In this New York Times article published today entitled “Steve Bannon Is Charged With Fraud in We Build the Wall Campaign” it has shocking revelations about a fundraising campaign in the US.  Hat tip to Paul Alof for retweeting it.

The NYT notes “Stephen K. Bannon, President Trump’s former top adviser, was charged on Thursday in New York with defrauding donors to We Build the Wall, an online fund-raising effort that collected more than $25 million for the president’s signature plan to erect a barrier on the Mexican border.”

Crowdfunding

This is not charitable fundraising.  It is crowdfunding for a political cause.   A good reason to keep charitable work and controversial political positions at a distance in my humble opinion but others may disagree.    Anyone can raise funds for anything when doing crowdfunding.  Buyer beware.  Realize that there is very little regulation of crowdfunding.  Crowdfunding by for-profits has a role but be careful   Depending on what you want, it might be better to find a good charity and donate to them.  For some ideas on charities and giving see our website www.SmartGiving.ca

 

Fundraising

Apparently the NYT describes that “To persuade donors to contribute to the effort, prosecutors said, Mr. Kolfage promised them that he would “not take a penny in salary or compensation” and that all of the money he raised would be used “in the execution of our mission and purpose.””  When you conduct a public fundraising campaign it is important how you craft your request to the public and describe how the funds will be spent.  Allegedly some of those involved with the campaign were paid funds that were used for personal expenses while they claimed they would “not take a penny in salary or compensation”.  Charities need to be careful of any public appeal language and remember that the world is constantly changing and the appeal language should be broad enough for different contingencies, and often having a secondary purpose can be helpful.  Most importantly don’t overpromise – there are real costs of running any campaign or project.  Reasonable fundraising and administration costs can be acceptable but not if for example, you say in your public appeal “100% of every dollar donated will go to paying for food for the pink Koalas of Tanzania”.

We recently prepared a course on Canadian charities and restricted gifts “Restricted Gifts – Managing the Opportunities and Dangers of Restricted Charitable Gifts“.  It is important that charities spend the funds according to the description that they told the public.  You might also find our article Special purpose fundraising for COVID-19 – be careful what you ask for! helpful.

CRA also has helpful guidance for registered charities on fundraising.

We work with charities and non-profits on compliance issues including those related to restricted gifts and fundraising. It is so much easier to discuss these issues before an appeal is made to donors or the public rather than afterwards when it can be very difficult and costly to fix, if it is possible to fix at all. Contact us if you wish to retain a lawyer to assist your charity or non-profit.