If your charity has property that is not used directly for charitable activities or administration, a certain % of the value of that property must be spent each year. Property not directly used in charitable activities or administration could be things like investments, cash in bank accounts or land and buildings.
The value of any building does not have to be included in the calculation if it used for a charitable purpose, for example if it is a church where regular services are held or a school that is used for educational purposes.
If the value of the property that is not used is more than $100,000 then 3.5% of the value of the property must be spent annually by the charitable organization. For public or private foundations if the value is over $25,000 then 3.5% of the value of the property must be spent annually.
Charities can apply for permission to temporarily accumulate funds to make a major purchase. Property that the charity is given permission to accumulate is not included the calculation of the annual spending requirement.
For more information see the Canada Revenue Agency's information on the annual spending requirement.