WE’s mixing of profit with charity should have raised red flags for the government

WE’s mixing of profit with charity should have raised red flags for the government
Two of the three times Prime Minister Justin Trudeau has gotten into trouble for ethical lapses were because of his relationships with supposedly not-for-profit NGOs (non-governmental organizations). 

In both cases, the NGOs have significant financial resources. More important, both NGOs blur the line between doing good for humanity and making a profit for themselves.

The Aga Khan empire includes for-profit businesses, a not-for-profit development agency, a centre for pluralism, and an organized religious denomination. It is vast, wealthy, and global in its reach. 

The Aga Khan’s development arm does business with many governments, including Canada’s. Because of that relationship, the parliamentary ethics commissioner rapped the prime minister’s knuckles for a 2016-2017 winter vacation he, his family, and close friend, Liberal MP Seamus O’Regan, took at the Aga Khan’s luxurious quarters on a private island in the Bahamas.

At the time, Trudeau argued that the vacation was entirely personal and had nothing to do with the government. The Aga Khan, he said, was a longtime Trudeau family friend. 

Former ethics commissioner Mary Dawson did not buy it. She said the lavish paid vacation could be seen as an attempt to influence the government. 

This writer pointed out, in 2017, that no other Canadian NGO — many of which do excellent and effective work, with minimal funding — would be able to offer an all-expenses-paid, luxury vacation to the prime minister .

WE also blends for-profit with not-for-profit

The WE organization, the focus of the most recent ethics imbroglio, is not as vast, wealthy or grandiose as the Aga Khan empire. But, by Canadians standards, it is big and generously funded. 

According to Charity Intelligence Canada, an independent organization that rates charities according to a series of quantifiable criteria, WE “is one of Canada’s largest charities.” 

According to Charity Intelligence, in the most recent year for which figures are available, WE reported nearly $28.1 million in donations. As well, it received several million dollars from its U.S. and U.K. affiliates.

WE owns significant real estate, valued at nearly $40 million, which allows it to borrow heavily. For the most recent reported period, the organization was in a deficit position, to the tune of somewhat over $2 million. This put it in breach of what Charity Intelligence calls the “financial covenants” on its bank debt. But because the loans were secured against WE’s properties, its bank waived the restrictive conditions.

Overall, Charity Intelligence gives WE high marks on certain fronts: financial transparency, for example, as well as results reporting, and the proportion of its money it spends on administrative overhead (14 per cent). 

However, given WE’s record of running deficits for some years, Charity Intelligence is not impressed with the organization’s overall management of funds. And, on what is probably the most significant measurement, demonstrated impact, Charity Intelligence gives WE only a “fair” grade. 

WE engages in lots of activity, both in Canada and overseas. 

In the developing world the organization works with local partners on education, water, health, and food security. In that regard, WE’s focus does not differ from many other less-favoured and less flashy NGOs.  

It is WE’s final area of focus — entrepreneurialism — that sets it apart. The organization’s emphasis on promoting private enterprise and the profit motive as valid goals for development work is what most likely endears it to so many well-heeled donors. 

Some donors would likely consider other, more grassroots NGOs to be too anti-corporate for their taste. USC-Canada’s Seeds-for-Survival program, for instance, is openly critical of certain powerful corporate interests. It works to lessen the influence of massive agribusinesses, such as Monsanto, on agriculture in the Global South. 

In Canada, as opposed to the developing world, WE’s activities are focused to a surprising degree on cheerleading and mass rallies. That emphasis puts it far out of step with the hundreds of low-profile Canadian NGOs, which focus on tangible work at the community level.

It is the preoccupation with rallies and other large public events that brought people such as the prime minister’s mother, Margaret Trudeau, into WE’s orbit. 

When your goal is to attract attention to yourself it is helpful to have celebrities on the stage. And when you want famous people to help you out, sometimes you have to pay them.

Still, while many might wince at the idea of an NGO that depends on charitable donations and government money paying speakers, it is perfectly legal. It is not that practice that Charitable Intelligence considers to be most objectionable about WE. 

One hand washes the other

What really bugs Charity Intelligence is the way WE deliberately blurs the lines between its for-profit business and its charitable activities.

The fact is that there are two closely related entities: WE, the charity, which Craig Kielburger founded as Free the Children in 1995; and ME to WE, a business, not a charity, founded in the 2000s, whose mission is to create “profit for social good.”

Charitable Intelligence believes the intertwined structures of the charity, WE, and the business, ME to WE, create what it calls “donor confusion.”

Officially, the two distinct organizations are referred to, collectively, as “WE,” or “WE organization” or “WE movement.” There is often little distinction made between the for-profit business and the not-for-profit to which people donate money.

The business, ME to WE, is a private corporation, owned and controlled by the charity WE’s co-founders, Craig Kielburger and his brother Marc. In addition, the CEO is Marc Kielburger’s wife, Roxanne Joyal.

And just to make the circle complete, WE and ME to WE share the same chief financial officer. It’s a cozy arrangement.

On an operational level, WE Charity, buys stuff, such as promotional goods and travel services, from ME to WE the business, which then turns around and makes charitable contributions back to WE.

It is a classic story of the left hand washing the right. 

In an interview on CBC Radio’s The Current, Charity Intelligence’s managing director Kate Bahen explained that the business ME to WE does not have any disclosure requirements. We do know, she said, that since it was founded, ME to WE says it has donated $20 million to WE. At the same time, however, over the past 10 years the WE charity has paid the business $11 million.

“In the last two years, 2018 and 2019,” Bahen told the CBC, “seven per cent and eight per cent of WE Charity’s total revenues have flowed to ME to WE, the private business of the Kielburgers.”

Bahen considers that the entire arrangement is, to put it generously, problematic.  

Canadians who participate in WE events, or who give to the organization, have no way of knowing to what extent their donations or money spent on WE-sponsored trips go into the coffers of the Kielburgers’ private corporation. 

WE’s alleged ethical and management issues are now well-documented, and have been known in NGO and charitable circles for a while. Despite that, the prime minister says, the civil service recommended that the government award WE a sole-source contract to manage nearly a billion dollars of public funds. 

When asked if the bureaucrats’ recommendation came in written form, the minister responsible for the program, Bardish Chagger, said something about how the civil service always provides detailed written documentation. 

It would be helpful if Canadians could see those documents, but don’t hold your breath. They are covered by the arcane rule of cabinet confidentiality. 

The government will try to tough it out, and hope a couple of apologies do the trick, even as more revelations about the deep involvement of the prime minister and his family with WE emerge. 

Given the dumpster fire south of the border, Canadians might be willing to afford their prime minister — who looks balanced and reasonable compared to too many other world leaders — another pass on yet another major ethical breach. 

We do, indeed, have bigger worries, much bigger. 

In the end, that is what is most shameful for the prime minister. 

This perilous time — when we face such monstrous human, economic and environmental challenges — is exactly the wrong time to have allowed the vexatious distraction of an avoidable scandal to bloom and grow. 

Karl Nerenberg has been a journalist and filmmaker for more than 25 years. He is rabble’s politics reporter.

Image: CanadianPM/Twitter/Screenshot

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