Ottawa

Ontario needs crowdfunding law, prof says

Crowdfunding has become the go-to method for raising money for everything from product development to disaster relief, but one law professor believes Ontario is falling behind when it comes to legislation governing how all those dollars are doled out.

Law would help ensure money is doled out properly, limit chance of misappropriation

A lawyers says Ontario needs a similar law to Saskatchewan's Informal Public Appeals Act to deal with crowdfunding campaigns. (Jonathan Hayward/Canadian Press)

Crowdfunding has become the go-to method of raising money for everything from product development to disaster relief, but one law professor believes Ontario is lagging when it comes to legislation governing how all those dollars are doled out.

Donating to a GoFundMe or Kickstarter campaigns might seem like a straightforward transaction, but according to David Freedman of Queen's University, there are often unanswered questions about such basic matters as who keeps the money at the other end.

It's not impractical, it's not hard. As a matter of fact it's easier than what we have now.- David Freedman, Queen's University

"Normally with a charity or a not-for-profit corporation, all that is worked out in advance," Freedman told CBC Radio's Ottawa Morning.

Take the case of the more than $15 million raised after the Humboldt Broncos bus crash. It was one of the largest amounts collected by a single campaign in GoFundMe's history, but there was confusion about how all that money would be disbursed.

The matter was recently settled in a Saskatchewan court, where a judge, under the provisions of that province's Informal Public Appeals Act, awarded $50,000 to each survivor, or to the family of each victim.

Law would benefit everyone

But Ontario has no such law, and that can lead to problems, Freedman said.

"You have people that are raising these funds informally, and they may not have the background or the sophistication to be able to consider all of these various points as to how to deal with the money given the fact that a fund might be years in operation."

Freedman recommends rules similar to those governing charitable trusts in the province. Such regulations can also help protect the individual collecting the money from liability, he said.

"That [law] is necessary if you're dealing with a large amount of money like $15 million dollars," he said.

Freedman said one major hurdle is that the problem hasn't really been brought to the attention of legislators. It should be, Freedman said, for everyone's benefit.

"It's not impractical, it's not hard. As a matter of fact it's easier than what we have now," he said.

CBC Radio's Ottawa Morning

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