The complications encountered by comedian Celeste Barber’s massively successful bushfire fundraiser are an example of what can happen when good intentions collide with the legal concept of charitable purpose. Here are two lessons that all charities can learn from the saga.
Background to Barber’s fundraising blitz
Barber’s extraordinarily successful bushfire fundraiser on Facebook broke records, raising more than $51 million. The fundraiser was accompanied by this text:
“Want to join me in supporting a good cause? I'm raising money for The Trustee for NSW Rural Fire Service & Brigades Donations Fund and your contribution will make an impact, whether you donate a lot or a little. Anything helps. Thank you for your support.”
As with all Facebook fundraisers, donations went to the Paypal Giving Fund, a public ancillary fund set up to receive and distribute funds to deductible gift recipients.
Given the large amount of money raised and the relatively limited purpose of the NSW Rural Fire Service & Brigades Donation Fund (the RFS Fund), donors and media then began asking how the money was going to be distributed and to whom. There were suggestions (including from Ms Barber) that the funds would be distributed across a range of different organisations in various states and territories.
At this point Barber learned, through some “pretty long and pretty boring conversations”, that things were not so simple. The RFS Fund trust deed prevents money raised from going to anyone other than the RFS. Once the funds go to the RFS, they can’t (easily) be distributed by the RFS to bushfire relief organisations, such as those providing housing or services to affected families.
Other commentators have proposed solutions for a broader distribution of funds. Here we focus on the principles at play and the key lessons for charities.
Lesson 1: What you say when you raise funds constrains what you can do with the funds
The first lesson for charities, individuals and organisations who fundraise is this: be careful when articulating your fundraising purpose, and how you intend to spend the money.
Some donors have asked why PayPal doesn’t simply distribute the funds raised to a number of different organisations. However, PayPal can’t do this without potentially breaching the law. The text that accompanied Celeste Barber’s Facebook fundraising page clearly stated that the money raised would go to the RFS Fund. The Facebook page also listed the RFS Fund as the charity the fundraiser was “benefitting”. Terms on PayPal’s website state that it retains exclusive control over how funds are distributed, but overall it was very clear to donors that money raised would go to the RFS Fund, not to other organisations or funds.
Lesson 2: A charity’s purpose constrains how it can use donations
The second lesson is for charities: You can spend donated funds only to further your charity’s purpose.
The RFS Fund’s trust deed states that the fund’s trustees must use the funds:
“to or for the Brigades in order to enable or assist [RFS] to meet the costs of purchasing and maintaining fire-fighting equipment and facilities, providing training and resources and/or to otherwise meet the administrative expense of the brigade which are associated with their volunteer-based service activities.”
Supporting brigades is important for bushfire preparedness, but given the amount raised, donors (including Ms Barber) wanted to provide broader relief – including to wildlife and affected families. The restrictions of the RFS Fund will make this very difficult to achieve.
This is not a failure of charity law. Being purpose-driven (rather than profit-driven) is what separates charities from the for-profit sector. Purpose helps donors know what they are supporting. It also provides charity boards with a framework to guide their decisions. There are good reasons why charities can’t stray outside their purpose.
For charities, this is a reminder to be familiar with your purpose (usually set out in your governing document), and make sure your resources are directed towards it. As lawyers, we often engage with charities that have good intentions in wanting to support a cause or project outside their usual activities. All too often, however, the charity’s focus is on the value of the cause or project, not on whether it is consistent with the purpose of the charity.
The Celeste Barber fundraiser is a heartening example of generosity in the face of disaster, but it also highlights the importance of careful fundraising communications and awareness of charitable purpose. Charities should ensure they understand these principles.
This article was first published on the Moores website.