WE Charity plans restructuring, launches another governance review amid political controversy

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The WE organization will undertake a restructuring that will lead to the winding down of some of its domestic programming, a renewed focus on international work, and a second review of its board in one year.

WE, one of Canada’s best-known charities, said Wednesday it would conduct its review as it tries to deal with a controversy that began when the federal government awarded it a contract to administer a $900-million program that would pay students for volunteer work.

Prime Minister Justin Trudeau announced the contract on June 25, and by July 3 it had been cancelled amid conflict of interest accusations. After it was cancelled it was revealed that Mr. Trudeau’s wife, mother and brother had been paid for work with the charity. The Ethics Commissioner is investigating whether the Prime Minister broke the Conflict of Interest Act, and two House of Commons committees have started probes into how the contract was handled.

At the same time, WE Charity, which the federal government said was the only organization that could take on the contract, came under increasing scrutiny about its structure, governance and treatment of its staff.

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“After much reflection and with great care and concern for all our stakeholders, we have made some important decisions to refocus on our mission, simplify our program offering, and undertake a series of governance and structural changes,” said a late Wednesday statement that was not attributed to a person but instead came from the organization as a whole.

The group said it would clarify its structure, move its North American educational programming to online only, and cancel its popular WE Day events for the “forseeable future.”

“International development is where we began, and it is where the need for our services is greatest,” the statement said. “Our global partner villages have already been significantly impacted by COVID-19, and we must not let them be further adversely affected by unrelated issues halfway around the globe.”

The WE organization has two main divisions. WE Charity is a registered charity that focuses on international development projects and youth education programs such as WE Day events that attract thousands of youth and have featured Mr. Trudeau and his wife, Sophie Grégoire Trudeau, as keynote speakers. The organization also includes ME to WE, a for-profit corporation that sells products and services including chocolate, coffee, bracelets and travel services.

The Globe is a media partner of WE Charity.

In its Wednesday statement, WE said it needs to be “more transparent for all our stakeholders” and that its current structure is “more complicated than it needs to be.”

The charity said it will launch two reviews and will create two new positions. It said WE will hire a chief risk and compliance officer, which will be accountable to the board. And former Ontario lieutenant-governor David Onley will join the organization as an executive adviser to consult and ensure the reviews’ recommendations are implemented.

Education governance consultant Avis Glaze and law firm McCarthy Tétrault LLP will conduct a workplace review, the statement said. And organizational consulting firm Korn Ferry will lead a review of the WE structure and look at the future of ME to WE “with the goal of a clearer separation of the social enterprise from the charitable entities.”

The firm will also conduct a full review of the board of directors, the statement said, and “assist in the development of best-in-class systems of governance.”

In a separate statement to The Globe and Mail, the charity said it is gathering and reviewing internal records “in order to fully co-operate with various inquiries from official sources to which we are legally required to respond.” Despite repeated requests from The Globe, it has not specified what official sources it is complying with.

Charity Intelligence, an independent organization that rates charities based on criteria such as financial transparency, has said it is concerned that WE blurs the line between its charity arm – which is legally required to produce public financial reports – and the for-profit company, which is not required to disclose its financial details.

For example, the watchdog group’s managing director, Kate Bahen, pointed out that the charity’s chief financial officer holds the same position for WE Charity in Canada and the United States and for the ME to WE for-profit group.

In response to the announced restructuring, Ms. Bahen said the greater emphasis on transparency should include hiring a Tier 1 auditing firm “appropriate for WE Charity’s size, complexity and global operations.” She said the same firm has been auditing the charity’s financials since the organization started.

In the last few months, the charity saw almost full turnover in its Canadian board, with only one director staying on. The internal shakeup was only reported in July, after the Liberals had awarded the administration of the new program to WE.

The charity said on July 1 that the changes were part of a “well thought-out process for board renewal” that happened in 2019.

However, Canadian board chair Michelle Douglas said she resigned from the board and other directors either resigned or were replaced.

The size of WE Charity’s Canadian board of directors was also reduced from seven to five members. It was further reduced to four members after Rann Sharma, a new board appointee, told The Globe and Mail she had also resigned from the board for personal reasons.

Ms. Sharma’s name was still on the organization’s website when The Globe reported on the board shakeup in early July, but the charity said she resigned on June 23. She and two of the other four new board members, including its new chair, have previous ties to WE or ME to WE.

The changes at the board prompted Charity Intelligence to issue a donor advisory, with Ms. Bahen calling the turnover a “red flag.” She said the watchdog group had “significant concerns about the independence and expertise of WE Charity’s governance.”

Prior to WE’s Wednesday evening announcement, The Globe had been asking the charity about Ms. Bahen’s critiques. In response the charity said the board is made up of highly qualified directors who are dedicated to providing “strong governance expertise.” Less than an hour after sending that statement, the charity announced a review of the board.

In addition, Jason Saul, the head of the University of Chicago’s Center for Impact Sciences, reached out to The Globe, saying WE co-founder Craig Kielburger had passed on The Globe’s e-mail and contact information.

He said he disagreed with Charity Intelligence’s assessment and he did not see a material basis “for being suspicious of a planned board replacement.”

The organization may be a “victim of bad timing, but I don’t think they’re a victim of bad governance,” he said. “The timing of the turnover, the extent of the turnover to me is not material. It’s a matter of who are the actual people that are independent on the board and is it truly an independent board.”

Mr. Saul said he has previously been paid for work with the WE organization and is also an informal adviser to the organization.

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