Deeds of Gift: A Crash Course for Charities

What should you consider when using a Deed of Gift?

1.     Ensure that the making of the gift aligns with your charity’s purposes

Charities are required to operate ‘for purpose’; generally being those set out in the charity’s governing document (for example, advancement of education or religion, prevention of poverty). This means that the responsible persons (e.g. directors or committee members) of a charity must ensure that any action the charity takes aligns with its purpose/s. This includes the requirement that any gifts made by a charity must be made in pursuance of its purposes.

When making a gift, the responsible persons of charities should consider the following questions:

i.   For what purpose was my charity established? (The best place to determine this is the charity’s governing document).

ii.   What is the proposed gift?

iii.   Why is my charity giving the proposed gift? Does this align with my charity’s purposes?

iv.   Who is my charity giving the gift to?

v.   Do the purposes of the recipient align with the purposes of my charity?

vi.   If my charity is winding up, what do the winding up clauses in its governing document say? Does the gift comply with these clauses?

If a charity fails to pursue its purpose by undertaking a particular activity (for example, by making a gift of property to an organisation with goals adverse to those of the charity), it may lose its charitable status and its responsible people may be subject to disciplinary action.

2.     What are the terms of the Deed of Gift?

When drafting a Deed of Gift, you should ensure that the terms of the Deed suit the circumstances under which the gift is being made.

Important terms of a Deed of Gift in a charitable context may include:

i.  The parties to the Deed – i.e. the gift giver and the recipient.

ii.  The nature of the gift – the more specific the better. For example, if gifting real estate include the Volume and Folio Number of the property.

iii.  That the gift can only be used by the recipient to pursue specific purposes. These purposes should be enunciated in the Deed and should align with your charity’s purposes.

iv.  The date from which the gift is made.

v.  Whether GST will apply to the gift (consider whether your charity is or should be registered for GST, and seek advice from a registered tax agent if you are unsure).

vi.  Acknowledgement that the principal purpose of your charity is consistent with the principle purpose of the recipient.

The Court’s power to amend a Deed of Gift

A Deed of Gift operates in a similar fashion to a charitable trust. This means that the gift must be used in accordance with the purposes set out in the Deed. This also means that if someone is not happy with the terms of a Deed of Gift, or with how a gift is being used in conjunction with a Deed, they can apply to the Supreme Court to have the issues resolved.

Deeds of Gift in the news

An example of issues arising from a Deed of Gift used in a charitable context can be found in a recent report made by the ABC news in relation to the gift of McIntyre Centre in Queensland, a horse riding school designed for people with disabilities. The recipient of the Centre, Help Enterprises, has elected to close the Centre despite protests from the community. Although the terms of the Deed of Gift are unknown, the report indicates that it is unlikely that the closure of the Centre would have been contemplated by the original owners. More information about this can be found on the ABC website.

We can help

We are experienced in drafting and reviewing Deeds of Gift in a charitable context to ensure the terms meet your needs. Please contact Elinor Riley – Elinor.Riley@lewisholdway.com.au or on (03) 9629 9629 or submit an enquiry through our website to discuss how we may assist you.