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?
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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).
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.
|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: