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Dozens of big-name Canadian corporations lined up behind WE Charity as the organization expanded its youth programs into thousands of schools across the country.

Many of those same corporations cut their ties with WE at the first whiff of controversy, however, as the organization became embroiled in a political scandal involving Prime Minister Justin Trudeau that has raised questions about WE’s governance.

Royal Bank of Canada and Telus Corp., which appear to have been WE’s biggest Canadian-based sponsors, did not even wait for a verdict from federal Ethics Commissioner Mario Dion. Mr. Dion is investigating whether Mr. Trudeau and Finance Minister Bill Morneau violated conflict-of-interest rules by participating in a cabinet decision to award WE an untendered contract to manage a student volunteer program, even though their families had long-standing ties to WE.

While it is not surprising to see corporations move quickly to limit the potential damage to their brands stemming from their association with WE, these same corporations appear to have paid little attention to problems at WE prior to the current scandal. The March resignation of chairperson Michelle Douglas raised a red flag about WE’s governance, financial transparency and claims about its overseas operations.

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Yet, neither company moved to cut its ties then. It was only after WE began making national headlines in connection with the proposed Canada Student Service Grant program, and subsequent media scrutiny of WE’s operations, that RBC and Telus acted.

Neither company has explained exactly why it dropped WE. Each issued a public statement saying it had come to a “mutual agreement” with WE to end its partnership with the organization. Yet, their actions spoke louder than words. By withdrawing funding for WE, RBC and Telus in effect sent a message to their shareholders and other stakeholders that the organization was unworthy of their support.

So, why did RBC and Telus, and the dozens of other major corporations who signed on as WE sponsors, get involved with the organization in the first place? Was it because they wanted to do good, or because they wanted to promote their brands?

Indeed, few organizations in the country were better positioned to reach teenagers than WE, whose programs aimed at promoting youth volunteering and community engagement have been offered in more than 7,000 schools across the country. Students who participated in such programs were invited to WE Day events at which corporate sponsors were given pride of place. Teenagers might have been led to believe that WE’s association with RBC and Telus was an endorsement of their businesses.

The co-mingling of WE’s non-profit and for-profit activities should have raised questions about whether the former were being leveraged to generate business for the for-profit affiliate, ME to WE, which sold various products and “voluntourism” travel packages. WE Day websites had links urging young people to “use [their] shopping power to make a difference” and “see [their] impact on a truly unique travel experience.”

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RBC chief executive Dave McKay and his Telus counterpart, Darren Entwistle, were also personally involved in WE’s activities. Mr. McKay served as a global co-chair of WE Day events, while Mr. Entwistle was a national WE Day co-chair. Several RBC and Telus executives also served as regional WE Day co-chairs across the country in recent years.

It would be naive to believe that RBC and Telus got so deeply involved with WE without expecting a return on their investment. After all, both are publicly traded corporations that answer first and foremost to their shareholders. And both have extensive environmental, social and governance policies that guide their corporate-giving practices.

RBC, for instance, donated $130-million to various charities in 2019, or about 1 per cent of its overall net profit of $12.9-billion. While that might not seem like a huge amount, such donations reduced the amount of income tax paid to governments and dividends paid to shareholders. The latter have every reason to question whether the money was well spent when, in the case of WE, RBC and Telus have suffered some reputational damage from their association with the organization.

The entire WE affair casts corporate philanthropy in a negative light and serves as wake-up call for all stakeholders. It shows that it can sometimes be hard to separate corporate support for popular causes from corporate virtue-signalling. And that looking good and doing good are not always the same thing.

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