You’ve received charitable solicitations, both directly to your doorstep and indirectly through the media. Often it is clear that the fundraising is for the general charitable purposes of the charity to use as they decide.
More often, though, to grab our attention and encourage us to open our wallets, a charity solicits donations for a specific project or an urgent need: construction of a new building, research into a rare and intractable disease, summer camp for kids with cancer, the immediate needs of a community dealing with the devastating impacts of fire or flood.
When the language of a fundraising campaign is razor-focused on a specific project, the charity may have unwittingly created a restricted charitable purpose trust.
The terms of a charitable donation are fixed at the time it is given. Without a charity reserving rights to alter a restricted purpose if it can’t be carried out or is no longer in its best interests to carry out, the charity cannot unilaterally do so, and it must persuade a judge to approve an amendment to the purpose. Going to court to solve these problems is time-consuming, expensive, and the outcome may not be what a charity hoped for.
The law by which courts are bound is very restrictive. A court is ordinarily able to approve changes to the purpose only if it is impossible (not at all possible) or impracticable (practically impossible) to carry out the original purpose, and such changes must be as near as possible to the original purpose.
Recent case law1affirms this restrictive law.
The Boys and Girls Club of Victoria wanted to sell a camp property that had become underutilized and no longer cost efficient to run or maintain, and it wanted to use the resources to support its more popular non-camp programs that were oversubscribed with waiting lists.
The property was built with funds raised through a public campaign beginning 20 years ago for the specific purpose of the camp, and maintained with an endowment fund for the same purpose. The court considered the fundraising materials as relevant to the determination of whether the funds were held as specific charitable purpose trusts. The materials described clear purposes for the property and a vision for the funds raised, but had no reference to the charity’s general charitable purposes2.
The court rejected the Boys and Girls Club’s requests. Their budgetary concerns were not sufficient reasons to sell the property, and the proposed use of the proceeds was not as close as possible to the original purpose.
There are important policy reasons behind this law. It protects donors’ charitable directions, and it ensures gifts are used for the purpose given. However, in some cases, this leads to harsh outcomes for charities: having to use funds in ways that are no longer in their best interests nor their highest needs. Charities, as an important part of a benevolent society, need to be able to respond to the changing needs of the constituencies they serve and act in the best interests of their charitable objects.
In light of the current law, it is important that charities implement best practices for fundraising: materials that are sufficiently broadly worded to retain flexibility to address unexpected and unanticipated situations, or that explain what they will do if they can’t use all the funds they raise for the discrete and specific purpose for which they appear to be campaigning; appropriate gift agreements; and policies that support these. These safeguards are as important for temporary singular activities as they are for endowments and other long-term use property.
- Boys and Girls Club of Greater Victoria Foundation v British Columbia (Attorney General), 2024 BCSC 442 (CanLII). | ↩
- Stet, paragraph 8. | ↩