Scott Baker, WE Charity’s Chief Operating Officer answered some common questions about WE Charity in an article published in Foundation Magazine which you can read HERE.
FALLACY #1: The Canada Student Service Grant (CSSG) was a billion-dollar program that in delivering, WE Charity stood to make millions of dollars to benefit the charity.
FACTS: First, the total value of the contribution agreement was $543.5M, not the $900M to $1 billion number that has been widely, and incorrectly, reported (see a copy of the agreement here).
WE’s role did not allow for any “profit” (by definition, a charity cannot generate or earn profits) or financial gain for the organization whatsoever. The contribution agreement has 26 references to the fact that WE would only be reimbursed for “eligible expenditures” as identified in the agreement. To be eligible, the expenditures must be “directly related to the carrying out of the Project.”
The theoretical maximum expense reimbursement to WE was $34.78M if all 100,000 students engaged in the program, not the $43M routinely cited by the media. These costs were for all aspects of the program including its design, delivery, disbursement of grants, third-party costs, etc. This was not a set payment and only a maximum amount to reimburse expenses.
For more about WE’s role in the CSSG, please see here.
FALLACY #2: WE Charity was chosen to administer the program due to political connections.
FACTS: WE Charity was chosen for this project because of its 25-year record of engaging and inspiring students and youth in meaningful service learning.
In April, WE Charity was approached by the Government of Canada about delivering the Canada Student Service Grant (CSSG) program to support post-secondary students through the COVID-19 pandemic. Specifically, on Sunday, April 19, 2020, Rachael Wernick, Senior Assistant Deputy Minister at Employment and Social Development Canada, called Craig Kielburger to introduce the idea of the CSSG and asked for WE Charity’s help to deliver this national student service program for the summer of 2020. Here is the email from Ms. Wernick to WE Charity’s co-founder asking for the conversation.
As stated by Ian Shugart, Clerk of the Privy Council and Secretary to the Cabinet, in his remarks to the Standing Committee on Finance in July, WE was chosen for its track record: “What WE was able to provide… was the full range of services that would go to the heart of this matching program that would put young people in contact with not-for-profits so they could gain the relevant experience; their ability to promote the program with a massive social media following; experience in other situations of matching young people to service opportunities;… existing database information; representation right across the country with partnerships with other charities.”
Please see here for more.
FALLACY #3: Trudeau and Morneau families gained exorbitant benefits from WE Charity.
FACTS: Margaret Trudeau was engaged through a Speaker’s Bureau to assist with various WE Charity events. Started in 2015, she was engaged 28 times for multiple events per engagement, receiving a total of $180,000 (plus 20% speaking bureau commission). Similarly, Alexandre Trudeau was engaged for 9 events in 2017 and 2018 for a total $36,000 (plus 20% speaking bureau commission). Many media have conflated honorariums with travel and accommodation expenses, which do not benefit the individuals. For more details, please see here.
In 2017, WE Charity invited noted philanthropist Nancy McCain and her daughter, who were in Kenya visiting programs the family had philanthropy supported, to see the WE Charity programs. This prompted a second visit from the full McCain-Morneau family in 2017 to WE Charity’s Ecuador projects. WE Charity hosted the family at the project sites in WE accommodation. At the end of that trip, the family donated $50,000, and later followed up with a second $50,000 donation. All international flights and related expenses to Kenya and Ecuador were paid directly by the families.
In July 2020, Bill Morneau contacted WE Charity in order to pay the highest possible amount that could have been incurred for arranging similar visits. This was estimated at $41,000 for all family members to stay at the charity’s Kenya and Ecuador project sites. To be clear, these did not represent actual expenses incurred by WE Charity, but represented the absolute maximum costs that could be incurred for such trips by the same number of people. For more details, please see here.
FALLACY #4: The WE Charity Foundation, which was the organization WE used to sign the CSSG contribution agreement, is just a shell company used to hold real estate.
FACTS: Much has been written about so-called complex systems, but there are two ultimately entities: WE Charity and ME to WE Social Enterprise.
ME to WE Social Enterprise incorporates each social enterprise line as a separate entity for ease of operations (ME to WE Trips, ME to WE Chocolate etc.).
WE Charity over the past 25-years has established three related charitable entities to assist with donor wishes, managing liability etc. WE Charity is the founding or sole member of each of these entities, which gives the WE Charity Board of Directors specific legal rights over each entity.
WE Charity Foundation is a registered charity. From a legal standpoint, WE Charity is the founding or sole member of the charity, which gives WE Charity specific legal rights over the WE Charity Foundation.
Contrary to incorrect media reporting and statements by politicians, WE Charity Foundation has never held WE Charity real estate assets, and prior to the CSSG, it never operated nor held any funds for any purpose. Its mandate was adjusted with the CRA for the purpose of the CSSG.
The WE Charity Foundation was created to manage legal liability. The use of multiple corporate entities to isolate liabilities for particular projects is not uncommon. The Government of Canada required that WE indemnify the government from all losses related to the participation of the first 40,000 students as well as the Non-Profit Partners who were engaging those students. WE Charity was therefore assuming significant possible legal liability for the program, especially considering the service work would be done during a global health pandemic. Such liability could overwhelm WE Charity, and counsel advised that the contracting party would preferably be WE Charity Foundation.
FALLACY #5: The CSSG program was doomed to fail.
FACTS: WE Charity has a successful track-record of building large-scale service programs for students. Over 7,000 Canadian schools use WE Charity service-learning programs. In the United States, AP with WE Service is active in all 50 states, and provides the only on-transcript service designation for college applications.
WE Charity built a successful CSSG platform, as evident by the rapid success within one week after launch: • A coalition of 83 not-for-profit partners with 24,000 service placements, a number that was growing each day. • More than 35,000 students applied – including from every province and all three territories. • There was a wide diversity of applicants, with 64% visible minority and 10% LGBTQ2+. • An average of 3,000 new applications were being received each day. These metrics demonstrate that WE Charity’s experience in working with 130+ school districts and agencies across Canada made it an ideal partner to design, launch and deliver this national service program in a matter of weeks.
WE Charity incurred over five million dollars in expenses to build and launch the CSSG. WE Charity waived all reimbursement from the Government of Canada.
It is highly unfortunate that the students and community did not benefit from these service opportunities.
FALLACY #6: WE Charity was in bad financial shape and needed the CSSG to save the organization.
FACTS: WE Charity was in a strong financial position prior to the onset of the pandemic in March. WE Charity had multi-year partnerships locked in, revenues were steady or rising for 5 years straight, with a strong asset.
However, due to the impact of COVID-19, like most organizations, WE Charity was affected financially and forced to make tough staffing decisions to right-size the organization. Following these staffing transitions, WE Charity was in stable financial standing with multi-year sponsorship contracts and eight months’ worth of operational assets.
As such, it would be inaccurate to make any link between the charity’s financial status and the awarding of the CSSG contribution agreement to WE Charity. Further, as the CSSG contribution agreement clearly states multiple times, WE Charity would only be reimbursed for expenses to deliver the CSSG, and the organization did not stand to make a profit from it in any way.
As a result of the political fall-out from the CSSG, WE Charity proactively reached out to its corporate supporters and educational partners to pause partnerships. WE Charity wanted to act honourably to protect the brand of its partners, and felt that they should not be drawn into this political matter.
FALLACY #7: WE Charity relies heavily on Government of Canada funding and regularly lobbies for government contracts. FACTS: During the last fiscal year, WE Charity received approximately 1% of its operating budget from the federal government.
Lobbying has never been a core function of WE Charity. In fact, WE Charity had only one employee handling both “Government and Stakeholder Relations,” at all levels. As the title suggests, this role involved engaging both “stakeholders”, including individual donors and foundations, and government”, including municipal, provincial and federal governments.
The federal concept of lobbying is not limited to advocating for something from government. Responding to a Government of Canada invitation can be considered lobbying. (This is unlike the law in most provinces.) The volume of noted interactions with the government in early 2020 owed directly to the fact that WE Charity was working with the government to establish, design and roll out the CSSG program, at the request of the government itself. See here and here.
FALLACY #8: We Charity has weak governance structures.
FACTS: WE Charity is fortunate to have eight dedicated and experienced members of the North American Board of Directors who provide strong leadership and oversight of the organization. Through their expertise in the non-profit sector, academia, education, legal, finance, government, private enterprise and social enterprise, the Board of Directors provides legal, financial and social impact oversight to WE Charity's projects and activities.
WE Charity has publicly recognized and thanked Michelle Douglas, former Chair of the Canadian Board for her service. Ms. Douglas resigned during the height of the pandemic, in March 2020. There was a difference of opinion between Ms. Douglas and WE Charity senior management regarding pandemic-related staff reductions. In March there were 14 briefing calls with Board members, a full Board meeting, and multi-scenario financial modelling. It was a trying time for everyone, and the outcome was regrettable.
Michelle Douglas transitioned in a manner different than other Board members that year. In anticipation of WE Charity’s 25th anniversary in 2020, the organization launched in 2019 a strategic review of the Board of Directors to help plan for the organization’s future that culminated in 2020.
FALLACY #9: WE Charity’s real estate empire takes away from its charitable mission.
FACTS: WE Charity’s real estate assists in delivering its charitable programs, and provides financial security for the organization.
WE Charity’s main property, accounting for about $35M of its “holdings”, is the WE Global Learning Centre (WE GLC) in Moss Park, Toronto. It was funded through a 20th anniversary capital campaign. It employs advanced technology to connect educators and youth anywhere in the world. The entire the first floor of the WE GLC is an open community space, dedicated to providing access to resources and mentorship opportunities to visiting school groups and other not-for-profits.
For its 25th anniversary in 2020, WE Charity embarked on a capital campaign to create a “campus for good” to retrofit a series of buildings to provide free space for youth-led non-profits and social enterprises. Please see here for an article celebrating the plans.
To correct misconceptions, no funds from youth or international development funds were used for these purchased. Unfortunately, the COVID-19 pandemic stalled the plan for the WE SEC, indefinitely.
Read more about our real estate philosophy here.
FALLACY #10: ME to WE Social Enterprise is just a cash generator for WE Charity.
FACTS: The Canadian Revenue Agency significantly limits the ability of a Canadian charity to operate a business. ME to WE Social Enterprise was founded in 2009 to provide economic opportunity in WE Village communities and a sustainable source of funding for WE Charity. ME to WE Social Enterprises supports the work of WE Charity through three principle avenues:
• Creating over 1,800 empowering jobs in underserved rural WE Villages regions around the world in eco-travel, artisans products, and Fairtrade consumables to help families lift themselves out of poverty. • Providing services to assist the charity, especially establishing hosting facilities in rural regions of developing countries for WE Charity donors who are visiting WE Charity projects and youth service trip scholarship. This has resulted in millions of dollars directly donated by these funders to WE Charity building schools, healthcare facilities and more. • 100% of all ME to WE Social Enterprises profits since its founding have been donated to the charity or invested in the social mission. Annual donations averaging over 90% of its profits to WE Charity (read more), with the balance reinvested to launch the next enterprise. Over the years, ME to WE Social Enterprise has donated in excess of 20-million dollars in cash and cost-offsetting in-kind services to WE Charity.
To learn more about ME to WE Social Enterprises, please click here for detailed transparency information.