ABSTRACT Foundations exist to support charitable causes over an extended period, allowing investment returns to improve social conditions. In many countries, this is regulated by a required payout percentage each year. The existing research, overwhelmingly from the United States, has examined foundations' regulatory compliance under the static conditions of the longstanding rule of distribution of 5% of assets annually. Drawing on regulatory behavior theory, this research takes advantage of the rare opportunity presented by a decrease in the disbursement rate in Canada to determine whether foundations altered their behavior and assesses the factors associated with differential responses. This facilitates the assessment of whether a mandated disbursement quota functions as a floor, a norm, or is irrelevant in guiding payouts, which will assist practitioners and policymakers in assessing the policy relevance for foundation compliance or over‐compliance.
Grasse et al. (Mon,) studied this question.