Evidence of meeting #49 for Finance in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was charities.
A video is available from Parliament.
Bloc
Rhéal Fortin Bloc Rivière-du-Nord, QC
You told us earlier that Charity Intelligence Canada is also a charitable organization. Did I understand that correctly? You distribute information and you also assist other organizations yourselves. Is that correct?
Bloc
Rhéal Fortin Bloc Rivière-du-Nord, QC
You receive donations, but do you also give them to organizations or individuals?
Managing Director, Charity Intelligence Canada
It's with very few. It's on an ad hoc basis, with some donors, that we work on wills and estates.
Liberal
The Chair Liberal Wayne Easter
Mr. Fortin, we'll give you a little more time than normal because of the little lag in translation. Go ahead.
Bloc
Rhéal Fortin Bloc Rivière-du-Nord, QC
First, is it common to see a charitable organization like WE Charity incorporate an empty shell as a company to manage a new program?
Second, what conclusion do you draw from the fact that a new entity, the WE Charity Foundation, is about to manage a program when it has no staff? Let's not forget that this was a $900 million program, give or take.
Those are my final two questions, Mr. Chair.
Managing Director, Charity Intelligence Canada
It's not frequent in the charity sector to have these shell organizations with limited liabilities, a single vehicle like that, a single-entity vehicle. Mr. Sorbara would be familiar with this from corporate analysis or real estate holdings or construction. I've never seen it before to this extent. You might have one subsidiary. For instance, you have Habitat for Humanity with its ReStores, but those are just two. When you're seeing this multiple of charities, I have never seen anything like this.
Liberal
The Chair Liberal Wayne Easter
Thank you.
We turn to Mr. Julian now, who will be followed by Mr. Cumming.
For around six minutes, Peter, the floor is yours.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
Thanks, Mr. Chair, and thanks, Mr. Thomson and Ms. Bahen, for being here today. We hope that in the midst of this pandemic you and your loved ones are safe and healthy.
I want to start by thanking Charity Intelligence Canada for the good work you do in shedding light on charities. I come from the charitable sector myself. I ran a social enterprise and a charitable organization in British Columbia, so I know the importance of accountability. This is why this inquiry by the finance committee is so important. In the charitable sector, I was used to making sure that when I applied for government grants, every single box was checked, that there were full financial statements and information about board movements.
Often in the charitable sector about a quarter of a charity's work is just making sure that the due diligence is performed and provided to funders, including the federal government. This is why it is so inconceivable to the finance committee, and why the committee is continuing this important study, that first off WE seemed to have an inside track and could file a submission for a program the same day it was announced, and secondly that it sailed through with absolutely no due diligence that has been identified with regard to all of the myriad problems, things that should have been a red flag and that for any other charity in the country would have meant there would be absolutely no possibility of their being considered for funding. It just continues to surprise me, the extent to which this was pushed through. Our work at the finance committee is to find out how and why this happened. We haven't been getting answers so far.
I want to start by asking a very simple question. Many people have described the atmosphere inside WE as a climate of fear. We did question the Kielburgers on whether or not they had hired private detectives to intimidate journalists, and they evaded answering that question. Are you aware of any legal pressure or private detectives, anything like that, between you and WE? At any point in your honest reporting of what's going on at WE have you felt some kind of pressure coming back?
Director of Research, Charity Intelligence Canada
We've not felt specific pressure. We have received a letter from WE based on comments that we've made publicly, but we did not take that to be legal pressure.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
Okay, thank you.
My second question is about your most recent grading of WE. In terms of the demonstrated impact, you rate them as “fair”. In reading the report itself.... There seem to be five levels of grading by Charity Intelligence when it comes to judging the impact of charitable organizations: high, good, average, fair and low. Is it appropriate to say, then, that “fair” is actually the second-lowest grade that you can give to a charity when it comes to impact?
NDP
Peter Julian NDP New Westminster—Burnaby, BC
Okay.
In terms of the transparency of the organization, the financial records or the financial statements are available, as you mentioned, and that's included in your report. I'm interested in knowing.... You've actually spoken about the multiple single-purpose entities, including the WE Charity Foundation, which had no assets; it was a shell foundation, and it was the recipient of this untendered contribution agreement. To what extent do you believe the financial statements to be accurate?
I'm particularly concerned about how much could be redirected. There seems to be some controversy around the evaluation of goods in kind and how that might lead to transfers between for-profit organizations and the charity. What is your sense, given the information that we've received most recently, about the accuracy of the financial information? Are you concerned about monies being potentially redirected to one of the for-profit entities that are part of this very labyrinthine organization?
Managing Director, Charity Intelligence Canada
On the related parties' transactions, with WE Charity providing cash to ME to WE, and ME to WE providing back to WE Charity support, which is cash and also donated goods or time, we would like to have greater disclosure about how much of ME to WE's contribution to WE Charity was cash and how much was donated time. I think the audited financial statements meet all the disclosure requirements on these transactions.
NDP
Director of Research, Charity Intelligence Canada
I was going to say the same thing. I don't think there's anything inaccurate about their financial statements; we cannot point to that. As Kate said, they've disclosed what they need to disclose; however, it does leave us with questions that...would provide greater clarity and greater assurance for donors.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
That's primarily related to the goods in kind, which is difficult to evaluate and intangible.
My next question is around salary information.
If it is a little unclear, then, how many funds or how much has been redirected, and you have flagged the issue of goods in kind, is it possible that the salary information that was disclosed may not be accurate either? In other words, there may be intangible benefits that go to certain members of WE at the highest level, but this may not necessarily be disclosed because of the multiple single-purpose entities and the transfers between for-profit and not-for-profit organizations.
Managing Director, Charity Intelligence Canada
Mr. Julian, to your question, with so many allegations swirling around about the numbers, I believe that donors and the corporate sponsors would really get a shot of confidence if an international tier 1 auditing firm came in to do the audit on these.
The numbers are presented as they are presented. The concerns we saw, which we learned only recently, were about the U.S. WE entities and the large volumes, I believe it was $15.8 million U.S., flowing through a similar shell structure [Inaudible—Editor] ME to WE foundation, with non-arm's-length directors. The only disclosure on that flow of funds was program spending, program services, so that would.... And then, because of the under-the-radar with the co-founder title, there was no disclosure on that $15.8 million U.S. and what proportion of that was paid to anyone, because, at that shell, there was no staff and there were no salaries, just the three directors who were not arm's-length.
Liberal
NDP
Peter Julian NDP New Westminster—Burnaby, BC
It's very disturbing that there is that much money in the U.S. entity that doesn't seem to be going to program salaries.
Is Charity Intelligence able to delve more deeply into affiliated charities or for-profit companies like the ones in the United States? Do you have the resources to go beyond the Canadian filings?
Managing Director, Charity Intelligence Canada
Yes, we've looked at WE Charity in the U.K. We did that. We went through that, and in my assessment, WE Charity U.K. looks clean, looks really good. It has a nice strong independent board and a lot of domestic programs. I couldn't see any of the concerns about board turnover, the independence of the directors or the interrelated parties at WE Charity U.K.
In the U.S., just last night, more entities were raised on Twitter that we look forward to going into.
Liberal
The Chair Liberal Wayne Easter
Okay, we will have to end that round there. Now we'll start with Mr. Cumming, followed by Mr. Fragiskatos.
I do want to point something out, though. I let that round of questioning go, but we are really looking into government spending, WE Charity and the Canada student service grant. There are certainly many questions related to WE Charity, and I understand that, but our purpose here is to try to find out how this Canada student service grant came to be awarded and all the criteria surrounding that. We have been getting some answers from government and many other officials, and I would hope we don't stray too far into the charity itself and away from the business that I think the finance committee is supposed to be studying.
I understand there are some problems there—
Conservative
Conservative
Pierre Poilievre Conservative Carleton, ON
I would only point out that the two issues that you listed are not separate. The awarding of this half-billion-dollar contribution to the WE Charity was by itself suspect to begin with, but now that we learn about the strange labyrinth of WE Charity organizations and the peculiar way in which money circulates among the multitude of entities, it does draw a line back to how the government chose this organization and whether or not appropriate due diligence about the recipient group, the program delivery body, was done. These are not separate issues—