Morgan’s decision raised a question of whether a donor is “like an investor in a business” and can require consultation and reports on how funds are used.
The decision is one of only a few in the case law on s. 6 of the Charities Accounting Act, says Toronto lawyer Ronald Lachmansingh, a partner at Juriansz & Li and one of the lawyers who represented appellants Andrew Faas and the Faas Foundation.
“So, we don’t have judicial pronouncement on that issue: What happens if you give money for a designated purpose? What are the considerations for satisfying the criteria for whether an investigation would be in the public interest?” says Lachmansingh.
“I think the result may be a chilling effect on donations. If you give money for a specific purpose — and you want it used for that purpose — I don’t know that there’s a way to enforce that.”
The dispute centred on Faas Foundation and its principal, Andrew Faas, who agreed in 2014 to donate $1 million to CAMH, according to Edward’s 2018 decision.
The donation, according to the decision, was intended for a program called Well@Work, a program that was set to be developed over three years to provide online resources, training simulations and leadership training for mental health in the workplace.
Meanwhile, CAMH staff had been working toward implementing Canada’s national standard on mental health at work.
Faas had asked that the program be extended to five years and had also requested the “identities, positions and salaries, hours worked, and description of work of all staff working on Well@Work” as well as spreadsheets of contributions and records of suppliers, the decision said.
However, Faas only donated one-third of the total sum, as he became “disenchanted with the direction of the program” after the first year, wrote Morgan.
Faas sought an order directing the Public Guardian and Trustee to investigate the use of the funds.
Lenczner Slaght Royce Smith Griffin LLP lawyer Kelly Hayden, who represented the Centre for Addiction and Mental Health and its foundation, declined to comment.
“The issue, I think, comes down to the fact that donors have power before the gift is made. At that point, they can negotiate for information, they can negotiate the terms of the gift. But once the gift is made, it’s made,” says Adam Aptowitzer, principal at Drache Aptowitzer LLP, who practises out of Ottawa and Toronto. He was not involved in the case.
Michael Leaver, a partner at Kelly Santini LLP in Ottawa, says the case shows that there is a high threshold for a court to say that there’s a public interest when it comes to these donations. Leaver was not involved in the case.
“There’s going to be a certain level of ‘buyer beware,’ frankly, where donors and philanthropists will have to be conscious of the fact that the donor agreements may be followed. But maybe the level of disclosure in the professional business world — it’s going to be short of that,” says Leaver.