I have previously commented on the massive amount of money that has been raised for the benefit of The Trustee for NSW Rural Fire Service & Brigades Donations Fund (see Disaster fundraising for government or charity? (January 5, 2020)).
News reports (‘$10,000 a minute: Celeste Barber spearheads celebrity bushfire appeal’ Sydney Morning Herald (Online) 5 January 2020) are now that this particular campaign has now raised $30 million. Celeste Barber is quoted as saying:
… the funds raised, initially for the NSW RFS, will also be distributed to Victoria and South Australia, the Red Cross and families of those killed in the fires, to be decided in consultation with NSW RFS.
There is however a problem with that. As a commentator to this blog has written:
There’s a problem coming up that needs to be addressed: the fundraiser Celeste has now put out on Instagram that she will be splitting up the donations and doling it out to various OTHER charities, not just the RFS NSW. She said people have asked her to give some to the Red Cross, WIRES, Vic and Qld firies, and direct donations to families of firefighters killed in action etc. That is not what my donation was for. I want donations to fund the actual Rural Fire Service of NSW as stated on the fundraising page.
Is that legal? Is that obtaining money for one reason and using it for another, is that obtaining money under false pretences, is that not fraud? Is that right?
This raises two problems. First, a Facebook donation is paid to the nominated charity. It could not be the case that the person who sets up the donation call can determine where the money goes after it has been paid. If that were the case Facebook would be a source of fraud; people would set up donation campaigns calling for donations for a cause and then divert the money to themselves or some other cause.
Ms Barber’s fundraising page says:
Fundraiser for The Trustee for NSW Rural Fire Service & Brigades Donations Fund by Celeste Barber.
Donations are made to PayPal Giving Fund Australia (ABN 65 106 950 945) and granted to the charity within 90 days, subject to PayPal Giving Fund’s policies
It follows that the donations made will be paid to the beneficiary, not Ms Barber, so Ms Barber cannot determine how the funds will be distributed. Distribution of the funds, once received, will be a matter for the trustees.
The trust deed is available via the Australian Charities and Not-for-Profits Commission. The deed says that the trust:
… is established and operated solely for the purpose of supporting the volunteer-based fire and emergency service activities of the Brigades.
Brigades is defined to mean:
all brigades established from time to time under the Rural Fires Act 1997 (NSW) as amended.
It does not include, for example, the brigades of the CFA or CFS.
Paragraph [2.3] says:
2.3 Purpose of Trust
The purpose of the Trust is to pay or apply the income from the Trust Fund, and such parts of the capital from the Trust Fund as the Trustee at any time and from time to time thinks fit as follows:
(a) to or for the brigades in order to enable them or assist them to meet the costs of purchasing and maintaining firefighting 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…
(a)[sic] For authorised investments which are consistent with carrying out the purpose described in the bullet point above
(b) To meet the reasonable costs of the current and continuing operation and management of the Trust.
If the trustees want to divert the money to ‘Victoria and South Australia, the Red Cross and families of those killed in the fires’ they will need to amend their trust deed or somehow justify how that expenditure meets the purposes listed above.
The trust deed does allow for amendment. Clause 11.1 says:
The Trustees may be deed amend the provisions of this Deed including the trust created by this Deed provided that:
(a) the amendment has the approval of the RFS;
(b) no amendment may be made that would, or would be likely to, change the Purpose of the Trust;…
In other words, paragraph [2.3] cannot be amended.
The other problem, as my correspondent has noted, is that some people gave the money with the express intention that it will go to the RFS fund. To divert it now is to not use the money for the purpose for which it was raised.
With over $30 million the trustees will be able to afford legal and accounting advice to see if they can divert the money but it would appear that the deed is very strict, and clear. I am not an expert in charity or trust law but I note the heading from one law firm – ‘Amending Trust Deeds – It’s Trickier Than It Looks’ – and that’s talking about discretionary family trusts. Amending the deed for a trust that has $30 million donated for a particular purpose would be even trickier. If they cannot amend the trust deed, then the money must be spent in accordance with the terms of that deed – ie for the benefit of NSW RFS brigades.
It is not simply a matter for either Ms Barber, or the RFS, or the trustees charged with managing the NSW Rural Fire Service & Brigades Donations Fund to redistribute funds ‘to Victoria and South Australia, the Red Cross and families of those killed in the fires’.
If the money has been or will be paid directly to the beneficiary nominated in the fund raiser, then Ms Barber cannot divert it and the trustees can only use the money for the purpose of the trust. In any case there may be objections from those that donated money. If they, somehow, divert the money to ‘to Victoria and South Australia, the Red Cross and families of those killed in the fires’ those that wanted their money to go to the RFS will be aggrieved. If they use to help the RFS meet expenditure that otherwise government would have funded those that thought, they will be donating to community relief will be aggrieved.
Further comments on the funding of the RFS
The Office of the Commissioner of the Rural Fire Service is an executive agency within Department of Communities and Justice of the NSW Government (Government Sector Employment Act 2013 (NSW) Schedule 1). The Rural Fire Service itself is established by the Rural Fires Act 1997 (NSW) and consists of the Commissioner, the employees and volunteers (s 8). The Rural Fire Service is not a separate legal entity so proceedings by and against the RFS would be brought in the name of New South Wales (see for example, Electro Optic Systems Pty Ltd v State of New South Wales; West & Anor v State of New South Wales  ACTCA 45, the decision in a case alleging negligence by the RFS in its handling of the 2003 fires that burned into the Australian Capital Territory and Canberra).
The Rural Fire Service is an essential part of government funded by the government. As noted earlier the Service’s income in 2017-18 was $424 million. The RFS is funded by government, insurers and local government. Each year the Minister must prepare a funding target for the RFS (s 103). As part of that process the Minister must the ‘estimated rural fire brigade expenditure for the financial year’ (s 103) and subject to various adjustments (s 108) that is the amount paid to the RFS by the Treasurer (s 106). A funding target is prepared for each fire district and the local council for that district must pay 11.7% of that funding target (ss 103 and 110) to the State as their contribution to the RFS.
Insurers are required to add an emergency services levy based on the relevant premiums that they collect (Emergency Services Levy Act 2017 (NSW)). That levy is used to fund Fire and Rescue NSW, the NSW RFS and the NSW SES.
In short, the treasurer funds the RFS but receives back the levy imposed on local councils and the levy charged on relevant insurance policies.
The RFS is well funded and claims that its budget has been cut have been refuted – (‘Cuts to firefighting budgets described as “rubbish” Fire Commissioner Shane Fitzsimmons’ 7NEWS 10 November 2019; ‘Jodi McKay says the NSW firefighting budget is facing a $40 million cut. Is that correct?’ RMIT ABC Fact Check (9 December 2019)).
Spending the donated trust monies
Having said that the ‘government’ does not decide how the RFS budget is spent. The money goes to the RFS and the RFS makes decisions on how to spend it. The choice of what equipment is supplied to volunteers is a decision of the RFS not the Premier and Cabinet. A donation of $30m (or more) to the Central Fund is a donation to be spent on RFS purposes. The RFS, not the brigades, will (in collaboration with the trustees and in accordance with the trust deed) decide where the money is spent.
Throwing $100 into a bucket held by a local firefighter would see that money spent by that brigade, perhaps that day. $30m donated to the central fund is quite different. It is up to the trustees to determine how it is spent but it will be the RFS that seeks to access the money. What the RFS choses to spend it on, provided it is ‘to meet the costs of purchasing and maintaining firefighting equipment and facilities, providing training and resources and/ or to otherwise meet the administrative expenses of the brigades’ is up to the RFS. It will not be up to the trustees to independently decide to supply to brigades equipment that the RFS has chosen, for whatever reason, not to supply.
If the RFS says ‘great, let’s supply respirators that we weren’t providing before’ they could ask the trust to fund that. But the RFS says that the reason it is not supplying respirators is that it hasn’t done the assessment required and they think PS2 masks are adequate; not because they haven’t got the money (see Donated respirators for RFS firefighters (December 29, 2019)). Brigades may ask the RFS to supply equipment that could be funded from the donation, but there is no guarantee that the RFS will start supplying material that is not currently supplying where the choice is made on grounds other than money.
Those that make claims that ‘the government is not supplying this equipment so now we can’ miss that crucial point. The government does not supply the equipment, the RFS does. Donating money to the RFS gives the RFS more money but does not have to change their purchasing decisions and it will be up to RFS, not local brigade volunteers, to determine how the money is spent. Though, granted, the trustees with $30m to spend may have significant capacity to influence spending decisions.
The trustees are used to dealing with income of around $1m (see https://www.rfs.nsw.gov.au/about-us/fundraising/brigades-and-donations-fund-reports). To receive and deal with $30m will require quite a change in mind-set and significant advice. The likelihood that it will be spent during this response is very low. Apart from the need to actually consider what the money might be spent on, the RFS is not a recovery agency that will be spending money over the next 2 years rebuilding communities. Once the fires are out no doubt this money will be invaluable for replacing equipment, restoring fire sheds and investing in equipment for the next fire. But (subject to what was said above about amending the trust deed) it won’t be available for community recovery.
If I was one of the trustees (and I’m not) this would be the stuff of nightmares. They are going to receive $30m with expectations that it will be spent quickly and in ways that they cannot meet.
And there is the risk that The Chaser have it right – in their satirical piece, Morrison deploys emergency marketing squad to bushfire affected areas (5 January 2020), they envisage the Prime Minister launching:
… a brand new ad campaign highlighting the various benefits these fires are bringing our country, like the global media coverage, the photography opportunities, and the huge amount of money being donated to the RFS. In fact, it’s raised so much money we might be able to just privatise the whole thing and finally get it off the government teat. How good is that!”
I’m sure the NSW government would not want to privatise the RFS, but come the next budget round, $30m in discretionary funding may well affect how much the Treasurer wants to pay.
As I understand it this particular campaign, started by Ms Barber was to raise a small amount for her local RFS brigade. A commendable desire as is the desire of all those that have donated. However, despite the good intentions the desire to divert what is now a massive amount of money to ‘to Victoria and South Australia, the Red Cross and families of those killed in the fires’ will be much easier said than done.
I fear that many people who have donated to this campaign will not see the money spent in a way that they hoped it would be, and will not see it spent during the peak of the response and immediate recovery.
Having an impact! This post was:
- Reported on Canadian TV (CTV) – Christy Somos ”This is terrifying’: Aussie comedian’s wildfire appeal raises millions‘ CTVNews.ca (6 January 2020).
What if the RFS agreed to accept the money on the onus it would then on-donate to the new charaties?
The RFS don’t get the money; the trustees of the NSW Rural Fire Service & Brigades Donations Fund get the money; and they can only use it for the purposes set out in the trust deed. Donating it to another charity is not a purpose of the trust. They cannot do it.
The Trust Deed is located on the ACNC website. Clause 11 contains the amendment powers and Clause 2 the express purposes of the Trust. I seriously doubt the trustees could amend the Deed given it would be contrary to the express purposes to assist Brigades under the Rural Fires Act or ancillary/supporting purposes.
Thanks Tony, I did find the deed and amended the post accordingly. I agree with you that they would not be able to make the necessary amendments to the trust deed to spread the money around.
I suspect if any of the donated funds were not passed to the Trustees, they would be obliged under their fiduciary duty to sue for their recovery or be sued by the potential beneficiaries for failing to collect all the funds due. Interesting legal point though if Brigades have no legal standing as beneficiaries…potentially a failure in the Trust to settle properly and a need to make an application to the Supreme Court for appropriate rectification orders. Hopefully won’t go that far though, but legal advice will definitely be required.
Thanks Michael for these updates, good information. Very interesting times.
People give with good intent but unfortunately there are a lot of loopholes governing these donations Maybe those that are not happy with the outcome should be given a refund and channel their donation to their desired area directly It would cause a lot of extra admin work but maybe the only fair way
Thanks Michael , these are all the concerns that I have had. As a volunteer for a different (not RFS) agency I think you have hit the nail on the head as far as how funds are spent, when they will be spent and the reduction of funding come the allocation of money at the next budget.
Hmm, I think it would be political suicide to reduce funding to fire services in the next round of funding, on the basis that the services received so many public donations. Isn’t the government already so much on the back foot already?
It is also been revealed that parts of their funding was cut last round. The overall funding was increased but that is because the compensation funding for injured firefighters was increased but the funding for day to day ops was reduced by 12.9% . They can’t use compensation funds for ops as it is earmarked for compensation. So it is a case of lies, lies, damn lies and statistics… the government could say the funding was higher but at the same time reduced. It could be that the trustees had asked for higher compensation and that is what they got.
Secondly, it occurs to me that there are ways to get around the NSW loop hole. The NSW can use the funds to buy what is needed, a plane, more masks, some roll-bars around their trucks, etc… they can then lend or lease for $1 to other fire services… technically the items still belong to NSW but other services benefit as well.
The funds went to and were spent by the NSW branch, and the items are still owned and controlled by NSW but they can assist other state based services as well…
Just a thought. I could be wrong.
I agree it would be ‘unwise’ to cut funds, and I was being cheeky in that comment. I don’t know what the impact will be. Your suggestion that the RFS could buy equipment which it then shares with other states is probably ‘doable’. And they could spend a lot of money on helping communities get bushfire ready – public education, buying community fire unit trailers (recognising that the CFU scheme in NSW is run by Fire and Rescue NSW not the RFS, but even so providing that equipment to help prepare communities would assist the RFS volunteers).
Might a legislative response be posible? For example could the Rural Fires Act be amended to include support to other agencies and recovery activities in the normal activities of the brigades?
It might but it would not change the purpose of the trust which is to spend its money on brigades. There could I suppose be legislative intervention to change the trust deed (I’m not sure of that). It would certainly be controversial for those that do want their money to go to the RFS and do we really want governments stepping in to change trust arrangements?
The trustees could also go to the Supreme Court, I’m not sure of the courts ultimate jurisdiction, but the Court does exercise a supervisory power over trusts and may be able to make orders to allow this money to be more widely distributed. Lawyers expert in a different field to emergency law would need to comment on that. No doubt there will be a chance for lawyers to earn a small share of this donation.
Huge thanks for putting this together Michael. I’d flagged this as being an issue on a couple of public forums a few days ago, but wasn’t sure how to consolidate it all together in an easily digestible form. Now I’m just going to share this post!
Happy to have helped.
Thank you for the precise explanation and details on this very complicated issues. This clarifies all my questions on my donation intention. All victims and helpers do need and deserved immediate help, not 40 days later in bits.
An interesting issue.
The relevant rules to examine would be those of the PayPal Giving Fund, which is a public ancillary fund (https://www.ato.gov.au/Non-profit/Getting-started/In-detail/Types-of-DGRs/Public-ancillary-funds/) – that’s where the money will still be, as the PayPal Giving Fund only distributes them after 15-60 days of an appeal commencing.
The trust deed of the RFS Donation Fund isn’t actually relevant, at least not at this stage.
The PayPal Giving Fund’s ACNC page and governing documents can be found here: https://www.acnc.gov.au/charity/2a364343e6b055199bb7be2c82d73471#financials-documents
As a public ancillary fund, the trustees of the public ancillary fund legally make the decisions about where donations are distributed.
They can act on a recommendation of the person setting up an appeal. They can’t actually promise to honour instructions, as that would create a separate fund and the donations wouldn’t be tax deductible.l (see Note 2 to Guideline 45 within the Public Ancillary Fund Guidelines 2011: https://www.legislation.gov.au/Details/F2016C00434/3339ba19-0f73-4bae-ae35-32f26e3c8243).
In theory, the trustees could donate them to any charity with so called ‘Item 1 deductible gift recipient’ status. That would be acting consistently with both trust law and tax law and their governing document.
I imagine how it’s set up is that each each appeal is structured as a ‘sub-fund’ and then the person setting up an appeal makes a recommendation about how it’s distributed. Ideally this would be consistent with how the appeal is marketed.
This is all indeed consistent with how the PayPal Giving Fund trust deed is drafted, with this being set out in clause 4.7: https://acncpubfilesprodstorage.blob.core.windows.net/public/33bd51ba-3aaf-e811-a963-000d3ad244fd-8d7aa3c8-a499-4e1e-9f4f-adb50ec97271-Governing%20Document-f3e76742-55b0-e811-a960-000d3ad24282-Trust_Deed_PayPal_Giving_Fund_Australia_Redacted.pdf
So up until this point, there would be legally nothing stopping Barber from recommending the funds be distributed from the PayPal Giving Account to other charities. Then it depends on what the response of the PayPal Giving Fund’s trustees is.
However Facebook may have certain terms and conditions for appeals using its platform, and also the PayPal Giving Account may have a policy – e.g that it considers a ‘recommendation’ for a distribution to be the charity which an appeal is set up for. But they may also adopt a flexible approach, I don’t know.
State and Territory fundraising laws may also apply and provisions about misleading and deceptive conduct, however with such conduct it’s unlikely that the appeal would be considered in trade or commerce (but it may be).
It’s somewhat complicated. However, it’s a question about how the PayPal Giving Fund is operated. It’s not about the RFS Donation Fund.
I think you’ll find that people around the country have donated to this fund, is it fair to ask them to now donate again to a fund specifically set up for their state?
Do you think that the international businesses and celebrities that have donated millions of dollars have done so specifically for the NSW firefighters?
I’m not sure what fair is. I think this fund was never expected to get this big and now that it has it is a complex situation. I’m sure most people did not realise the money was earmarked just for the NSW RFS nor that there were such strict limits on what the RFS trustees can use the money for. I also suspect lots of people don’t understand the legal position of the RFS.
And now changing where the money can go is no simple matter.
Totally agree…this is a minefield that no one is adequately prepared to handle and it is not being dealt with in a transparent way as far as the well intentioned donors or the public are concerned.
And what about the communities that need assistance immediately while massive funds are flowing into channels that do not lead to community support.
Thanks for posting this Michael. After seeing the fundraiser on a friend’s facebook site I looked at the Trust Deed … so when donaters on her fundraiser asked questions about whether the money could go to wildlife rescue, or brigades in Victoria or SA, or victims, I explained no, due to the terms of the Deed. Made no difference, people just responded that there could be nothing ‘dodgy’ as Celeste herself had guaranteed that the money would be shared around. Unfortunately as you point out, as many donators no doubt intended to give to NSW RFS brigades for trucks and training, there isn’t much incentive to trot off to the Supreme Court to try to amend the deed, and it would be impossible anyway to discern who intended to give to whom.
We’ve got a national crisis happening, not just NSW.. no one would have expected the amount of generosity coming from across the globe, even Celeste I am sure did not expect such a massive result so good on everyone. Surely people with empathy and some form of common sense would be happy to see the money distributed to the areas that need it, including SA, VIC, TAS and WA. And a gentle reminder that WIRES also only supports NSW wildlife and there are many other organisations that we can support to ensure all wildlife across Australia is cared for (Australian Animal Rescue being one).
Verfin, I’m sure everyone ‘with empathy and some form of common sense would be happy to see the money distributed to the areas that need it, including SA, VIC, TAS and WA’ the problem is that the trust deed of the Rural Fire Service Brigades and Donations Fund does not allow that to happen. No amount of empathy or wishful thinking will change that. What will be required is an Act of Parliament or an order of the Supreme Court (and the lawyers I’ve spoken to are not sure how the Supreme Court could intervene here), or, as suggested in the subsequent post (https://emergencylaw.wordpress.com/2020/01/07/further-complicating-the-issue-of-diverting-facebook-donations-and-perhaps-an-out/) interventions by the PayPal trustees but that would raise its own problems if they pay money that has been donated in a way that does not accord with the instructions the donor made at the time of donation. The problem is not a lack of goodwill or empathy, or an understanding of the issue, the problem is that the donation has been made to the Trustees of the RFS Brigades and Donations Fund and they can only spend the money on very limited purposes. Hoping for a solution won’t find one but not doubt the RFS and the trust’s lawyers will be looking to find one.
Many people on the FB donation page are asking Celeste to confirm what will happen with the money & thus far she has not answered anyone. There is nothing in writing stating that the money will be shared across other charities & states, just videos of Celeste saying that will happen, however these videos expire after 24 hours. The fundraiser is still going & is over $50m now. Should the fundraiser be stopped until it is clear & transparent when the money will be released & who it will be donated to?
It’s not for me to say whether the ‘fundraiser [should] be stopped until it is clear & transparent when the money will be released & who it will be donated to’. If people are happy to donate in the current circumstances, that is a matter for them.
Thanks for your reply. However, whilst there is major confusion about where the donated money is going & I now believe lawyers have been brought in, shouldn’t this information be made public in an official statement on the donation FB page?
It’s not for me to say what should be on the donation page.
Sadly, this looks like we are donating money that will end up going to lawyers.
It will be lawyers and accountants that make sure people’s expectations are met
I have little law experience and hence my suggestion comes from that lack of knowledge however I will offer this as something that may come from that.
Can the Trust purchase trucks and other assets that can be rented at very low rates to other firefighting trusts or is using/making money out of their assets not allowed according to the Trust rules?
The trust can invest its money in ways consistent with its purpose and I’m sure they don’t want to spend $52m in one go so making investments would seem prudent. They may well be able to invest in say fire appliances and then earn income by leasing them to other agencies but I don’t see how the trustees could, consistent with duty to the trust, lease them out at other than market rates in order to earn income for the purposes of the trust.