investment certificates), treasury bills, money market funds. That figure grew by nearly $12 billion in a single year. Among the 13,497 charities holding $500,000 or more in short-term investments – organizations with demonstrated surplus liquidity, excluding hospitals, universities, and colleges – $66.7 billion of that sits in instruments designed to preserve capital, with no connection to impact.
Reserves matter. Holding capital is not the problem. The question is: what is that capital doing while it waits?
We talk endlessly about the 5% to 7% we disburse annually. We have developed sophisticated cultures of accountability around that story, impact reports, outcome frameworks, disbursement ratios, annual reports that glow with purpose. We are fluent, even eloquent, in the language of what we give. Almost nobody talks about the bulk that stays. And that silence has allowed a cultural default to take hold. One that lets the sector wave the banner of dollars granted while staying largely hushed on dollars invested.
This is what pathological short-termism looks like. Not a scandal, not a conspiracy. A quiet tax on mission, paid in the silence between the 5% we know how to talk about and the much larger share we don’t.
What the data reveal
Set aside hospitals and universities, whose operational scale creates legitimate liquidity demands. Focus on those 13,497 organizations – charities that demonstrably hold surplus liquid capital, not just property or equipment. Among them, only 15% have what could reasonably be described as a meaningful long-term investment strategy. Eighty-five percent do not.
The asset picture is equally stark. Across the full cohort, 52% – nearly 7,000 organizations – hold on average 81% of their entire asset base in short-term instruments. And for most of them, the remaining assets are also in cash or near-cash equivalents. There is no long-term portfolio.
The designation breakdown offers its own provocation. Public foundations, organizations whose entire mandate is long-term capital deployment for social good, are among the least likely to have a long-term investment strategy in place; only 6% do.
It raises an uncomfortable question: from a fiduciary standpoint, is capital that is safe but idle actually fulfilling its duty, or has protecting capital become a way of avoiding the harder work of generating impact with it?
The gap between rich and poor charities, just like in society, is going to continue to grow.
Sharon Avery, Toronto Foundation
Community foundations tell a different story. Drawing on decades of pooled investment infrastructure, the network holds just 5% of assets in cash and short-term instruments combined, with 83% deployed in long-term investment pools. The model exists; what is missing, for most of the sector, is access to it.
Sharon Avery, CEO of Toronto Foundation, whose team is preparing a dedicated brief on short-term investing for release later this year, is direct: “The gap between rich and poor charities, just like in society, is going to continue to grow. The rich get richer and the poor get poorer. And it is exactly the same thing playing out with charities right now.”
The sector is being asked to solve the defining challenges of our time while showing up to the Formula One racing circuit in a rental car, technically mobile, entirely outmatched by what the moment demands.
The GIC problem
The GIC is not the villain; it has its place. For organizations managing liquidity, timing, or near-term obligations, it can be a useful and responsible tool. The problem is what happens when a tool becomes a default investment thesis – when capital preservation is the end of the conversation.
In that frame, money meant to advance public good can end up doing little more than waiting. A GIC protects principal, but it caps possibility. It limits capital’s role to preservation at the very moment the sector needs every available tool working harder, deeper, and more intentionally.
One practitioner described an organization that had kept $12 million in GICs for years, earning roughly $800,000 over five years at prevailing GIC rates. Had that same capital been placed in a pooled investment fund over the same period, the return could have been closer to $5 million. That’s not a rounding error. It is the difference between deferring a program and launching one, between preserving capital and putting it to work.
Avery traces the governance pattern that produces this: “Overly conservative governance is part of this issue. CEOs who do not understand or care about investments are part of this problem. And they delegate the decision-making to their finance people or to financial advisors. And either one of those folks are going to choose the safest, safest, safest route possible.”
Nobody in that chain has been asked what the money should be doing. The result is not negligence; it is something more insidious, a governance knowledge gap dressed up as good stewardship.
As Carl Pelland, portfolio manager at Addenda Capital, puts it, the question was never whether to take risk; it was always about taking the right kind. “Taking bad risk versus good risk, that’s what makes the difference.” Used as a strategy rather than a tool, a GIC manages the wrong risk entirely: it protects against loss while guaranteeing the absence of mission.
The other story the portfolio tells
For the minority of organizations that do hold long-term investment portfolios, there is a second question the sector has been equally reluctant to ask: what are we actually holding?
A long-term investment strategy does not automatically equate to responsible capital stewardship. A standard 60/40 balanced portfolio may look balanced on paper while quietly financing the very harms an organization is working to repair: a mental-health charity exposed to platforms linked to youth-mental-health harms, an anti-poverty organization invested in predatory lending, an environmental foundation holding fossil-fuel producers, an organization supporting refugees with exposure to detention facilities. In those cases, the contradiction is not theoretical. The portfolio is not just sitting apart from the mission; it may be financing the problem.
When I look at what some investors actually hold [in their portfolios], it may go against what their values are.
Carl Pelland, Addenda Capital
The sector is telling two stories simultaneously: one in its annual reports and donor communications, the other, quieter one told by its investment portfolio. For most organizations, those two stories have never been required to answer to each other.
Pelland names the irony of organizations that avoid the question out of fear: “People are afraid of headline risk. Greenwashing criticism of their investment portfolios. But when I look at what some investors actually hold, it may go against what their values are. It’s not just about having an exclusion list and saying it’s done. You need to push it further.” The fear of imperfect progress masks inaction. Organizations worry about being criticized for the portfolios they might build while leaving unquestioned the ones they already hold.
The gatekeeper in the blue suit
Understanding why awareness alone does not fix this requires a frank look at the financial services industry.
Organizations that want to invest differently are often told they cannot – by the very people paid to guide them. Darryl Brown, portfolio manager at Genus Capital Management, knows this dynamic from the inside. Before moving to mission-aligned investing, Brown spent years as an independent investment consultant working directly with clients inside the traditional wealth-management industry. “The role of a financial advisor or wealth advisor can act as a gatekeeper,” he says of that world. When advisors lack the knowledge, mandate, or incentive to explore mission-aligned options, they don’t simply fail to help; they become the barrier between an organization and a more impactful path. “It’s a really brutal and very poorly recognized dynamic in the wealth-management ecosystem,” he says.
The fiduciary misunderstanding is what keeps organizations from pushing back. “You take these same individuals and you present to them something that sounds different, it sounds risky,” Brown explains, “and they go, ‘Oh, we can’t be responsible for this. Put it in GICs and let’s call it a day.’”
The entire wealth-management industry has a tendency to funnel and direct capital to the existing investment solutions.
Darryl Brown, Genus Capital Management
Asking a conventional financial institution to design an investment approach that challenges its existing product suite is, as Brown puts it, a bit like walking into H&M asking for a custom suit. They may show you different sizes. They will not build you something new. At some point, you have to leave the store. “You have to fire your financial advisor,” he says. “Go find somebody else. That’s the missing piece. I think people are ready to hear that message.”
The deeper shift, Brown argues, begins when organizations reclaim ownership of their own capital. “When we re-engage agency of our capital, when we say, ‘This is our money, not my bank’s money, not my financial advisor’s money’ – it’s very scary to do that because people feel the weight and the responsibility.” That weight, he suggests, is not a burden to avoid; it is precisely the governance conversation the sector has been deferring.
Avery knows this dynamic from her own experience earlier in her tenure. “You see a guy in a blue suit and he comes along and pats you on your little head. I asked the question about responsible investing, and they said, ‘Don’t you worry your pretty little head. We’re not going to make money off that.’”
That credentialed dismissal of a legitimate question is not incidental; it is part of the structure. As Brown puts it, “the entire wealth-management industry has a tendency to funnel and direct capital to the existing investment solutions.” There is little incentive to create another pot. The problem is not that charities are asking the wrong question; it is that too often, the advice they receive comes from a business model designed to keep capital exactly where it is.
The equity dimension
There is one more layer compounding the issue: access to better options is not equally available.
To be considered a client worth a truly bespoke investment strategy with a bank’s wealth-management division often requires significant assets, frequently $20 million or more, according to practitioners in the field. A grassroots organization operating on $500,000 a year is not making a bad choice by staying in GICs. It may be making the only choice the system has made available to it. As Avery puts it, “It’s not that the traditional charities want to do harm. They have no choices. Because they don’t have enough money.”
It’s an important distinction. The solution is not simply to tell boards to govern better or charities to make more sophisticated choices. It is to ask the ecosystem of advisors, investment managers, foundations, intermediaries, and philanthropy infrastructure to build access pathways that make better decisions possible at every asset level.
Right now, too much of the responsible-investment conversation is designed for institutions that already have scale. If mission-aligned capital is available only to organizations with large portfolios, then the sector has not solved the problem. It has created another version of unequal access.
A better way is already happening
Inertia is powerful, but it’s not permanent.
For years, boards were discouraged from asking harder questions by the assumption that mission-aligned investing meant sacrificing returns. “Since the inception of our fund in 2018,” Pelland says, “we’ve proven that you can have as good a return as a traditional fixed-income portfolio.” The products exist. The track record exists. What is still catching up is the culture.
Pelland says organizations that have not moved beyond GICs often have not started with the most basic question: how much liquidity do we actually need? “The first conversation is really sitting down and having a thorough analysis of their liquidity needs. There are other ways than GICs that can still be safe investments.” Many organizations discover, when they do this honestly, that a much smaller portion of their assets needs to stay liquid than their current posture suggests.
Beyond GICs and conventional investment portfolios, a whole other world of capital deployment exists – and it is largely invisible to most charity boards. Social finance products offered through credit unions, community loan funds, community bonds, and pooled investment vehicles represent a spectrum of options accessible well below the thresholds that institutional wealth managers require. These are not abstract instruments. They are what makes it possible to finance social enterprises like Purpose Construction, which trains and employs people rebuilding their lives and newcomers entering the trades; to preserve affordable housing through community bonds like those issued by the Ottawa Community Land Trust, keeping rents below market in Canada’s capital; to provide capital to refugee-led enterprises that banks won’t touch but that are already reshaping local economies. These instruments don’t just avoid harm; they fund the change the sector exists to create. And yet they remain at the periphery of most charitable investment conversations, largely unknown to the boards that would benefit most from them.
Pelland describes one investment his firm made in Groupe TAQ, a non-profit manufacturer in Quebec City employing people with physical disabilities. “One of my greatest experiences in finance is meeting those employees. I’ve never seen an employee so happy in my life. You see that it makes a difference.” It required extra work that, as Pelland acknowledges, most managers are not willing to do.
We need to move the investment conversation into the centre of the strategy.
Sharon Avery
As Avery argues, that means moving investment decisions out of the margins of finance: “We need to move the investment conversation into the centre of the strategy. It isn’t this kind of delegated finance function. If we move it to the centre of strategy, we will then have a new lever, a brand-new lever for economic prosperity for a sector that needs every dollar they can capture.”
For most organizations, the path to mission-aligned investing will not be a single dramatic decision. It will be a sequence of better questions: How much liquidity do we truly need? What are we holding? What contradictions are we willing to tolerate? And where can capital begin to move in closer alignment with purpose? The pathway exists. What is missing, too often, is the governance space, advisory support, and institutional confidence to take the first step.
The moment we are in
Canada’s disbursement quota framework is approaching its mandated five-year review next year. That review will likely reopen familiar questions about how much capital should move out the door each year, and whether the current rules are ambitious enough for the scale of need communities are facing.
Those questions matter. But they need to be scaled up.
If the sector debates only the percentage that must be granted, it leaves untouched a much larger question: what is the rest of the capital doing while it waits?
The issue is not only whether organizations are meeting their minimum obligations; it is whether the sector is using every available tool with the seriousness this moment requires. The $101 billion in short-term investments is the balance-sheet expression of pathological short-termism – not a compliance issue, but a governance signal. It asks whether the sector sees capital as something to protect from risk or something to deploy with purpose.
Capital is never just waiting. It sits somewhere. It earns something. It finances something. It either moves with the mission, drifts away from it, or works against it.
The grants are the story we’ve always told. It’s time the portfolio tells its own.
The author is director of transformation and partnerships at Community Foundations of Canada and writes in a personal capacity. Data analysis draws on Canada Revenue Agency T3010 open data, 2023 and 2024 fiscal year. Cohort methodology: Canadian-registered charities holding $500,000 or more in short-term investments, excluding hospitals, universities, and colleges. AI tools were used to assist with data analysis. The author thanks Sharon Avery (Toronto Foundation), Darryl Brown (Genus Capital Management), and Carl Pelland (Addenda Capital) for their generous contributions.
Editor’s note: This article was corrected on July 21, 2026. The non-profit manufacturer in Quebec City that Addenda Capital invested in is Groupe TAQ, not TAC.
