Recently, a working group of the Uniform Law Conference of Canada released a consultation paper on a Uniform Informal Public Appeals Act (the “Act”). The Uniform Law Conference of Canada considers areas in which provincial and territorial laws would benefit from harmonization and develops “uniform statutes”, which it recommends for enactment by all relevant governments in Canada.
The Act would govern appeals to the public for donations by individuals or groups other than appeals by registered charities or corporations. The Act would provide rules to govern the use of the funds, and surplus funds where the appeal lacks its own governing documents on the subject.
The consultation states:
Appeals to the public for donations are a feature of everyday life. Appeals that occur on a regular basis are usually conducted by registered charities and other organizations having the benefit of experienced fundraisers and professional advice. But spontaneous appeals occur frequently as well, especially after a disaster like a fire or a flood. They may follow publication of a news item about a family or individual in some sort of distress. Campaigns on behalf of individual children requiring specialized medical treatment elsewhere have also become familiar examples of this kind of fundraising.
Unlike the regular campaigns of established fundraising organizations, spontaneous appeals are often begun by a single person or a small group. Rarely is an organization or foundation created at the beginning to manage the fund. The fundraisers simply issue a message asking for donations and, possibly, open a bank account to hold the fund. The help of the press and the electronic media may be enlisted to publicize the appeal. The emergency that gives rise to the appeal may have substantial emotional impact, and the generosity of the public’s response is sometimes astonishing. The amount donated may go well beyond what is required to meet the original need. Sometimes the appeal turns out to have been unnecessary, because the need is met through governmental or other sources. Substantial amounts may already have been collected, however. Occasionally the opposite situation arises. Too little may be raised to be of any use at all.
In either case, the fundraisers may be left with money on their hands. This does not cause any difficulty if the terms of the appeal indicate clearly how any surplus or unused funds will be handled, and if donations are made with that understanding. But in the heat of the moment, the fundraisers may not have thought of the possibility of a surplus or unusable donations.
The Act is well drafted and solves several issues regarding surplus in a cost effective manner. For example, the Act provides that where a surplus is less than $10,000, the trustees may distribute it to listed entities rather than applying to court to approve the scheme. Since court fees could eliminate a surplus of this size, this provision is a sensible solution. The Act also eliminates the common-law requirement to demonstrate that donors had a general charitable intent before surplus can be used for another purpose. Instead, in order to receive a refund of a donation, a donor must request a refund in the event of surplus at the time the donations made. This provision eliminates the onerous requirements to track down donors and notify them of surplus. When donors receive a refund, the Act returns a pro rata share of the surplus and thus eliminates any dispute over the amount to return based on an analysis of whether a particular donor’s funds were spent on the project.
This Act would provide a sensible framework to govern these public appeals. While outside the scope of this consultation, some of these provisions in respect of surplus donations would also simplify charity law and should be considered for incorporation in legislation applicable to charities.
The consultation paper can be viewed at: http:/ulcc.weebly.com
Currently, the working group is seeking comments on the consultation paper until September 7, 2010.
