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08 June 2020

Online fundraisers and social media campaigns: Not as simple as clicking donate

Social media fundraisers can be useful fundraising tools for charities. However, as comedian Celeste Barber (and the whole world) recently found out, they can also result in an array of unintended complications.

Social media fundraisers can be useful fundraising tools for charities. However, as comedian Celeste Barber (and the whole world) recently found out, they can also result in an array of unintended complications.

Ms Barber’s recent request for donations to support those affected by bushfires in New South Wales emphasised the importance of doing your due diligence before establishing or donating to a fundraising campaign.

When social media donation campaigns go wrong

Ms Barber garnered significant attention for her support via social media for donations to the Trustee for NSW Rural Fire Service & Brigades Donations Fund (RFS).

The fundraiser generated a staggering $51 million in donations from more than 1.3 million people around the world. Ms Barber stated that the funds donated would be going to bushfire victims. Some donors also expressed a hope that donations could be shared with other charities.

However, when it came time to distribute the funds, it became complicated. The RFS ended up before the New South Wales Supreme Court asking for guidance in In the matter of the New South Wales Rural Fire Service & Brigades Donations Fund; Application of Macdonald [2020] NSWSC 604.

Importantly, all donations were made via Ms Barber’s Facebook fundraiser page to PayPal’s Giving Fund. The Giving Fund is a charitable trust and, when making a donation to the Fund, a donor agrees to be bound by certain terms of service. The terms of service in this case nominated the RFS as the recommended recipient of the donated funds.

The RFS is also a charitable trust with stated purposes that focus on assisting and supporting rural fire brigades, as opposed to victims of bushfires.

In the decision, Justice Slattery determined that each of the donors donated to the RFS in accordance with the published terms. The donations were to be used in furtherance of the RFS’s stated purposes, despite what the donor or Ms Barber may have hoped or intended.

In light of this decision, what should be considered before commencing an online fundraising campaign?

Fundraising laws

The general rule is that organisations (including not-for-profits and charities) are required to hold a fundraising permit before soliciting any donations from the public. Each state and territory in Australia has its own fundraising laws however, and there are some exceptions to this general rule.

Penalties for fundraising without an appropriate permit can range from fines to imprisonment.

Fundraising laws apply to soliciting donations via door-to-door appeals, selling goods, websites, crowd funding platforms, social media and everything in between. Therefore, organisations (and individuals that fundraise for organisations) should ensure they are meeting all legal requirements before launching a fundraising campaign.

If the fundraising campaign will be promoted on any online platform or by third parties, organisations should also consider:

  • how the laws of all states and territories of Australia (and not just their place of incorporation) may apply to the campaign
  • if third parties promoting the campaign are required to be formally authorised to do so
  • if they have adequate processes and mechanisms in place to regulate the campaign and receipt and receive donations.

If competitions, such as raffles, will be used to raise funds, other laws may also apply to the campaign.

Limitations on use of funds

Organisations must ensure that any fundraising events are in furtherance of (and consistent with) their charitable purposes. This is also relevant to how an organisation applies its funds and advertises the intended use of the funds.

The Celeste Barber campaign highlighted these issues.

When the total figure raised during the campaign greatly exceeded expectations, Ms Barber, along with Facebook donors, called for the funds to be split between a range of organisations assisting with bushfire relief, in addition to the RFS.

However, as outlined above, the fundraiser was established only to raise money for the RFS (via the PayPal Giving Fund). It was alternatively suggested that once the RFS received the funds, it should re-distribute the donations to other organisations to better assist with recovery from the bushfires.

RFS, under its trust deed, is required to apply funds it receives in accordance with its charitable purposes. The trust deed for RFS sets out that its sole purpose is to support the volunteer-based fire and emergency service activities of the brigades, being all brigades established under the Rural Fires Act 1997 (NSW). Further, the trust deed states that income of the trust fund of RFS should be applied ‘to or for the Brigades in order to enable or assist them to meet the costs of purchasing and maintaining fire-fighting equipment and facilities, providing training and resources and/or to otherwise meet the administrative expenses of the Brigades which are associated with their volunteer-based fire and emergency service activities’.

In some cases, it is possible to address expansions of an organisation’s activities by amending its governing documents. However, the trust deed for RFS provides that ‘no amendment may be made that would, or would be likely to, change the Purpose of the Trust’.

Given the specific purposes for which the RFS operates, there was no scope to donate any of the proceeds to other charities nor to use the proceeds for causes outside its charitable purposes.
It seems Ms Barber’s intention was to raise funds for bushfire relief more generally, but the objects of RFS were not consistent with this purpose.

Misleading and deceptive conduct

Organisations must be careful to ensure that they do not engage in misleading and deceptive conduct in the course of fundraising activities.

The Australian Consumer Law outlines that ‘a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive’. Depending on the nature of a fundraiser, a fundraising activity could be viewed as being ‘in trade or commerce’. The Australian Competition and Consumer Commission’s Guide to the Australian Consumer Law for Fundraising and Other Activities of Charities, Not-for-Profits and Fundraisers notes that fundraising will be classified as ‘in trade or commerce’ if:

  • the organisation engages in a fundraising activity involving a supply of goods or services
  • the fundraiser is a for-profit professional fundraiser
  • the fundraising is in an organised, continuous and repetitive way.

Whether a fundraising activity is ‘in trade or commerce’ depends on the facts of the individual case. The risk of engaging in misleading or deceptive conduct in fundraising could arise for example, if an organisation represents that donations received will be applied for a certain purpose but the funds (or any portion of them) are used for another purpose.

Lessons in summary

The issues arising from the Celeste Barber campaign provide a timely reminder to organisations that wish to fundraise to:

  • obtain fundraising authorities in all states and territories where authorisations to fundraise are required before starting the fundraising
  • confirm that the governing documents of the organisation facilitate the intended use of funds raised
  • clearly express to potential donors the purpose of the fundraising activities and any intended application of funds
  • apply donations in accordance with the intentions expressed to the public.

The Celeste Barber campaign also highlights the importance of donors making proper enquiries about the use of donated funds and the relevant beneficiary of a donation before donating.

If help is needed, Cooper Grace Ward can assist to ensure organisations fundraise in compliance with their legal obligations and achieve their desired outcome.

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This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please let us know.

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