Following the catastrophic bushfires over Summer, many charities and not-for-profit organisations called for donations to help those affected. The most famous of these was Celeste Barber’s record-breaking Facebook fundraiser for the NSW Rural Fire Service (RFS) that ended up raising approximately $51 million.
Who could receive the funds? During the campaign, Celeste stated that funds raised could be used for a variety of causes, including Wires and the Red Cross. However, on the donation page, the recipient of the funds was consistently stated to be the RFS’s fundraising body the “NSW Rural Fire Service and Brigades Donations Fund” (“the Trust”). As such, all of the raised funds were paid to that Trust.
So where’s the problem? Couldn’t the RFS just accept the funds and distribute them to other charities? In short, no. When Celeste nominated the Trust as the beneficiary and funds were raised in its name, then they had to be paid to that Trust. The issue then arose as to what the Trust could use those funds for, and also what power the Trust had to distribute those funds elsewhere.
The Trust is a separate entity and is bound by the terms of its “governing document”; in this case, a trust deed. This deed states how the Trust must be operated, including outlining the purpose for which all funds can be used.
The RFS trust deed is very restrictive, limiting its powers to using raised funds for purchasing and maintaining fire-fighting equipment and facilities, providing training and resources, and RFS administrative expenses. The trust deed gives no power to the trustee to transfer funds to any other charities or use them for anything other than the stated purpose.
Couldn’t the RFS just change the purposes outlined in the trust deed? – Alas, no. The trust deed includes a clause that expressly states that “no amendment may be made that would, or would be likely to, change the Purpose of the Trust”.
Off to Court – The Trust applied to the Supreme Court to receive clarity on how it could use the fundraised funds, including confirmation on whether they could be distributed to other charities to assist in providing relief to persons and animals affected by bushfires.
The Court found that the trust deed did not permit money being given to other states’ rural fire services or any other charities. However, it did allow funds being distributed to injured firefighters and the families of firefighters who died on duty; also for mental health training and resources, and trauma counselling. While the RFS wanted to assist other charities and rural fire service brigades, its trust deed simply did not permit this.
The fundraiser was a resounding success, but it also provided some valuable lessons.
When fundraising, always check the governing document for the charity you wish to support to ensure that the funds can be used for the purposes you intend and advertise. If a charity is registered with ACNC, governing documents are available at www.acnc.gov.au
If you are donating, you may also wish to check the charity’s governing document to see how donated funds can be used.
If you are involved in a charity, you should review its governing document to see that the charity’s activities are reflected in the document. If not, then consider whether the document can be amended so that its purpose and activities can be aligned.
If you need assistance concerning not-for-profit and charity matters, please give Jenkins Legal Services a call on 4929 2000 or email email@example.com