Charity watchdog tells MPs its research raised red flags over WE

A charity watchdog group told MPs that it dropped its rating of WE Charity after it looked closer at whether the organization was making the difference it intended.

Charity Intelligence Canada, which is a charity itself, made the call after looking at publicly available data on the organization and speaking with WE officials. 

Greg Thomson, director of research at Charity Intelligence, told MPs that his organization’s research raised a number of red flags, including that WE Charity has breached a financial covenant on millions of dollars in bank debt, WE’s complex structure and accounting mechanisms, and the fact that Craig and Marc Kielburger are listed as co-founders of the organization — not directors — which allows them to avoid fiduciary responsibility and disclosure requirements.

“WE Charity is an outlier. Normal metrics for assessing charities do not adequately reflect its suitability for donors,” said Thomson. “It is not similar to the vast majority of Canadian charities.”

Early last month, WE backed out of running the Canada Student Service Grant over a controversy around its ties to Prime Minister Justin Trudeau and members of his family, who have received speaking fees from the group totalling more than $500,000.

Charity Intelligence’s previous warnings about the WE organization garnered rebukes from WE and its co-founders, the Kielburgers, who testified before the committee last week.

The controversy around the grant program has also raised questions about WE’s use of high-profile corporate sponsors and celebrity endorsements and its work culture.

Audit of WE Charity and related entities

Conservative MP Greg McLean wrote National Revenue Minister Diane Lebouthillier on Wednesday, requesting that she commission an audit of the consolidated financial statements of WE Charity and all its many connected entities, including the formally separate WE Charity Foundation that was selected to administer the student grant program.

“Surely, as minister of national revenue, you and your officials must be curious as to the fluidity of expenses allocated between various WE entities,” he wrote, suggesting that expenses of tax-exempt charitable events may have been improperly allocated to taxable WE entities.

Charity Intelligence’s managing director Kate Behan told MPs she said an audit would give donors more confidence that their money is being put to good use.

“With so many allegations swirling around about the numbers, I believe that donors and the corporate sponsors would get a shot of confidence if an international tier one firm, auditing, came in to do the audit on these,” said Behan. 

Kate Behan of Charity Intelligence told MPs she thinks a ‘tier one’ international auditing firm should audit WE Charity. (Submitted by Charity Intelligence)

The organization has also faced allegations of lobbying the federal government in April, without registering as legally required, about a youth program similar to the eventual student grant program.

Meanwhile, opposition parties are hoping the imminent release of government documents will shed some light on how an organization with close ties to Trudeau was awarded a deal to administer the $912-million student program.

The government has until Saturday to table with the finance committee all memos, briefing notes, correspondence and other documents related to the now-cancelled agreement.

Thursday’s meeting almost didn’t happen due to the unavailability of key witnesses.

Conservative members of the committee had submitted a list of witnesses they want to hear from, including WE Charity’s chief financial officer, Victor Li, and Employment Minister Carla Qualtrough.

Committee chair Wayne Easter said Wednesday that Qualtrough has indicated she won’t be available until next week and Li isn’t available until sometime next month.

NDP committee member Peter Julian said he’s “not yet” concerned that witnesses are not making themselves available for questioning about the affair, which has mired the government in allegations of unethical conduct.

Indeed, he is hoping that the documents will clarify some facts and give the committee a better sense of who should be called as witnesses and what questions should be asked.

“There’s been so many contradictions through this that I think it’s fair to say that the documents, hopefully, will start giving us some answers,” Julian said in an interview.

“I think in terms of the next witnesses to get answers, the documents will help point us in the right direction.”

Julian moved the motion, adopted by the opposition-dominated committee a month ago, to demand the government produce all documents related to the affair.

He is hoping that another one of his motions, passed by the committee earlier this week, will help encourage other witnesses — those with knowledge of WE Charity’s operations but afraid of repercussions if they speak out — to come forward. The motion extended parliamentary privilege to protect witnesses against potential law suits.

Liberal ties to WE organization

The controversy has dogged the government since late June, when it announced an agreement to pay WE Charity up to $43.5 million to administer a $912-million grant program designed to encourage students to sign up for volunteer work related to the COVID-19 pandemic. The agreement stipulated that the charity could not make money on the deal.

Trudeau has been a featured speaker at six WE Day events since becoming prime minister, and his wife hosts a podcast for the group, for which they have not been paid. However, it has since transpired that Trudeau’s mother and brother have been paid almost $300,000 for speaking at numerous WE event over the years and reimbursed for some $200,000 in expenses.

One of Morneau’s daughters works for the organization, another has spoken at its events and his wife has donated $100,000 to it. Morneau also revealed last week that WE Charity covered $41,000 in expenses for him and his family in 2107 for trips to view two of its humanitarian projects in Ecuador and Kenya.

Morneau wrote a cheque to reimburse the organization for those expenses shortly before testifying at committee last week.

Prime Minister Justin Trudeau appears via videoconference before the finance committee on July 30. (Sean Kilpatrick/The Canadian Press)

Both Trudeau and Morneau have apologized for not recusing themselves from the cabinet decision to have WE Charity administer the student grants. However, they’ve insisted the recommendation to outsource the program to the charity came from public servants and that they did not personally try to influence the decision.

Indeed, Trudeau testified he delayed cabinet consideration of the plan on May 8, when he says he first learned of WE Charity’s involvement, so that bureaucrats could do further “due diligence.”

At no point did either Trudeau or Morneau consult the ethics commissioner on the matter.

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