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 said that the funds raised could be used for a variety of causes, including Wires and the Red Cross; however, at all times the recipient of the funds was stated on the donation page 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 the 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 the name of the Trust, they then 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 that is registered with the Australian Charities and Not-for-profits Commission, and is bound by the terms of its “governing document” (in this case, a trust deed).This trust deed outlines how the Trust must be operated, including outlining the purpose for which all funds in the Trust can be used.
In the case of the Trust, the terms of its trust deed are very restrictive, with its power largely limited to applying the fund assets for: purchasing and maintaining fire-fighting equipment and facilities; providing training and resources; and meeting the administrative expenses of the RFS. The trust deed does not give any power to the trustee to transfer the fundraised funds to any other charities or use them for anything other than the stated purpose.
So couldn’t the RFS just change the purposes outlined in the trust deed?
Alas, no. The trust deed incudes 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 as to how it could use the fundraised funds, including confirmation as to whether the funds could be distributed to other charities to assist in providing relief to persons and animals affected by bushfires. The court’s findings were handed down on 17 May 2020.
In short, the Court found that the trust deed did not permit money being given to other states’ rural fire services, or to any other charities; however, it did permit the funds being distributed to injured firefighters and the families of those firefighters who died while firefighting, and used for mental health training and resources, and trauma counselling. While the RFS had wanted to assist those other charities and rural fire service brigades, the trust deed simply did not permit such action being taken.
The fundraiser was a resounding success; however, there are some valuable lessons to be learned from this:
If you are fundraising, always check the governing document for the charity you wish to support to ensure that the funds will be able to be used for the purposes you intend and advertise. If a charity is registered with ACNC, governing documents are available on the website: https://www.acnc.gov.au/.
If you are donating, you may also wish to check the charity’s governing document to see that the funds you donate can be used as you wish them to be.
If you are involved in a charity, you should review its governing document to see that the activities undertaken by the charity are reflected in the document. If they aren’t, then consider whether the document can be amended so that the purposes can be varied to reflect the true activities. Jenkins Legal Services is available to assist you in relation to this.
If you need assistance in relation to not-for-profit and charity matters, please give Jenkins Legal Services a call on 02 4929 2000 or email firstname.lastname@example.org.