F13. As a director of a registered charity, can I be held personally liable for not protecting a donor's rights in a fundraising operation?

F13. As a director of a registered charity, can I be held personally liable for not protecting a donor's rights in a fundraising operation?


Short answer

Yes, you can. The Courts have placed a fiduciary duty on boards of directors to oversee charitable fundraising and ensure that the rights of a donor have been adequately protected, as seen in the AIDS Society case (see example below).

Long answer

Directors of a charity should actively review, approve, and oversee all fundraising activities of a charity, including the terms of contractual relationships with professional fundraisers. A risk management approach to fundraising is essential in order for board members to avoid personal liability.

Example
The duty placed on directors of charities from fundraising programs was underscored in a 2001 Ontario case in which the court found the AIDS Society for Children and its three directors liable for the unreasonable fundraising costs of almost $740,000 and imposed a further $50,000 penalty on the directors of the charity. It had been discovered that despite raising over $920,000 through public donations, no funds had been spent on charitable programs. More than 76 per cent of the money raised went to fundraising companies for fees.

The court held that directors of a charity:

  • have an obligation to the charity and the property held by the charity
  • are accountable to the public for all funds publicly raised
  • are accountable to utilize such funds to further the objects of the charitable institution

More ...

See Checklists for Charities and more on directors' liability .