Public Appeals

Written by: Albert Oosterhoff. Originally posted to the WEL Blog on: July 6, 2018.

People have always raised funds by public appeal for charitable and non-charitable objects, but with the advent of social media fundraising for such purposes has become more common and convenient. The reason for the appeal is typically to raise funds to provide relief to people who have suffered a disaster. The purpose can be charitable if it satisfies the requirements of a charitable purpose, or it can be a non-charitable purpose. The reason may also be to provide relief for specific individuals, which is neither a charitable nor a non-charitable purpose. For example, the fundraisers may seek funds to help a family when the breadwinner is killed or when the family’s house is destroyed in a fire.

Such appeals are wonderful examples of people helping their neighbours. But they often create many legal problems, because the fundraisers typically fail to make provision for what should happen to the funds if insufficient moneys are raised, or if too much money is raised and there is a surplus. In the latter case the question arises what you should do with the surplus. If the purpose is charitable the law has mechanisms in place to deal with the matter in the form of a cy-près scheme, but not if it is non-charitable or if it is for the benefit of identifiable persons or class of persons.

Bowman v. Official Solicitor, commonly referred to as Re Gillingham Bus Disaster Fund[1] provides a good illustration of the problem. A number of marine cadets were killed or injured when a bus drove into their marching column on December 13, 1951. A fund was collected through public appeals by the mayors of three towns to cover funeral expenses, help the injured, and “for such worthy cause or causes in memory of the boys who lost their lives as the mayors may determine”. Insurance covered most of the expenses associated with the first two purposes. But a large surplus remained and the court held that the third purpose was non-charitable, so that part of the trust failed. The question then arose what should be done with the surplus moneys. In such circumstances the doctrine of resulting trusts is called in aid and so the court concluded that the money was held on resulting trust for the donors. However, many of he donors gave anonymously and therefore most of the moneys could not be returned to them. So the moneys were paid into court, where they sat for 35 years, when they were finally distributed among 17 survivors of the accident.[2] Clearly, this an undesirable result and revealed an unfortunate lacuna in our law, but nothing was done about it until 2011.

The Uniform Law Conference of Canada addressed the problem in the Uniform Informal Public Appeals Act(2011).[3] The Act does not apply to a fund raised by a body that is registered with the Canada Revenue Agency as a charitable organization or other qualified donee. However, it does apply to funds raised otherwise for charitable or non-charitable purposes, or for persons. Section 71 of the Uniform Trustee Act[4]contains a “short-form” version of its provisions, to be enacted by a jurisdiction that does not enact the Uniform Informal Public Appeals Act. New Brunswick adopted many of the provisions of the Uniform Trustee Act when it enacted its new Trustees Act in 2015.[5] However, it did not enact the equivalent of s. 71, nor the Uniform Informal Public Appeals Act.

The Uniform Informal Public Appeals Act provides that moneys raised by a public appeal are held in trust for the benefit of the object for which the funds were raised and that such a trust is enforceable, even if it would not be enforceable under the general law. The Act permits fundraisers to create the trust expressly and encourages them to do so by providing a sample trust in the Schedule to the Act. It also encourages them to make provision for the disposition of any potential surplus and they can do so in the trust. They can also make various other provisions in the trust. If the fundraisers do not create a trust expressly, the Act creates one automatically. In that case the trustees are the persons who manage and control disbursement of the fund. The maximum duration of a fund for a non-charitable object is 80 years. If the fundraisers do not make provisions for dealing with surpluses and refunds the Act includes default provisions for these and other purposes. It also makes provision for the making of a scheme to distribute surpluses.

The Uniform Informal Public Appeals Act has been adopted in Saskatchewan by the Informal Public Appeals Act.[6] It is of particular significance that this Act has been called in aid in circumstances that are eerily reminiscent of the facts in the Gillingham case outlined above. A horrific traffic accident occurred in Saskatchewan in 2018, when a tractor-trailer collided at a highway intersection with a bus carrying the members of a junior hockey team from the Town of Humboldt. Sixteen of the players were killed and 13 were injured. A resident of the Town began a fundraising campaign, using the GoFundMe platform. As typically happens, the terms of the appeal on the platform were skeletal: “Please help us raise money for the players and families affected. Money will go directly to families to help with any expenses incurred.” Much to everyone’s surprise, some $18 million dollars was raised in a short time and the appeal was closed. The fundraiser and the team decided to apply to the court for an order approving distribution of the fund under the Act, which permits such applications when the terms of the appeal make no provision for the disposition of the fund. A committee has been struck to develop a scheme to be submitted to the court.[7]

In the interest of full disclosure, I served as one of the members of the ULCC working group that drafted the Act and reported to the ULCC. It is very gratifying to me to have had a hand in drafting the Act and to see it now being used with good effect in Saskatchewan. Thus the Act can prevent a repeat of the egregious delay of getting the funds raised by an appeal to the people who need it, as happened in Gillingham.

Clearly legislation of this kind will have a large impact in the area of fundraising moneys by informal public appeal. It will also have an impact in the area of non-charitable purpose trusts by recognizing an additional form of such trusts. The Act should be adopted by all Canadian jurisdictions and made widely known to the public, so that fundraisers can make its provisions from the outset.

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[1] [1958] Ch. 300, [1958] 1 All E.R. 37, affirmed [1959] Ch. 62, [1958] 2 All E.R. 749 (C.A.).

[2] See the 4 December 1993 issue of the Guardian, which contains a report on the distribution. See also the press release of the Treasury Solicitor of 1 September 1993, which stated that the basis for the distribution was that the court had declared the fund to be bona vacantia. Consequently, the payments to the survivors by the Crown were made ex gratia.

[3] https://www.ulcc.ca/images/stories/2011_pdf_en/2011ulcc0011.pdf. For the civil law version, see https://www.ulcc.ca/images/stories/2012_pdfs_eng/2012ulcc0016.pdf.

[4] https://www.ulcc.ca/en/uniform-acts-new-order/current-uniform-acts/633-trusts/trustee-act/1255-uniform-trustee-act

[5] S.N.B. 2015, c. 21.

[6] S.S. 2014, c. I-9.0001, in force 1 January 2015.

[7] See Alex McPherson, “Donations continue for Humboldt Broncos after GoFundMe closed, total now around $18 million”, Saskatoon StarPhoenix, https://thestarphoenix.com/news/local-news/tent-broncos-fundraiser-update.