Office of the Public Guardian and Trustee (Ontario) – Statement on Accessing Funds During COVID-19 Crisis

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The Ontario Office of the Public Guardian and Trustee (“PGT”) within the Ministry of the Attorney General issued a special statement on March 30, 2020 titled Accessing Restricted Purpose Trust Funds Prior to Obtaining a Court Order During the COVID19 Pandemic (the “Statement”).  The Statement indicates that the PGT has developed temporary guidelines to allow charities that are in danger of closing to access the income and capital of restricted purpose trust funds when necessary to enable them to continue their day-to-day operations without having to immediately obtain a Court order.  In order to do so, charities in Ontario must meet the following conditions:

  • The organization must be in danger of closing, which includes potential insolvency, bankruptcy or receivership, unless it can access the funds;
  • This is the last resort – unrestricted funds and reserves should be used first;
  • The organization must first notify the PGT;
  • The Board must unanimously approve the decision to use or encroach upon the funds and the decision should be documented contemporaneously;
  • Funds must be used only for operating expenses (salaries, building expenses, utilities) contractual obligations and services in response to the COVID19 pandemic (if authorized by the charitable purposes) and only to the extent necessary to maintain solvency;
  • An accounting must be kept of the funds used and they may not be transferred to another organization except in accordance with a pre-existing contractual obligation;
  • The amount must be reasonable in the circumstances;
  • A sale of securities at a loss may be considered reasonable if the sale is at arm’s length and on the open market.

Charities will be expected to apply for an order approving the encroachment under section 13 of the Charities Accounting Act within a reasonable time after the pandemic has subsided.

It is important to note that the scope of the discretion contemplated under the guidelines is to keep charities from facing closure during the pandemic and does not extend to accessing the funds for other activities, including funding other organizations.