Evidence of meeting #45 for Finance in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was sir.
A video is available from Parliament.
Liberal
Julie Dzerowicz Liberal Davenport, ON
Okay, perfect.
Now I'm going to get to my question.
One of the key things we have to determine here is, how did we get to selecting WE Charity? Can you maybe, for about 20 seconds or 25 seconds, explain what sets WE apart? Why is it that WE Charity was the best organization to actually deliver this program?
Conservative
Michael Barrett Conservative Leeds—Grenville—Thousand Islands and Rideau Lakes, ON
Point of order, Mr. Chair.
Conservative
Michael Barrett Conservative Leeds—Grenville—Thousand Islands and Rideau Lakes, ON
I just want to confirm that Ms. Dzerowicz was concerned that points were being restated. She's asking them to restate something they said during their opening statement—
Conservative
Michael Barrett Conservative Leeds—Grenville—Thousand Islands and Rideau Lakes, ON
I'm just trying to be consistent, Mr. Chair.
Liberal
The Chair Liberal Wayne Easter
Okay, we'll not get into an argument here. We will go back to questions.
Founder, WE Charity
Allow me to answer the question this way: It's what the Clerk of the Privy Council said. It's also what Rachel Wernick said.
In 25 years, we have engaged 7,000 schools across Canada in WE service programs. We have the largest Facebook and social media presence engaging youth from coast to coast to coast. We work in indigenous communities, with new Canadians, and we have staff and operations that serve.... We have the ability to build national service projects. We've done this twice in the past with distinct groups. We were willing to literally do this at the drop of a hat. We said that we would put our organization on pause, because we thought this was something that Canada needed.
Frankly, I have to say that the fallout of this has been unbelievable. It's damaging so many of the service projects and what we've tried in the past 25 years of our lives to try to build.
Liberal
Julie Dzerowicz Liberal Davenport, ON
Okay. I have two more questions.
Ms. Douglas mentioned to us that she and a number of other board members had resigned. Does that mean there was a big gap in your governance, that no one was on your board anymore and you didn't have proper governance for a period of time? How was that dealt with when Ms. Douglas and a number of other board members left? How did you ensure there was proper continued governance of the WE Charity?
Founder, WE Charity
During the pandemic, the senior staff and Ms. Douglas had a disagreement over the nature of reporting. Daily oral briefs were being provided, 14 over the course of the month, but we respect what she was asking for in writing. Due to the extraordinary circumstances, the team was not able to provide that.
As you heard, we had a conversation. I asked her to serve three more months. She decided at that moment to step aside. I respect that decision. That took place separately. There was a planned renewal process took place with other board members. In a different period the board members made a transition, and today three of the eight board members continue to serve and have served throughout the whole process. They are the head of finance on the board, a former BlackRock and Deloitte individual; the head of legal, a partner from one of the largest law firms in the U.S.; and the former director of education of Toronto Public.... All continued to serve, in addition to five individuals who joined, who had been pre-identified before the pandemic, to bring their skill sets.
I am extraordinarily grateful to Ms. Douglas for her service. She raised very valid points, and we commit to continuing to strengthen our governance, because she's right: We have to do better. But this was part of a larger, slightly more nuanced undertaking that took place.
Liberal
Julie Dzerowicz Liberal Davenport, ON
Thank you.
Ms. Douglas also mentioned that part of her concern was that there were a lot of layoffs. She said around 400 of the 1,000 employees were laid off, so there was a huge concern. My concern was, when we were selecting WE Charity, did you guys actually have the capacity to be able to deliver the program? Could you address that?
Founder, WE Charity
Thank you.
We very much had the capacity. With the layoffs, we went from 390 employees at WE Charity to, at the end, down to, quite sincerely, a wonderful team of 187. So the team was impacted. We needed to make some very strong decisions because of the pandemic, but we also had an alumni network. We had a group of other team members who were willing to come back on short-term contracts. We had relationships with educators who said they wanted to help. We have 2,500 former team members over the last 25 years, and we have a great network. Yes, we were very much ready.
Here's the wonderful thing about this. It's unfortunate, but at launch we were ready to do something truly wonderful for these young people and for Canada. We had 36,000 young people signed up for this initiative; 64% were individuals of minority populations. We had tens of thousands of volunteers—
Liberal
Founder, WE Charity
We were ready to do something really special, thanks to all of these amazing people, and thanks to an amazing team.
Liberal
The Chair Liberal Wayne Easter
Okay.
Ms. Gaudreau, you're next for about three minutes, and then Mr. Angus, and then on to Mr. Cooper.
Bloc
Marie-Hélène Gaudreau Bloc Laurentides—Labelle, QC
Good afternoon.
You spoke of WE Charity's financial situation. You mentioned that is is precarious.
In your remarks, you revealed a lot of things and I am very grateful to you for that. Can you tell us about the financial difficulties involving around $10 million?
Founder, WE Charity
Madame, I believe you're speaking about the bank covenant issue that's also been very much misrepresented in the press, particularly by one organization called Charity Intelligence that is sharing false information.
Specifically, the bank covenant issue was not an issue. Specifically, we and the board decided to change our financial year from the calendar year to the academic year. By doing so, it enabled us to focus very specifically on our program deliverables because it was tied to the academic year. By such, we had to defer a larger amount of revenue, which we did knowingly, and by that deferral we had a technical breach of our bank covenants. We had a conversation with our lender. They had no concerns about this, and the organization was in very fine financial shape as a result.
Founder, WE Charity
Could I just make that simpler for any Canadians who are watching? At the end of the day, the same amount of money was coming in, but the year shortened, because we had a different fiscal year, and the money we had to recognize later in the year, because you have to recognize the money comes in [Inaudible--Editor] you're going to spend it. It's the same amount of money. We were in no financial difficulty. This is, unfortunately, something that's been misrepresented by this website for whatever reason, but the organization was in a very solid operational state, including eight months of assets against our long-term placement. We had no—
Bloc
Marie-Hélène Gaudreau Bloc Laurentides—Labelle, QC
Thank you very much.
Has anyone from the Prime Minister's Office contacted you to obtain documents or information on your financial situation?
In addition, I would like to know whether you have an auditing system in place for both WE Charity and the WE foundation?
Founder, WE Charity
The Prime Minister’s Office was not involved in the vetting for the Canada student service grant. It was ESDC, so no one from the Prime Minister’s Office contacted us with questions.
Bloc
Marie-Hélène Gaudreau Bloc Laurentides—Labelle, QC
Okay.
However, when a contract is awarded, due diligence must always be performed.
Do you know whether they did that work to ensure your financial viability as an organization that received a contract as part of the agreement?
Founder, WE Charity
I would defer the question to the government, except I would add quickly that Rachel Wernick first visited our operations in 2017 and toured the broadcast facility that we have in our global headquarters, the digital classrooms and Skype pods where we host school groups on a regular basis. She saw what we were developing in the neighbourhood, the Network for Good, the campus for good that we were building to host other young entrepreneurs for [Inaudible--Editor] and space and whatnot.
Over the years we had had multiple grants with ESDC—
Bloc
Marie-Hélène Gaudreau Bloc Laurentides—Labelle, QC
So, you did not actually open your books when negotiating the contract agreement.