The road to disaster can be paved with good intention, as comedian Celeste Barber learned when the NSW Supreme Court ruled her $50 million fundraiser for victims of last summer’s bushfires could be not distributed as hoped. Is it time to reform charity law?
As comedian Celeste Barber’s online bushfire fundraiser attracted millions of dollars, she told her social media followers: “I’m going to make sure that Victoria gets some, that South Australia gets some, also families of people who have died in these fires, the wildlife.”
One donor wrote online: “I want my money to go to those who lost everything.”
Another wrote: “My family and I donated because we love animals and watching these amazing people surrounding themselves by fires, saving the terrified animals brought tears to my eyes.”
It’s clear Barber’s Facebook fundraiser, which raised $51.3 million for the NSW Rural Fire Service (RFS) at the height of the catastrophic bushfires, was full of hope and good intentions.
But the NSW Supreme Court recently ruled the donations cannot be distributed to other charities, or to interstate fire brigades as Barber had hoped.
“Turns out that studying acting at university does not make me a lawmaker,” Barber said after the decision.
Charity law specialists were not surprised by the ruling, but say it demonstrates the need for reform in a highly complicated area of law.
Jon Cheung, partner at Prolegis, a firm that focuses on advising charities, not-for-profits and philanthropists, says legal practitioners need to raise awareness about the complexities.
“You need knowledge of trust law, charity law, corporate law, fundraising law, contract law and tax law. You can get yourself tangled and it leads to this kind of situation,” Cheung told LSJ.
“I think what surprised people is that you’ve got to go beyond that next step of your hopes and intentions to make sure they can actually be fulfilled by the recipient of the funds.
“When it’s a celebrity fundraising and there’s a lot of people following them, it’s no longer as simple as fundraising for a specific entity. There’s a whole bunch of energy and different people’s hopes and intentions.
“Those are forces for good, but it’s about: how can we raise awareness to ensure we’re channelling the force for good to where it’s actually intended?
“It’s about moving from a hope and an intent to fulfil the cause, and have those things align.”
Barber’s fundraiser, titled “Please help anyway you can. This is terrifying”, clearly listed the Trustee for the NSW RFS and Brigades Donations Fund as the recipient, via the PayPal payment service.
As donations flowed in from around the world, Barber proposed sharing the funds with other charities, but did not change the written terms of the fundraiser. Some donors cast their doubts on the Facebook page, while others seemed to rely on her assurances that their intentions would be fulfilled.
The money was sent to the RFS Fund, whose trust deed stipulates donations can only be used for certain purposes, including firefighting equipment, training and resources.
The RFS Fund trustees asked the NSW Supreme Court to interpret the deed and advise on whether the funds could be shared to help provide relief to people and animals affected by the fires. The trustees also asked whether the donations could be used to support injured firefighters, the families of those who were killed, and to provide additional training and trauma counselling.
While Justice Michael Slattery ruled the money could not be shared among other charities or interstate brigades, he said donations could be used in the other proposed ways.
The judge interpreted the word “resources” in the trust deed to extend to “human resources”.
“The existence of a fund to provide longer term compensation for injuries suffered by firefighters, or to support the families of deceased firefighters is more likely to encourage volunteers,” Justice Slattery said.
“Expenditure to support the process of volunteering to ensure those human resources are available is permissible.”
Darren Fittler, partner at Gilbert + Tobin, who runs the firm’s charities and social sector group practice, said that interpretation of “resources” is very generous, and the best the parties could have hoped for.
“If this was having to interpret the trust deed in a way where there had been fraud, we would have had a different interpretation applied,” Fittler told LSJ.
“But at the end of the day, everyone is just caught in this difficult position.”
Fittler said not many people, lawyers included, appreciate the difficult nature of charity law.
“I think [Barber] would be pretty disillusioned with the system, and maybe some donors would be too.
“It’s a bit like, ‘If it’s so hard to give to a good cause and for it go where it needs to go then I give up’. In Australia, we have a very complicated charity law structure.
“We definitely need some law reform. We need to have every single state and territory in Australia governed by the same fundraising rules.”
Fittler said another way to simplify the sector would be standardised rules around how organisations classified as Deductible Gift Recipients can use their funds.
“Those who are saying the system is at fault are probably right,” Fittler said.
“We can’t blame the person down the road who is pulling out their wallet. You can’t expect them to know all of the details of Australian charity law before they give.
“There’re lots of things that we do every day where we don’t go and unpack all of the law underneath it.”
The Barber judgment may affect the way people approach crowdfunding and celebrity campaigns, Fittler added.
“I think people will be a little bit once bitten, twice shy. I think this will affect celebrities fundraising – people will be a bit cautious, but I think that’s probably a good thing.
“I don’t think it will stop the people at the local markets rattling the tin for the Salvos, or people selling lamingtons for a charity.”