Charitable Property & Donor Gifts

Charitable property must be used for the purposes it was given for. When donors, directors or members disagree about that, early resolution protects the charity and its reputation.

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A charity’s property is held for its purposes, not for its directors.

The Short Answer

Who oversees how an Ontario charity uses its property?

The Office of the Public Guardian and Trustee can inquire into complaints that a charity’s property is being used outside its charitable purposes, for the personal benefit of its directors, or without adequate controls. Under the Charities Accounting Act, a person can also complain in writing to a judge about how funds solicited from the public were dealt with, and the judge may order the Public Guardian and Trustee to investigate.

COMMON SITUATIONS

Where Disputes Arise

Restricted gifts spent on general operations or a different program.
Building and capital campaigns where the project changes or does not proceed.
Payments to directors or people connected to them, which charities may make only in limited circumstances.
Donor intent disputes after a donor’s death, often involving the estate.
Allegations of misuse by members or former directors.

THE PROCESS

Complaints and Their Limits

The Public Guardian and Trustee may decline to pursue a complaint that involves a minor matter or small amount, that another body can deal with, or that appears to be made to harass or embarrass. Its investigations and any court proceedings can become public, which is rarely in anyone’s interest if the matter can be resolved directly.

Where property may have been misapplied, the charity may also have obligations to the Canada Revenue Agency. That connection is one more reason to deal with a concern early and properly.

RESOLVING IT

Resolution That Protects the Charity

We act for charities, directors, donors and members. Often the most effective step is an independent review of the gift terms and the spending, followed by a negotiated or mediated agreement on how the funds will be applied or restored. See also our guide to restricted funds and donor intent.

GIFTS IN WILLS

When the Gift Comes From an Estate

Charitable gifts in wills bring the Public Guardian and Trustee into the estate, because it protects the public interest in charitable property. Disputes arise when a will describes a charity that no longer exists, a purpose that can no longer be carried out, or conditions the charity cannot meet.

These questions often involve executors, family members and the charity at once, and they are well suited to mediation. See also our estate mediation page.

CHANGING PURPOSES

When a Gift Cannot Be Used as Intended

A charity cannot simply redirect a restricted gift because its priorities have changed. Where the original purpose has become impossible or impractical, a court can sometimes approve applying the gift to a closely related purpose. Some approvals can be obtained by court order with the Public Guardian and Trustee’s consent under section 13 of the Charities Accounting Act, which is usually quicker than a contested application.

Where the donor is alive, a written agreement to vary the terms of the gift is often the simplest solution.

DIRECTORS

Protecting the Board

Directors of charities are held to a high standard when handling charitable property. Recording decisions and their reasons, taking independent advice on significant questions, declaring conflicts of interest and confirming insurance coverage all reduce personal exposure. A director who disagrees with a decision should ensure the dissent is recorded in the minutes.

AN EXAMPLE

A Building Fund Used for Operations

A charity raises money from its members for a new community hall. The project stalls, and during a difficult year the board uses part of the building fund to pay operating expenses. Several donors discover this and threaten to complain to the Public Guardian and Trustee.

An independent review of the campaign materials shows the gifts were restricted to the building project. The board adopts a written plan to restore the fund from future revenue, reports it to members, and agrees with the lead donors on a revised timetable for the hall. The donors do not pursue a complaint.

An illustration only. The organisation, people and details are invented, and every real dispute turns on its own documents and facts.

WORKING WITH US

How an Engagement Works

We start with a conflict check, because in a close-knit organisation the other side may be someone the firm already knows. Once that is clear, an initial consultation lets us understand what has happened and what you need.

We then agree the scope of the work and the fees in writing before anything else is done. For many non-profit disputes, the first step is a defined piece of work: a review of the governing documents and a written opinion on what they require. That often shows whether the dispute can be resolved quickly or needs mediation, arbitration or court.

We meet clients at our Toronto, North York, Mississauga and Oakville offices or by video, and we work in 13 languages. Boards often prefer video meetings so that several directors can attend together.

Sources

Where This Comes From

Last updated September 2026. Published by Lexaltico LLP, Toronto.

General information

This page is general information about Ontario and Canadian law published by Lexaltico LLP. It is not legal advice, it does not account for the facts of any particular situation, and reading it does not create a solicitor-client relationship. Rules change, and whether any option is available to you depends on your own circumstances.

Non-profit and charity disputes

Common Questions

Frequently Asked Questions

Can a charity use a restricted gift for something else?

Not simply by deciding to. A change of purpose may need the donor’s agreement or a court order, depending on the gift.

Can directors of a charity be paid?

Only in limited circumstances. An Ontario regulation allows some payments to directors for services other than as a director, if specific conditions are met.

Should I complain to the Public Guardian and Trustee?

Sometimes it is the right step. Often a direct approach or mediation resolves the concern faster and privately. We can advise which fits.

Does this involve the CRA?

It can where charitable property is misapplied or the charity is not pursuing its purposes.

Can a donor get a gift back?

Usually not once a gift is complete, unless its terms provide for it or the charity agrees. Conditional gifts and pledges raise different questions.

What records should a charity keep about restricted gifts?

The gift terms, how and when the funds were spent, and board decisions about them. Good records resolve most disputes quickly.

Is there a quicker route than a court application to change a gift’s purpose?

Sometimes. Certain orders can be made with the Public Guardian and Trustee’s consent under section 13 of the Charities Accounting Act.

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Related Pages & Guides

Non-Profit & Charity Dispute Resolution Faith & Cultural Organisation Disputes AGM & Election Disputes Member Discipline & Expulsion Board Deadlock & Director Removal By-Law Dispute Resolution Clauses

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