WE Charity’s Unusual ‘Backwash’ Financial Activity Raises Questions

July 15, 2020 Updated: July 18, 2020

The Epoch Times posed a series of questions to WE Charity but didn’t hear back by publication time. The organization has since responded. We Charity’s full response is at the end of this article.

The relationship between WE Charity—the Kielburger brothers’ charity at the centre of the scandal dogging Prime Minister Justin Trudeau—and the brothers’ for-profit venture ME to WE is blurring the lines between business and philanthropy, says the managing director of an organization that evaluates charities in Canada.

Kate Bahen of Charity Intelligence Canada says the unusual setup makes it unclear how much ME to WE benefits from WE Charity, citing the organization’s popular ‘voluntourism’ trips funded by ME to WE.

“When the kids go to WE Day and WE Charity says, ‘hey, next spring join us in Ecuador when we build a school,’ then ‘you guys get active, you know, go out and fundraise’—this is where the switch happens. When students raise their $5,000 or whatever it costs, they’re paying ME to WE for the trip with the WE Charity,” said Bahen of the WE volunteer trips to destinations that include places like Kenya and India.

“You don’t get a donation receipt for it like you don’t get a receipt when you buy a box of Girl Guide cookies for $5. You don’t get a tax receipt for that. But the difference is you’re giving your money to the Girl Guides, it doesn’t go anywhere else. But here, you’ve got the advertising for the WE Villages, and then if you go, you’re writing cheques to this private company.”

WE Charity, formerly branded as Free the Children, was founded by Marc and Craig Kielburger in 1995. The brothers went on to initiate ME to WE in 2008.

In addition to the basic nine-day tours ME to WE offers for between $4,000 and $5,000—not including luxury safari or other available add-ons—it also sells extended travel for globetrotting volunteers in youth, school, university, family, and corporate packages, where participants assist with a local development project like improving access to clean water or building a school. To date, WE claims to have built more than 1,500 schools.

Bahen is a former Bay Street investment adviser turned non-profit watchdog of Canada’s myriad charities. Each year, Charity Intelligence Canada analyzes publicly available financial statements of more than 750 not-for-profits and rates them for transparency, overhead percentages, and social impact.

She describes WE’s organizational structure as “utterly unique” in the charitable sector for something she calls “backwash.”

“You would never see Jumpstart (Canadian Tire’s youth sports charity) raising money in the community and then writing a cheque to Canadian Tire,” Bahen said of WE Charity’s financial statements that indicate tens of millions of dollars have flowed from WE Charity into ME to WE’s coffers.

According to WE Charity’s 2019 financial statement, it paid ME to WE a total of around $4.3 million. This included about $3.6 million for rent, promotional goods, and travel and leadership training services, and another $759,200 for books purchased through intermediaries. In an abridged eight-month financial reporting period for 2018, WE Charity paid ME to WE a total of around $3.2 million.

Over the years, ME to WE has donated more than $20 million in cash and cost-offsetting in-kind services to WE Charity, according to ME to WE’s website. However, Bahen told CBC that WE Charity has paid $11 million to ME to WE over the last decade.

WE Charity boasts on its website that Charity Intelligence Canada has awarded WE Charity “its highest four-star rating.” However, Charity Intelligence has since downgraded WE to a 3-star “fair” rating and issued a donor advisory about WE’s “nearly completely new board.” Since last year, four of six of board directors have been replaced, and a new director resigned just last month.

Charity Intelligence also states that there is “donor confusion about the blurred lines between WE Charity and ME to WE.”

Epoch Times’ queries to WE Charity and ME to WE about their relationship, the charity’s backwash into the for-profit, or how many Canadians have taken a ME to WE ‘voluntour’ have gone unanswered.

Nipa Banerjee, senior fellow at University of Ottawa’s School of International Development and expert in foreign aid effectiveness, including charitable organizations operating in developing countries, questions the value of sending volunteers to a host nation.

“An organization like WE, they send volunteers to different countries and these people don’t get an any salaries as such, but there is a cost to their accommodation, to their food, to their travel etc.,” said Banerjee.

“And whether or not the amount spent on those things is really cost beneficial for the recipient country, that has to be looked at one by one, case by case.”

Banerjee said development projects work best if they’re homegrown ideas and managed locally.

“The first thing I tell students is that development is not charity. Of course, these countries don’t have the means and so sending money is important, but resources should be targeted at development programs handled by the country itself,” she said.

Apologies and Investigations

Details of how the kiboshed Canada Student Service Grant deal with WE came about is currently being probed by Conflict of Interest and Ethics Commissioner Mario Dion. The Opposition Conservatives have called for the PM to testify about his involvement at the federal finance committee studying the issue, and have also called the RCMP to investigate potential criminality.

On July 13, Finance Minister Bill Morneau followed in Trudeau’s footsteps by issuing an apology for being part of a cabinet decision to hand a $20 million contract to WE to administer over $900 million to students for volunteer work.

After WE acknowledged its for-profit ME to WE corporation paid Trudeau’s mother Margaret Trudeau some $250,000 for 28 speaking engagements and brother Alexandre Trudeau $32,000 for eight similar appearances, it emerged that Morneau’s daughters also had close connections with the charity.

In 2016, WE promoted Clare Morneau’s book “Kakuma Girls: Sharing Stories of Hardship and Hope from Kakuma Refugee Camp,” and the same year she spoke at a WE charity event (unpaid according to WE). Morneau’s adopted daughter, Grace Acan, currently works for the charity.

“Given the fact that my daughter works for the organization in an unrelated branch, I now realize I should have [recused myself] in order to avoid any perception of conflict,” Morneau said in a July 13 statement.

“I apologize for not doing so, and moving forward, I will recuse myself from any future discussions related to WE.”

When Trudeau offered up his mea culpa the same day he said that due to the pandemic “we got very creative with a range of programs” to assist Canadians, involving charitable organizations like the Red Cross and United Way.

“When it came to [WE Charity] and the [Canadian Student Service Grant], the involvement that I’d had in the past and that my family has, should’ve had me remove myself from those discussions and I’m sorry that I didn’t,” he said.

Also on July 13, the Kielburgers published full-page advertisements in the Toronto Star and Globe and Mail and a statement on their website.

“The past two weeks have been extremely difficult. The charity’s integrity and purpose has been called into question,” reads the brothers’ joint statement, noting that they had “made mistakes that we sincerely regret.”

As for the now-cancelled $20 million contract to dispense more than $900 million to students for volunteer work, the Kielburgers said “they agreed to this challenge because we have 25 years of experience building youth service programs that are in 7,000 Canadian schools.”

This week, the New Democrats and Bloc Quebecois joined the Conservatives in calling for Trudeau to answer questions in front of the all-party finance committee.

Conservative finance critic Pierre Poilievre said if Trudeau declines to appear, a vote in the House of Commons could be called to compel him to testify, which in the current minority government scenario requires both NDP and Bloc support.

The Bloc also repeated its call this week for Trudeau to step aside while Dion investigates whether he broke federal law.

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Response from WE Charity:

We would like to clarify that ME to WE Social Enterprises supports the work of WE Charity through three principle avenues:

  1. Annual donations averaging over 90% of its profits to WE Charity over the last 5 years (See HERE)
  2. Creating empowering jobs in underserved rural WE Village regions around the world in eco-travel, artisans products, and Fairtrade consumables to help families lift themselves out of poverty. For example, on average women artisans in Kenya earn 4x more than they previously earned. 
  3. Providing services to assist the charity, especially hosting at ME to WE travel locations WE Charity donors who are visiting charity projects and youth service trip scholarship. This has resulted in tens of millions of dollars directly donated by these funders to WE Charity.

 When ME to WE was launched, the idea of social enterprise was still relatively new in Canada. Although it was built on the work of pioneers like Grameen Bank, Goodwill and Habitat for Humanity’s ReStore, Canadian business and tax laws still made it difficult to earn profit to support a charitable cause. Canadian CRA regulations limit the ability of charities to engage in commerce, and, in order to follow CRA guidelines, a separate legal entity was launched with the support of external experts ME to WE Social Enterprise. ME to WE’s business structure, and the legal relationship to WE Charity, have been reviewed by multiple eminent legal experts including the former Prime Minister John Turner and former Supreme Court of Canada Justice Peter Cory. 

 We can also confirm, through audited statements that over the past five years that ME to WE Social Enterprise has given, on average, over 90% of its profits to WE Charity over the past 5 years.

 ME to WE Social Enterprise has donated in excess of 20-million dollars in cash and cost-offsetting in-kind services.  

 Since founding, 100% profit have either been donated to WE Charity for social impact programs or reinvested to grow ME to WE Social Enterprise and its social mission (see HERE). 

 Further, both internal controls, external reviews, and auditors have confirmed that any financial interactions between the two entities has ensured that WE Charity has disproportionality benefited. In order to ensure full transparency, the Honourable Stephen T. Goudge conducted a 2019 review of ME to WE, including the salaries of its co-founders Craig Kielburger and Marc Kielburger. All is publicly available HERE

 In response to your question about trips, there have been tens of thousands to a Asia, Africa, Latin America and around the world since 1999.

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