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Uniform Law Conference Adopts New Uniform Crowdfunding Act By Terrance S. Carter and Luis R. Chacin At its Annual General Meeting, on August 12, 2020, the Uniform Law Conference of Canada (“ULCC”) adopted the Uniform Benevolent and Community Crowdfunding Act, 2020 (the “Uniform Crowdfunding Act, 2020”) to replace the Uniform Informal Public Appeals Act previously adopted by the ULCC in 2011. For background information, including a review of the 2019 Consultation Paper from the ULCC, which included a number of new provisions adopted in the Uniform Crowdfunding Act, 2020, see Charity & NFP Law Bulletin No. 455. The introduction to the Uniform Crowdfunding Act, 2020 reiterates the distinction highlighted in the 2019 Consultation Paper between the fundraising efforts carried out by organized charities and similar bodies on a continuing basis from the kind of informal fundraising through public appeals covered by the Uniform Crowdfunding Act, 2020. As such, the Uniform Crowdfunding Act, 2020 provides for the application of trust law to all public appeals, with special guidance in relation to surpluses, and contains a list of powers available to the fundraisers to properly administer the funds raised through the informal public appeal. The Uniform Crowdfunding Act, 2020 also allows for judicial oversight where appropriate, and recognizes the important role of Internet-based crowdfunding platforms. The Uniform Crowdfunding Act, 2020 addresses a number of issues raised in response to the 2019 Consultation Paper, including certain issues raised in a submission from the Charities and Not-For-Profit Law Section of the Canadian Bar Association. Of interest to registered charities, the Uniform Crowdfunding Act, 2020 provides for a “right to halt the appeal” where if an appeal has been initiated without the consent of a qualified donee for whose benefit the appeal was initiated, the qualified donee, through an authorized representative, would be able to demand that the appeal be halted and the appeal organizer or intermediary would have to comply with the demand. Where the appeal organizer or the intermediary fail to comply with an objection by a qualified donee, the Uniform Crowdfunding Act, 2020 would provide the right to apply to court for injunctive relief. As well, the Uniform Crowdfunding Act, 2020 would not apply to a public appeal conducted by a qualified donee or a public appeal through an intermediary, provided that the intermediary stipulates and effectively pays the funds directly to a qualified donee, and the qualified donee did not object to the appeal. Further, the qualified donee for whose benefit a public appeal was initiated, as well as, amongst others, the Public Guardian and Trustee or comparable official of the provincial enacting jurisdiction, would be permitted to commence court proceedings to enforce the terms of trust of the public appeal. At this time, only Saskatchewan has adopted comparable public appeals legislation, which was applied to the administration and distribution of funds raised in response to the Humboldt Broncos incident in 2018, discussed in the January 2019 Charity & NFP Law Update. However, other provinces may (and should) consider adopting legislation to address the increasing prevalence of online crowdfunding. |
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