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A finding by a Barrie Superior Court judge has changed the way charities will have to conduct business to avoid fraud charges, says Toronto criminal lawyer Sam Goldstein.
“Justice John McIsaac has expanded/changed the law of fraud by requiring a fundraiser to divulge information which they previously did not have to do,” says Goldstein. “His ruling means that when you are approached on the street by a fundraiser and asked to donate to a charity, the fundraiser must inform you that they are being compensated.”
Goldstein says McIsaac’s finding arose in the context of the fraud conviction of a North Bay businessman who conducted fundraising for a children’s charity. Adam Gour will be sentenced Sept. 4.
“The decision required fundraisers to disclose to donors that they are being compensated,” says Goldstein. “He did not say when disclosure is to take place, what constitutes compensation (many charities give free coffee and doughnuts to people who volunteer at telethon weekends) or who is responsible for the disclosure –the charity or the third-party fundraiser?
“What his honour failed to acknowledge is that charities are already required by law to declare on their CRA Income Tax returns that they are using a third party fundraiser, and CRA already regulates how much they can spend on these costs before a charity will be specifically audited,” he notes.
Goldstein says the decision has ramifications for all charities.
“Right now just about every charity in Canada uses the services of third party marketers and per this decision are committing fraud,” he says. “Just this morning I received a call from the Toronto Police Services asking if I would donate to an event. The caller did not inform me that he was getting paid. I don’t see the Toronto Police Services being charged with fraud.”
Goldstein says the decision will be appealed and he has meanwhile been in contact with the Professional Fundraisers of Canada which is assessing its options.