Uncharted Waters: Donor rights in Canada
Update: June 12, 2018 Justice Morgan denied a donor’s appeal for investigation into how a charity spent money in Faas v. CAMH.
Learn more: Charity Intelligence’s review: https://www.charityintelligence.ca/research-and-news/ci-views/33-donor-giving/265-donor-legal-rights-to-be-seen-not-heard Donor Legal Rights, To be seen, not heard.
In Canada, Carters Law believes a gift agreement is legally enforceable on the charity when the gift involves restrictions. Canadian donors can restrict their gifts by time or purpose. Donations can go towards a specific purpose, like a building campaign, a disaster appeal to a specific country, or a program.
Ontario’s laws on abusing restricted gifts are very severe. Charity directors are responsible for fulfilling the donor restrictions. If the court finds restricted money was misspent, the directors of the charity being found in breach of trust, can be fined, and even face a maximum of a year in jail.
Unlike in the US where recent court decisions have upheld donor intent, Canada lacks court decisions. With donors reluctant to take charities to court, or unable to pay what can be exorbitant legal fees challenging goliath universities and hospitals, Canadian case law in the charity sector moves at a “glacial pace”. Canadian public opinion strongly support donor rights. This leaves a gap between public expectations and case law.
We may have the opportunity to see if Canadian donor rights are protected, or are all bark and no bite. There is a current challenge to donor rights preparing for trial. The Faas Foundation is currently challenging CAMH Foundation about a restricted donation covered in the media.
Faas is not the only donor upset with CAMH Foundation’s transparency on how it specifically spends restricted donations. David Bird donated $400,000 to CAMH Foundation in 2012. Bird says his gut instinct was to stop payment partway through his commitment, if it had not been made in memory of his 22-year-old son, Graeme. “It’s the reporting that hasn’t been forthcoming. I couldn’t have told you what the money has been spent for.”
Experienced philanthropic advisor, Doug White has seen “misappropriation” of funds from donor restricted gifts many times. His books on giving list many examples.
text-align: right; Doug White
Traditionally donors have not had remedies. This is changing in the US. The Garth Brooks case in 2012 saw a jury reimburse the original donation and also award damages.
To learn more about donor legal rights:
https://www.charityintelligence.ca/research-and-news/ci-views/33-donor-giving/266-abusing-donor-intent-the-robertson-s-epic-lawsuit-against-princeton-university-by-doug-white Abusing Donor Intent: The Epic Lawsuit between the Robertson Family and Princeton University – a review of Doug White’s book
https://www.charityintelligence.ca/research-and-news/ci-views/33-donor-giving/589-lessons-learnt-the-hard-way-doug-white-s-recommendations-for-donors-in-making-restricted-gift Lessons learnt the hard way: Doug White’s recommendations for donors in making restricted gifts
https://www.charityintelligence.ca/research-and-news/ci-views/33-donor-giving/265-donor-legal-rights-to-be-seen-not-heard Ontario court decision 2018 To be seen, but not heard
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