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).