ABOUT THE PROJECT
This Project concerns the creation of a Uniform Informal Public Appeals and Crowdfunding Act recommended for adoption in Canadian provinces and territories. Its focus in on “informal public appeals” an expression meant to distinguish between the fundraising efforts carried out by organized charities and similar bodies on a continuing basis and the kind of informal fundraising with which the proposed Act is concerned. An informal public appeal will usually arise in reaction to a specific event or concern. A familiar example is an appeal for funds to provide relief in relation to a misfortune that has struck an individual, family or community. Other examples are appeals for support for some community cause or activity. Such appeals are frequently led by persons with limited experience in fundraising and in the administration of funds that are the proceeds of the appeal.
Although appeal organizers may not be aware of it, their public appeal is at the centre of a complex web of trust and charity law, much of which is obscure and inaccessible. So long as nothing unexpected arises in the course of the appeal or the administration of the fund this may not pose a problem. However, unforeseen questions can arise. Often these questions can be answered if the organizers have appropriately and clearly recorded the circumstances that led to the appeal and its objects. In reality, however, this is seldom done. Nor does the general law provide a clear legal framework to guide the organizers. This gap may subject them to legal liability or cause the appeal to fail to fulfill its objects.
A recurring issue concerns informal public appeals that result in a surplus. A surplus may occur where more money is raised than is needed to satisfy the objects of the appeal or, sometimes, too little is raised to be of any real use. The law governing the proper way to distribute a surplus is particularly unsatisfactory. This is a reflection of a distinction the law draws between objects of an appeal that are “charitable” and those that are not. This distinction can be highly technical and elusive with the result that some objects that might reasonably be described as “philanthropic” or “benevolent” fail to satisfy the strict legal definition of “charitable”. An example would be an appeal to send an ailing child to an out-of-province hospital for necessary surgery – not “charitable”.
The purpose of the Uniform Informal Public Appeals and Crowdfunding Act is to provide an appropriate legal framework to assist in their creation and administration. It reforms some aspects of the general law to ensure that trust law applies evenly to all appeals; it provides special guidance in relation to surpluses; it contains a list of powers available to the fundraisers to properly administer the fund raised by the appeal; it provides for judicial oversight where appropriate; it recognizes the importance that internet-based crowdfunding platforms have come to play in the conduct of such appeals. Also, set out as a Schedule to the Act, is a simple model trust document that can be adapted to properly document most informal public appeals.