Limits on Recourse for Donors Once a Gift is Made.

• Author: Broder, Peter
• Position: Columns | Not-for-Profit Law

It is an under-appreciated nuance of Canadian charity law that s. 92(7) of our Constitution actually gives the provinces the bulk of regulatory authority over charities. Provincial governments often don't exercise their jurisdiction in this area, so the federal government's Canada Revenue Agency (CRA)--which grants tax privileges to charitable groups--has become in many instances the default regulator.

However, though the CRA can and does exercise lots of oversight under the guise of federal powers over taxation matters, its ability to delve into the day-to-day operations of charities are limited. One province, Ontario, has a longstanding and significant regulatory structure to monitor and enforce appropriate use of charitable property. British Columbia has recently become more active in its regulation of this area.

In provinces without an office dealing with such matters, the Attorney-General retains an inherent jurisdiction over charitable property. This allows a provincial Attorney General to initiate court proceedings where charitable property needs to be protected.

Ontario's Office of the Public Guardian and Trustee (OPGT) is mandated under the Charities Accounting Act (CAA) to administer an annual reporting requirement and with various sanctions and remedies where charities misuse or misappropriate charitable property. One of its CAA powers is to investigate a charity's finances.

A recent case, Fass v. CAMH, highlights the OPGT's role and the limitations in that role. The case is being appealed to the Ontario Court of Appeal. At issue was an attempt by a donor, who had made a large gift to the Centre For Addiction and Mental Health (CAMH), to trigger an investigation by the OPGT into how the institution had used the proceeds of the donation. The gift had, pursuant to a written agreement, been subject to certain conditions, which the donor suggested that CAMH had not fulfilled. The parties disputed how closely the charity had abided by the terms of the agreement.

At common law a gift must be a voluntary transfer of property for which conditions on the use of a gift at the time it is donated. For example, scholarship funds may be the donor receives no "consideration" (i.e., does not get anything of value in return). A donor can, however, set certain established with a requirement that a prize be awarded to the student with the highest marks in a particular academic program.

Sometimes, however, scholarship funds or similar gifts are...