Businesses warned over corporate responsibility in light of fundraising law

Law firms' advice sends signals to companies to be mindful when it comes to their involvement with charities.

DUBAI // Companies that engage in philanthropy may run afoul of the law, experts say.

When the decree on fundraising in Dubai was introduced last year, law firm Clifford Chance produced guidance on the regulations governing charities and fundraising.

Its key messages were: don’t raise money without approval from the authorities; employers may be punished if their employees breach the law and they are deemed to have “allowed” it; free zones and international charities based abroad are not exempt; the requirements for becoming an approved charity are “extensive” and licences are only likely if they are “in conjunction with a registered charity”, and “penalties are high”.

Getting a licence for charitable and fundraising activities is not a straightforward, box-ticking exercise.

As well as completing a standard form, applicants have to provide full details of the purpose of their fundraising, how, where and for how long they will conduct it, where donations will go to and how much will be collected.

Dubai’s fundraising law states that approval for fundraising may only be granted to a licensed charity. If IACAD does not issue a decision on an application within 15 days, it is considered to have been rejected.

“The law applies to any donations raised within Dubai, and therefore by extension it affects donations raised in Dubai for international charities or non-governmental organisations outside of the UAE,” Clifford Chance said in its guidance. “We also understand that IACAD approval would likely only be granted to, or for, a licensed charity in Dubai, and it is unclear whether a recognisable international charity may be able to obtain a licence.”

As well as the potential custodial and financial penalties for breaching the law, bank accounts holding illegal donations can be frozen, and this money can be “seized and disposed of by IACAD”.

Those violating the law can also have their trade licences revoked, be ordered to repay twice the amount raised and see the place where the funds were raised closed for up to a year.

But there is one thing the law does not cover – it does not stop giving to charity, said Clifford Chance.

“Individuals can donate money and items in their own private capacity to any licensed charity, or international organisations, so long as they do not solicit donations from other individuals,” the law firm’s advice states.

“Corporations can also make donations from their own corporate funds, as long as they do not raise funds from among their employees or clients.”

Law firm DLA Piper said in its advice that: “Although IACAD acknowledges that crowd-funding and other websites allow fundraisers to maximise the level of donations, the role of such websites needs to be looked at carefully.”

newsdesk@thenational.ae

Published: September 10, 2016 04:00 AM

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