The Legislative Assembly of Saskatchewan has recently introduced Bill 105, The Informal Public Appeals Act. The proposed legislation would provide guidance and rules around public appeals for donations to support a particular purpose, whether charitable or otherwise. An example of such an appeal would be a public collection taken up to support a family whose home has been destroyed and does not have insurance. The rules surrounding such appeals, and the responsibilities of those who collect and administer funds for such purposes, have long been unclear. The proposed Act would provide additional clarity.
The proposed Act applies to public appeals by persons other than qualified donees under the Income Tax Act. Thus, registered charities would not be affected by this legislation.
The proposed Act is divided into three main sections. The first section deals with the nature of the “trust” created by an informal public appeal. It confirms that a fund created from a public appeal is subject to a trust requiring the fund to be used for the purpose communicated in the appeal. It also provides clarity as to the governing law and authority that applies to such a trust. It confirms that such trusts cannot last longer than 80 years, and provides for broad rights to various stakeholders to apply to court to enforce the terms of the trust. Such stakeholders include the trustees, donors, beneficiaries, Attorney General, and any other persons having an interest in the trust.
The second part of the proposed Act deals with the treatment of surpluses and refunds. It is not uncommon for the purpose of a fund created by a public appeal to be completed and for a surplus of funds to remain. The proposed Act would provide for rules around the use of such surpluses. The Act essentially requires that the surplus be distributed for a charitable purpose (in the case of funds with charitable objects) or, in the case of funds with non-charitable objects, for charitable or non-charitable purposes that are consistent with the spirit of the appeal. In some cases, Court approval of a scheme to distribute such surpluses would be required. The Act would also entitle donors whose donations in response to an informal public appeal exceed a threshold amount to receive a refund of a portion of the surplus.
The final section would provide clarity around the duties and powers of trustees of a fund established by a public appeal.
Miller Thomson will keep the readers of this Newsletter updated as this Bill progresses.