Representing a collective $42 billion in 2019, these 14 charitable foundations are among the largest in the country, founded by some of the biggest names in Canadian business. From 2018 to 2019 alone, their collective investable assets grew a whopping 43 per cent, from $29.3 billion to $41.2 billion. But in 2019, none of them met the Canada Revenue Agency’s minimum threshold for running charitable programs and making gifts to other charities.

Some of them came close, like the Molson Foundation, which was just under $28,285 short of the 3.5 per cent minimum. Others missed it by a mile, like Lululemon founder Chip Wilson’s Wilson 5 Foundation, which spent just over $142,000 on charitable activities in 2019 while reporting the previous two years’ average value of its investable assets—the denominator the Canada Revenue Agency uses to calculate the disbursement quota—as $96.8 million.

The Logic reached out to all 14 foundations for comment. Of those that got back to us, none denied they gave away less than 3.5 per cent in 2019. But five of them—the Asper Foundation, the Bruce H. Mitchell Foundation, the ​​Fondation Lucie et André Chagnon, the Molson Foundation and the Audain Foundation—told The Logic they believed they were in compliance with the law because they had spent more than the minimum in some of the previous five years. If a foundation falls short of meeting the disbursement quota in any given year, the CRA lets them carry forward any spending above the minimum from the preceding five years, or back in the following year, and count it against the shortfall.

It’s a loophole. The trouble, however, is there’s no standard way it’s applied. “There is total confusion about how private foundations use carry-forwards,” said Kate Bahen, managing director of the charity-research organization Charity Intelligence, in an email to The Logic. Her organization is among those calling for “basic transparency” about how foundations use the exemption.

The Logic used two different accounting methods to check whether these 14 large foundations, which in 2019 failed to meet the minimum charitable payout rate of 3.5 per cent, met their legal obligations thanks to the carry-forward loophole. In one method, we added up the shortfalls and excesses in the five previous years to see if they cancelled out the current year’s; in the other, we drew from excesses as if they were savings accounts, adjusting the balance as we went so shortfall years couldn’t draw on the same money twice.

Three of them—the Audain Foundation, the Bruce H. Mitchell Foundation and the Molson Foundation—had enough excess spending in the five previous years to meet the disbursement quota under both accounting methods. Seven of the 14 met the disbursement quota using one method but not the other, while four failed to meet it using either method.

The Asper Foundation and the ​​Fondation Lucie et André Chagnon, which told The Logic they believe they were in compliance with the disbursement quota in 2019 thanks to excess spending in previous years, were among the seven foundations that met the disbursement quota using one accounting method, but not the other.

Moses Levy, executive director of the Asper Foundation, told The Logic that an external accounting firm had calculated its carry-forwards. Claire Neveux, a spokesperson for the ​​Fondation Lucie et André Chagnon, said the foundation uses the CRA’s official method, but did not outline what the foundation believes that is.

The Green Municipal Fund, a federally funded foundation held in trust by the Federation of Canadian Municipalities to fund cities’ sustainable projects, had almost $452 million in investable assets in 2019, giving away just $2.3 million. FCM spokesperson Véronique Breton said the organization believes it is in compliance with its disbursement-quota requirements because all of its assets are used for its charitable purpose of funding municipal projects.

Bruce H. Mitchell, chair and chief executive of the investment and holding management company Permian Industries, was the only representative of the 14 foundations to agree to an interview. The Bruce H. Mitchell Foundation was one of the four foundations that met its disbursement-quota obligations in 2019 according to both accounting methods, thanks in part to a large gift it made to Queen’s University announced in 2017 that allowed the school to expand its research into artificial intelligence.

Mitchell said the carry-forward loophole is essential to foundations like his that want to plan large gifts in advance.

“The purpose of the foundation is to do something of significance,” he said. “You do something of significance when you target a big dollar amount at one thing.”