Thank you.
Good morning. My name is Greg Thomson. I am the director of research for Charity Intelligence. Charity Intelligence is itself a charity, one that analyzes Canadian charities to help donors be informed and give intelligently. Our website hosts free reports on more than 780 Canadian charities and provides insight into such specific giving areas as the environment, cancer and homelessness. This year some 314,000 Canadian donors used our website for information on Canadian charities, reading over 1.3 million charity reports. We estimate that our research helped inform and influence $95 million in Canadian charitable giving last year alone.
Just as democracy depends upon informed citizens, the fundamental health of philanthropy rests on well-informed donors. Our own research supports this case. In our surveys of donors who have used our website, 77% say that Charity Intelligence reports have improved their confidence in giving to charities, and have inspired these donors to give 32% more money to charities. It’s within this context that Ci presents to the finance committee today.
Since 2011 Ci has analyzed and reported on WE Charity. WE Charity Canada is a big piece, but only one piece, of what we now know is a highly complex international network of WE-related entities. Starting in 2014, Ci rated WE Charity with our highest four-star rating based on transparency, reporting and overhead spending. WE Charity ticked all of the boxes and performed well relative to other Canadian charities.
In September 2019 Ci analyzed WE Charity’s demonstrated impact, the measurable returns from its programs, and found WE Charity’s impact to be “fair”. Fair is below average. This reduced Ci’s rating on WE Charity to three stars.
Our major limitation as analysts is that we are only as effective as the data is reliable. We are analysts, not auditors.
Ci’s August 2019 report on WE Charity flagged the following material information: a breach of financial covenants on its $13.7 million in bank debt that its bank has waived for the second year in a row; and the related party transactions with 8% of donations to WE Charity going to ME to WE, the private business controlled by Marc and Craig Kielburger, to purchase goods and services. In August 2019 an outside party shared with us public records about WE Charity’s real estate transactions. These transactions were not disclosed as related party transactions in WE Charity’s audited financial statements. Given this lack of disclosure, we reviewed WE Charity’s auditor, who has a solid reputation for tax and business. However, the auditor’s website advertised only one charity client: WE Charity. In our database, no other charity used this auditor.
This contrasts with WE Charity hiring the most prestigious law firms and its stated commitment to the highest financial transparency. We questioned why WE Charity has not hired leading international auditors to prepare their financial statements, despite being one of Canada’s largest charities with global operations. On learning of the resignation and replacement of WE Charity’s directors in March of this year, we arranged a 30-minute video call with WE Charity’s chief operating officer. Subsequently, we learned through the media that one of the newly appointed directors had resigned. We were not assured by WE Charity’s comments or statement. On July 17, 2020, Ci issued its strongest alert, a donor advisory.
With more news coming to our notice, and after looking at other WE entities, we released our list of 10 questions, primarily as follows. Was the cabinet aware that the CSSG was contracted through WE Charity Foundation, a new and separate foundation with no employees or assets, rather than WE Charity? Why are the Kielburgers not directors of any of the WE charities but take the title “co-founders”, which allows them to avoid fiduciary responsibility and evade disclosure? Why has neither WE Charity Foundation in Canada or ME to WE Foundation in the U.S. disclosed in their regulatory filings the non-arm's-length relationships of their three directors? Why does WE need such a complex organizational structure with multiple single-purpose entities to do its work? This is highly unusual for charities, even amongst Canada’s largest international aid charities.
WE Charity is an outlier. Normal metrics for assessing charities do not adequately reflect its suitability for donors. It is not similar to the vast majority of other Canadian charities. We have flagged these issues because the more donors understand about the entirety of the WE network, the better informed they will be and the better able to give intelligently.
With that, I'll hand the floor to Kate Bahen, managing director.
