UAE: Authorities urge caution as illegal fundraisers gain ground on social media

Despite the UAE imposing fines that can go up to Dh500,000 against people resorting to illegal fundraising and seeking donations, many people continue to use social media seeking donations to ‘treat themselves or their sick children’, pay rents, school fees or other expenses.

Authorities say many of them join social media groups to get the contact details of members and then solicit them for help in paying for their kids expenses, or their own debts, and officials say such practices will not be curbed without collaborative and intensified awareness campaigns.

Maha Abdul Aziz, the admin of a social media group said many women members post ‘sob stories' saying that a member of the group, who does not wish to disclose her name, is facing some terrible medical or financial problem or a family emergency and needs urgent help.

“I reject such posts because most times they are fabricated to make easy money. However, I realised that some of them then use the details of group members to contact them privately seeking money," Aziz said.

Ahlam Abdulazim, the admin of a group on Whatsapp, said that last month, a woman posted that there were many underprivileged families and children who needed winter clothes and requested group members to donate their used and unneeded clothes to hand it out to these unfortunate people.

“Most members got emotional on seeing the post and donated their used clothes for the ‘needy families’. Later it was found that the woman had established another page on social media selling the clothes as new. When buyers ordered clothes from the site, they were shocked to find out that they had been delivered used clothes. She also sold the clothes at cheaper prices to labourers and poor families in many areas," Abdulazim said.

Government authorities and registered charities say communities and social media group admins must be made aware of the law and warned about allowing such illegal posts seeking help or funds. They also need to make group members aware of the law that levies stiff penalties for fundraising, donations and handouts, without approval from a licensed charity.

Hessa Buhumaid, Minister of Community Development said that Federal Law No. 3 of 2021 concerning the Regulation of Fundraising Activities aims to regulate the fund-raising activities and donations for charities in the UAE.

It lists rules for charitable donations and governs the functioning of non-profit organisations. It applies to any association that wants to collect or provide donations in the country, on the mainland and in free zones. The law aims to protect fundraisers and their funds from the risks of exploitation in financing terrorism and illegal organisations. The law expands that to include donation of food and goods.

She explained that the law prohibits individuals in the UAE from conducting or organising fundraising activities in the country or collecting donations through social media or other types of communication.

The new law will prevent such kind of exploitation and will protect the donors who believe that he was doing good deeds to help others.

Helping neighbours is fine

The law does not prohibit families or individuals from giving food and other help to neighbours or poor people they know, as it aims to protect donors who do not know if their donation is going to deserving cases. It bars residents from collecting food, money, clothing and goods and giving them away without the permission of concerned authorities.

The law allows anyone who wants to help a friend, relative or neighbour by providing money, food or goods. It also allows a person to privately collect funds or items from family members or relatives and donate them to needy people he or she knows.

Donations

The law defines “donations” as “whatever collected money of any kind, cash or in-kind, movable or fixed, including national currency, foreign currencies, bonds, and shares, and whatever their form, including electronic or digital, to spend on various aspects.”

Prohibitions

Only authorised entities are allowed to collect donations. It is prohibited for all others. It is not permissible for any entity to establish, organize or perform any act with the aim of collecting donations, except after obtaining a permit from the competent authority, which studies the request and issues a decision to approve or reject it within 20 working days from the date of its submission.

Conditions for granting permit

The applicant must be a legal person, collect donations through a charitable organisation, and state in the permit application the purpose of collecting donations, the identities of those responsible for collecting donations; the beneficiary entity or parties; how the donations will be collected; their location; collection period; and the period for making donations to the beneficiary.

The applicant must also state the charity’s approval of the collection, and the percentage of administrative and operational expenses that will be deducted by the organisation.

Is there a limit on permits?

No entity may be granted more than four such permits during a year, except by a decision from the head of the competent authority. The local entity is obligated to maintain an electronic record of donations. It is also not permissible for authorised entities to publish or broadcast propaganda or advertisements to collect donations without obtaining the approval of the competent authority.

What about external donations?

The licensed and authorised entities may not collect or receive donations, or accept gifts, bequests or subsidies from any person or entity from outside the country, except in accordance with the controls and procedures specified by the executive regulations of the law.

The authorised entities must provide the competent authority with a report detailed about it within 15 working days from the date of receiving it. It is also not permissible to deliver, present or transfer donations to any person or entity outside the country except in accordance with the controls and procedures specified by the executive regulations of the law.

Also, banks and financial institutions in the country may not make any financial transfers outside the country, through bank accounts for donations, except in accordance with the controls and procedures set by the concerned authorities.

Is it possible to open a checking account to collect donations?

Yes, the authorised entities must open one or more current accounts with any of the national banks operating in the country to collect donations, and they must notify the competent authority of the name of the bank and the account number, within 10 working days from the date of opening the account.

Charitable societies must open independent current accounts, through which the sums resulting from donation collection permits are deposited. It shall provide the competent authority with the data and details of these accounts within 10 working days from the date of their opening.

What are the prohibitions?

Licensed entities are prohibited from depositing in the accounts any funds other than funds obtained from collecting donations, and banks and financial institutions may not open any accounts to collect or receive donations for any party, except by virtue of a letter from the head of the competent authority or his authorised representative.

Bank accounts with illegal donations

The executive regulation of this law defines the rules and controls for disposing and closing the bank accounts in which the donations collected are deposited in violation of the provisions of this law or the decisions issued for its implementation.

Can the donation money be invested?

No. The law stipulates that it is prohibited for authorised entities to trade in donation funds, engage in financial speculation, distribute any revenue or returns to its members or employees, and do any act during the collection, acceptance or submission of donations that would harm public order, or national security, public morals, or encourage any sectarian, ethnic, racial, religious or cultural disputes, or any illegal purpose in accordance with the legislation in force in the country.

What happens after collecting donations?

Authorised entities are obligated to provide the competent authority with a number of reports, including a report on the proceeds of the collected donations, within a period not exceeding 15 days from the date of receipt of the donations; a report on the beneficiaries in a period not exceeding 15 days from the date of making donations; and a report on the final accounts or the audited financial statements that show the number of donations collected and the aspects of their disbursement, within a period not exceeding 30 days from the date of expiry of the permit.

What about food and medicine donations?

The law stipulates that it is prohibited for licensed and authorised entities to accept, transfer, preserve or provide in-kind food or medicine donations to be presented inside the country, which violates the specifications specified in the legislation in force in the country. It is not permissible to accept any in-kind food or drug donations for distribution outside the country except in accordance with the provisions of the law.

Additional requirements

The authorised entities must ensure that the material collected are fit for use for a period of no less than 6 months from the date of their receipt. These materials are collected, transported and distributed in an appropriate manner that ensures their validity, safety, and usability, and they have the appropriate places to store them in accordance with the controls and requirements.

What are the penalties for violators?

Anyone who violates the provisions of clause (1) of Article (13) and Article (20) of the law shall be punished with imprisonment and a fine of no less than Dh200,000 and not more than Dh500,000 dirhams, or one of these two penalties. Imprisonment and a fine of not less than Dh150,000 and not more than Dh300,000, or one of the two penalties, whoever violates any of the provisions of Articles (6, 12, 14, 17, 21, 26, 31).

The penalty shall be doubled in the event of a second offence, and in all cases, the court shall order the confiscation of the donations collected in violation of the provisions of this law, and the deportation of the violator after serving the sentence imposed on him.