The Saskatchewan Court of Queen’s Bench has ordered money to be distributed from the Humboldt Broncos Memorial Fund Inc. to the victims and families impacted by the shocking bus crash in which 16 members of the team were killed and 13 were injured. The Court declared that the funds raised from the GoFundMe campaign organized by the Humboldt Broncos Memorial Fund Inc. were being held in trust for the beneficiaries of the campaign and approved an interim payment of $50,000 to each of the 29 victims or their families. The Court further approved the establishment of an advisory committee to determine how the rest of the money should be distributed (Case reference number QBG 1038 of 2018).
The orders issued by the Court were the result of the application of Saskatchewan’s The Informal Public Appeals Act (the “Act”). The Act was enacted in January 2015 in response to a consultation paper published by the Uniform Law Conference, a national body that proposes changes to provincial and territorial laws (and where appropriate federal laws as well) to increase harmonization and develop uniform statues across the country. The Uniform Law Conference recommended that all provincial and territorial governments enact legislation on informal public appeals for donations and proposed a Uniform Informal Public Appeals Act. The Uniform Law Conference’s consultation paper provided the following justification for implementing legislation to govern these often spontaneous fundraising campaigns:
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 emergency that gives rise to the appeal may have substantial emotional impact, and the generosity of the public’s response is sometimes astonishing.
(The consultation paper and final version of the Act can be found at http://www.ulcc.ca/en/home-en-gb-1/621-uniform-acts-new).
Saskatchewan was the only province to actually introduce legislation based on these recommendations.
The Act governs all appeals to the public for donations by individuals or groups (initiated after the coming into force of the Act) other than appeals by “qualified donees”. “Qualified donees”, within the meaning of the Income Tax Act (Canada), means registered charities and certain other entities that can issue donation tax receipts. A public appeal is an informal public appeal message directed at the public generally (or at a section of the public) requesting donations to, or indicating that the proceeds of any sale, competition, lottery, raffle, entertainment, service or event will be applied towards, a fund that is intended to be used for a specified object, whether charitable or non-charitable. The Act provides rules on the use of the funds raised by such an appeal, and any surplus funds that cannot be used for the object of the appeal, where the appeal does not have governing documents on these issues.
While the Saskatchewan government could never have anticipated that the tragedy resulting from the Humboldt crash would be the Act’s first case study, the public’s donation of over $15 million in response to the crash is the precise scenario that the Act was intended to address. The Act will provide guidance and oversight for these funds, which otherwise would not have been subject to any rules.
That said, the Act excludes public appeals by “qualified donees” only. This narrow exception may have a broader impact than originally anticipated in that other entities in the philanthropic sector (for example, non-profits and groups of individuals raising money informally on behalf of a registered charities) are subject to the provisions of the Act, and potentially court oversight of the distribution of funds or surplus from a fundraising campaign.
Given the Act is receiving recognition as a result of the Humboldt Broncos’ case, it is expected that similar legislation may soon be enacted in other provinces. Non-profits and other entities or individuals raising money should consider the potential implications of being subject to such legislation. Miller Thomson’s Social Impact Group can advise on all aspects of fundraising law, and if you are unsure whether your fundraising campaigns are affected by legislation, we would be pleased to assist.