By Ariane Thierry, Law Graduate
In early January 2020, while Australia suffered from catastrophic bushfires, comedian Celeste Barber began a fundraiser on Facebook which listed its beneficiary as the NSW Royal Fire Service & Brigades Donations Fund (RFS Fund). By the end of January, donations had amounted to an incredible $51 million (Donation), making it the largest charity drive effort ever on Facebook. As the donations continued to increase, Ms Barber made various statements suggesting that the Donation could be divided up between various charities and for different purposes, not just to the RFS Fund.
The Trustees of the RFS Fund (Trustees) applied for judicial advice under section 63 of the Trustee Act 1925 (NSW), submitting to the Court that they wished to honour the intentions of Ms Barber and of donors, within the limits of the RFS Fund Trust Deed (Trust Deed). As the RFS Fund is a charitable trust, the Attorney General of NSW joined the proceedings on behalf of the Crown, to represent the objects of the RFS Fund. On 25 May 2020, Slattery J of the Supreme Court of NSW (Court) advised that the Donation could not be distributed to other charities or for purposes outside of the scope of the Trust Deed.
Ms Barber’s fundraising appeal directed donors to make a donation through PayPal. Upon reading the terms and conditions, it became apparent that a donation through PayPal was not made directly to the RFS Fund. This was despite the fact that the fundraiser’s description and ‘about’ heading listed the Trustees of the RFS Fund as the beneficiary of the fundraiser. Rather, the PayPal payment was made to the PayPal Giving Fund Australia (PayPal Fund). Donors who made a donation to the PayPal Fund were bound by the PayPal Fund’s Donor Terms of Service (Terms of Service). The Terms of Service stated that the PayPal Fund was not required to remit the donation to the RFS Fund, but that it would ‘make every effort to grant the funds’ in accordance with the donor’s recommendation (to the RFS Fund). In late January 2020, the PayPal Fund distributed the Donation to the RFS Fund. This was despite the fact that Ms Barber had made various statements during the course of the fundraiser that may have led some donors to believe that the Donation would be distributed to other charities and for other bushfire related causes.
The RFS Fund
The RFS Fund is an express charitable trust constituted by the Trust Deed in 2012. The purpose of the RFS Fund, according to the Trust Deed, is to distribute income from time to time as it sees fit:
- To enable or assist fire brigades 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 fire brigades associated with their activities;
- For authorised investments consistent with (a); and
- For the costs of managing and operating the RFS Fund.
The Trustees asked the Court to consider whether they could apply the Donation in four different ways. In response to each of the four questions posed by the Trustees, the Court advised:
- To pay money to other charities or rural fire services (both within and outside of NSW) to assist in providing relief to people and animals that have been affected by bushfires.
The Court confirmed that the Trustees cannot distribute the Donation to other charities or interstate, to assist people and animals. This is because the purpose of the RFS Fund is to assist brigades, not those affected by bushfires. Further, the Trustees cannot make a donation to other charities for ‘bushfire related purposes’, as this would be ultra vires to the purpose of the RFS Fund and ultimately in breach of trust.
The Trustees are also prohibited from making any donations to any interstate fire services. The only exception to this arises where an interstate fire brigade is assisting in NSW bushfire relief under the command of a NSW officer in charge of that fire, and their administrative expenses can be met.
- To set up, or contribute to, a fund to support rural firefighters injured whilst firefighting, or the families of deceased rural firefighters killed while firefighting.
The Court advised that it would be permissible under the Deed for a proposed fund to be established by the Trustees for the purposes of ‘preventing future fires and resourcing the brigades’. Slattery J confirmed that the Trustees could provide funds to brigades in order ‘to address physical dangers by the recent fires.’ This means that money may be donated to brigades to help them meet the costs of providing resources to protect people from dangers resulting from bushfires in rural areas. The money must still, however, be for ‘resources’ for brigades, and cannot be given directly to people affected by the bushfires. It must also be used for ‘protection of persons from dangers to their safety and health’ where the danger arises from fires. The Court agreed that the Trustees could pay brigades money to provide food, water and temporary shelter for those affected immediately after a bushfire.
The Court agreed with the Attorney General of NSW that the Trustees could provide funds to assist injured firefighters and the families of fallen firefighters, beyond the immediate aftermath of bushfires. One of the reasons for this conclusion is that such longer-term assistance will likely encourage more volunteers. Encouraging more volunteers can be considered as providing resources under the RFS Fund’s purposes.
- To provide physical and mental health training and resources and trauma counselling services to volunteer firefighters who require such training and resources in connection with their volunteering under section 9 of the Rural Fires Act 1997 (NSW).
The Trustees may set up a fund to provide physical and mental health training for volunteer firefighters, as well as trauma counselling. This is because such training and counselling falls within the definition of ‘training and resources’ and counselling can be considered protecting firefighters ‘from a danger to their safety and health arising from the fires.’
- To set up, or contribute to, a fund that meets the costs for volunteer rural firefighters to attend and complete courses to improve relevant skills.
The Trustees may set up such a fund as it will fall within the definition of ‘training’ and thus be within the purposes of the RFS Fund.
Slattery J also confirmed that the Court’s advice did not prohibit a donor from bringing a suit against the PayPal Fund for not directing part of the Donation towards other causes. In conclusion, the Court confirmed that the Trustees of the RFS Fund were never bound by Ms Barber’s statements and the Donation cannot be distributed amongst different charities or for various purposes outside of the scope of the purposes of the RFS Fund.
Practical Advice for Not-for-profits (NFPs) and Trustees
Following the Court’s advice, NFPs should:
- Ensure that donors are aware of the intended beneficiary and the purposes to which their donation will be applied;
- Avoid making contradicting statements regarding how donations will be distributed; and
- Read the terms and conditions when using third party platforms such as PayPal to facilitate the fundraising event (particularly if the contract with the third party states that the third party has full control over how the donations may be distributed).
Trustees should also ensure that the trust deed clearly outlines who the intended beneficiaries of the trust are, and understand the limitations of how donations may, or may not, be distributed by the trust.