The space quota for a parent organization must specify a limit that is equal to or greater than the sum of its children organizations and the parent organization itself.

For example, if parent a organization has two children organizations and each organization requires a space quota of 5 GB each then the parent organization has to have at least 15 GB set for its space quota. 

Child organization #1 = 5 GB

Child organization #2 = 5 GB

Parent organization = 5 GB

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Sum of children and parent = 15 GB