News

Taking the fun out of fundraising

27.05.2020

In the wake of the 2019/20 Australian Bushfire crisis, comedian Celeste Barber took to Facebook to launch her NSW RFS bushfire fundraiser, with the intention and constant reassurance that the funds would be going to those victims who needed it most. A sentiment that was widely shared by those people who donated. It concluded with more than AUD $51 million being donated from approximately 1.3 million people.

Crucially, the Facebook page for the fundraiser specifically stated that it was a “Fundraiser for The Trustee for NSW Rural Fire Service & Brigades Donations Fund”. This declaration acted to effectively limit the allocation of the funds, so that they could only be donated to the NSW RFS’s Trust Account. This in turn acted as a limitation on the ways that those funds could be spent by the RFS, because the funds could only be spent for the RFS’ Trust Deed designated purposes.

Yesterday, the New South Wales Supreme Court issued its judicial advice on certain legal questions concerning the expenditure of these funds,[1] following a request for advice from the Trustees.

Barber’s close shave – the NSW Supreme Court’s decision

Given the undoubtedly narrow purposes within the NSW RFS’ charitable trust the decision of the Supreme Court is hardly a legal surprise to many. Yet, it also remains a sentimental disappointment, given the impassioned way in which the global community rallied behind Australia’s causes.

Among other issues, the Court’s decision made it abundantly clear that the terms do not extend to allowing for the money to be donated to other charities, interstate rural fire services or animal welfare charities. Perhaps in view of the public sentiment surrounding this decision, the Court decided to go further than this, and explicitly stated that statements made by Ms Barber and the public did not bind the Funds.

Such issues are also important to consider in the wake of the Bushfire crisis after it similarly became apparent that funds donated to the Red Cross’s Disaster Relief Fund were intended to be kept by the Red Cross for use at a later date.[2] Once money is donated to a charity, simply changing your mind about what you want that money to be used for, has no legal effect.

Taking the fun out of fundraising?

By asking or collecting donations to help an organisation, individual or a cause, people could be fundraising, and be at the behest of a complete new set of rules and regulations. This is not a simple and straightforward area of law and failure to comply does attract significant penalties. It is further complicated by the differences between each Australian State and Territory. Through non-compliance individuals and organisations risk attracting heavy fines.

These regulations govern the collection of the fundraising monies and their distribution thereafter. They are designed to facilitate trust and transparency as a key part of the fundraising process and to ensure that money ostensibly raised for a charity is actually donated to that organisation.

Fundraising is defined differently under the laws of each State. Generally, an activity or event will be a fundraising activity if it is being conducted for a “charitable purpose”. This can be anything that involves:

  • asking for or collecting donations to help an organisation, individual or cause;
  • selling goods, where some or all of the profits will go towards helping an organisation, individual or a cause; or
  • holding an event to raise money for an organisation, individual or cause.

Broadly, the following activities will not be fundraising:

  • asking a member of an organisation to pay a membership fee;
  • an appeal by an organisation to members of an organisation;
  • an appeal to Commonwealth, State or local governments; and
  • an appeal exclusively among persons sharing a common employer or place of work.

Today, most fundraisers and appeals for donations will be advertised or hosted online, such as Ms Barber’s. If hosted online, then the fundraiser is practically taking place in every State and Territory in Australia and it will then need to comply with each State or Territory’s individual requirements. These requirements may be as simple as asking a charity for an authority to fundraise on their behalf or it may necessitate an additional application to a state authority.

Moreover, if you are using a competition for this purpose, such as a lucky draw prize or a raffle, then you enter into another regulatory realm where additional requirements and permits may apply.

Most importantly, in the current COVID-19 climate, people are continuing to raise money for different causes every day. Thus, the RFS Trust decision acts as a timely reminder of the complicated and nuanced laws that surround charitable trusts, and the obligations that accompany hosting or running events for charities and not-for-profit organisations. It also serves as a warning, that these laws should not be ignored; lest the hard-earned funds are not donated towards your originally desired objective.

This memo presents an overview and commentary of the subject matter. It is not provided in the context of a solicitor-client relationship and no duty of care is assumed or accepted. It does not constitute legal advice.

© Moulis Legal 2020

[1]      In the matter of the New South Wales Rural Fire Service & Brigades Donations Fund; Application of Macdonald & Or [2020] NSWSC 604 (“the RFS Trust decision”).

[2]      See for example, https://www.theguardian.com/australia-news/2020/jan/24/australian-red-cross-defends-spending-10-of-bushfire-donations-on-office-costs