WE Charity Canada says it could take a year to wind down, will still release documents

Click to play video: 'WE Charity shut down reignites political controversy'
WE Charity shut down reignites political controversy
WATCH: WE Charity shut down reignites political controversy – Sep 10, 2020

WE Charity says it will still release internal documents, requested by Parliament, as the embattled organization proceeds with plans to lay off 115 staff and shutter Canadian operations.

But in the wake of a political scandal involving the charity that has rocked Prime Minister Justin Trudeau’s Liberal government, many questions remain about what will happen to a group of nearly a dozen sister organizations in the WE empire, including its for-profit arm, ME to WE.

The NDP and Conservatives have called on the charity to “immediately release” several documents that the Kielburgers and the charity’s staff promised to provide the parliamentary committee probing the controversy this summer, but haven’t yet been released. Among those documents include a breakdown of how much the WE organization paid members of Trudeau’s family for appearing at its events.

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WE said said Thursday it would be “pleased to provide” the documents once a new Commons finance committee is selected when Parliament resumes Sept. 23.

The charity also said although its operations in the U.S. are not currently impacted, the future of ME to WE Social Enterprises will be determined in the coming months.

“We expect the wind down of WE Charity Canada to take six to twelve months, and at the request of our Board of Directors we will be asking our WE Charity Canada staff to support with varying aspects of the transition from the planning to the execution,” the charity said in a statement Thursday.

“After this transition is complete, both Craig and Marc Kielburger and WE Charity Canada staff will move on from the organization.”

The WE organization founders, Craig and Marc Kielburger, said Wednesday that ME to WE, which makes money through leadership courses, travel services and retail sales, has been significantly affected by the ongoing COVID-19 pandemic and whether the company will continue is part of an “ongoing conversation.”

“All that we’ve done has come to a halt at this point including ME to WE,” Marc Kielburger told CTV news.

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“ME to WE has specialized in international volunteer travel and that’s of course no longer happening; we’ve gotten down to a handful of staff at this point and that’s up for conversation as well. We’re working with our advisers and our board and one step at a time.

“But again, today is about the decision here in Canada.”

Click to play video: 'WE Charity closing operations in Canada'
WE Charity closing operations in Canada

Kate Bahen, managing director of Charity Intelligence, said WE’s decision to shut down its Canadian operations is an “extraordinary development.”

“It’s such a drastic measure,” Bahen told Global News. “Other charities have gone through tough questioning, other charities have sat through royal commissions and committee hearings. And they’ve been able to face the music. They’ve come through and they’ve survived.

“To close down the Canadian operations, to close down WE Charity’s mothership of its global activities, it’s something I had not expected.”

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The Kielburgers, who are also planning to step down from the organization, said the decision to shutter its Canadian operations was due to the COVID-19 pandemic and the political fallout from its controversial agreement with the federal government to administer a student volunteer program, the Canada Student Service Grant (CSSG).

The agreement was cancelled in July amid growing questions about the group’s connections to Prime Minister Justin Trudeau’s family and that of former finance minister Bill Morneau.

“COVID-19 disrupted every aspect of our work,” the brothers wrote in the letter Wednesday. “The fallout from the Canada Student Service Grant has placed us as a charity in the middle of political battles and misinformation that we are ill-equipped to fight.”

WE has said it plans to lay off 115 Canadian staff and sell its property in Canada in the coming months, including the $15-million Global Learning Centre in downtown Toronto, which opened in 2017.

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WE Charity owns roughly $43.9 million of Toronto real estate, according to its 2019 filings with the Canada Revenue Agency, which only reflects how much the organization paid and not their actual value.

The charity said net profits will be put in an endowment fund that will be overseen by a new board of governors and used to complete several projects in communities in Latin America, Asia and Africa and provide online education resources for educators in Canada.

It will also fund infrastructure projects that need ongoing support, like the Baraka Hospital and WE College in Narok County, Kenya, and the Agricultural Learning Centre in Ecuador.

“Going forward, there will be no new schools, water or agricultural projects, and no expansion to new communities in the nine countries where WE Charity is active,” WE Charity statement.

Bahen said it’s “interesting” that the endowment fund will support international programs in markets that are aligned with ME To WE’s lucrative travel services.

“It is now pivoting to create this new WE Charity foundation that’s going to have an endowment that;s going to be focused on supporting its international programs in Kenya, Ecuador and China. It’s also interesting to note that those are the key markets for ME To WE’s travel business,” Bahen said.

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“While we charity is going to be shut down, WE Charities assets now are going to be going into a foundation that are going to be supporting the projects in those key markets for ME To WE’s travel business.”

Marc and Craig Kielburger told CTV that they were not able to make any decision yet about ME to WE’s future.

Click to play video: 'The timeline of Trudeau’s WE Charity controversy'
The timeline of Trudeau’s WE Charity controversy

The Kielburger brothers started the charity 25 years ago under the name Free the Children before launching an empire of more than 10 other entities based in Canada, the U.S. and Britain.

The British charity had $8.9 million in revenue last year, according to its fillings in the U.K., while the U.S. wing of the charity had over US$31 million in revenue in 2019.

Among its for-profit entities is ME to WE, a “social enterprise” that operates travel services to destinations such as Kenya for about US$6,000. It also sells what it calls Fairtrade chocolate, coffee and bracelets.

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The WE organization has faced previous criticism over how money flows between the charity and the businesses, as ME to WE’s financial statements are not. In a statement last month, the organization said that “100% of ME to WE Social Enterprise’s profits have been either donated to WE Charity or reinvested to grow the social enterprise and its mission.”

Click to play video: 'WE scandal: Co-founders Craig, Marc Kielburger defend taking on student grant program'
WE scandal: Co-founders Craig, Marc Kielburger defend taking on student grant program

WE Charity and the Trudeau government have been embroiled in controversy over a now-cancelled agreement to administer the CSSG that would have seen WE paid up to $43.5 million to run the program, which was budgeted at $912 million.

News of the deal prompted immediate questions about Prime Minister Justin Trudeau‘s ties to WE.  Trudeau himself has been a featured speaker at half a dozen WE events and his wife, mother and brother have been paid hundreds of thousands of dollars over the years in expenses and speaking fees.

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The controversy also ensnared former finance minister Bill Morneau, whose family has close connections to the charity.

Both Trudeau and Morneau are facing investigations by the federal ethics watchdog into whether they violated the Conflict of Interest Act. Both have apologized for not recusing themselves in the matter.

Meanwhile, Bahen is worried the WE Charity scandal could have a longer term impact on donations to the not-for-profit sector which is reeling from the COVID-19 pandemic. She said that individual giving to charities is expected to drop 25 to 35 per cent in Canada, which represent anywhere from $4 billion to $6 billion in donations.

“This is not usual, she said. This is a highly extraordinary situation that needs to be looked into more,” she said.

— With a file from Abigail Bimman

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