Reflections on the WE fiasco

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The Kielburgers at a WE Day event (Image: Paul Williams/Flickr)

I watched last summer's WE Charity brouhaha with particular interest. 

An apparently hugely successful charity and social enterprise empire, WE Charity found itself vilified in the media, resulting in the loss of donors and the eventual closing of its Canadian operation. The fallout even saw the resignation of Finance Minister Bill Morneau.

The media had it right. There were lots of issues that raised a lot of eyebrows:

  • WE's founders, Craig and Marc Kielburger, had far too prominent a role in the organization.

  • The acquisition of numerous properties in downtown Toronto, some owned by the charity, some owned by an apparently affiliated non-charitable not-for-profit, and some owned by a for-profit corporation suggested to many that there were mixed objectives -- was WE about doing good, or accumulating real estate?

  • Too many corporate entities within the Kielburger group -- some charitable, and some not. Who sets up so many, for what purpose?

  • An emphasis on glitzy promotion -- sometimes dubbed "charitainment" to describe the phenomenon of celebrity culture mixed with selective activism that serves to promote a celebrity's personal brand as much as it does the issue with which they're associated.

  • Cozying up to corporate and political interests. Nora Loreto commented:

"…politicians of all stripes would jump at the opportunity to perform at the Kielburgers' main stage -- a mix of evangelical mega church, Tony Robbins feel-good infomercial, and annual JUNO Awards party. Saving Children around the world isn't simply a Liberal ideal, though it overlapped best with the Liberals' brand of neoliberal social and economic policy: positive, nondescript work somewhere in the world, with little to show for it and no impact on or confrontation to the foundations of what creates global inequality and injustice."

  • Handing out freebies to people of influence (yes, then-finance minister Morneau, once discovered, paid up) and

  • Accepting a federal government contract for a lot of money after some government decision-makers and their families had received significant financial benefit from the organization. Per The Tyee: "The prime minister’s wife, mother and brother, Alexandre, have received a total of $566,346 in WE Day speaking fees and expenses from WE Charity."

There is nothing wrong with a charity being affiliated with another entity -- the restrictions on charities, imposed by the federal government, do mean one has to establish a non-charity if you wish to pursue activities outside of those restrictions.

And there's nothing wrong with a charity or its affiliate owning property. Ownership is a very attractive way to get off the spiraling rent treadmill and have more money available for doing good.

But, taken as a whole, reasonable people could conclude that there was something very wrong with WE Charity. 

Charities and non-profits are controlled by their boards of directors. They often have the final say on all aspects of the organization's activities -- from hiring and firing to budgets and spending.

Why did WE Charity's board not fix the mess that was very apparent?

Or, did they try to fix it, but not have enough clout within the organization to impose their will? 

Certainly, something led to their mass resignation last spring, before the mess became so public. CBC News said:

"The reasons for the resignations in WE's upper ranks remain unclear. The former Canadian chair of the board of directors, Michelle Douglas, tweeted that she resigned on March 27 and that "almost all" of those on the Canadian and American boards resigned or were replaced around the same time."

The governance model that WE Charity adopted is a common one for many non-profits: there is no broader membership that elects the board of directors -- the only members are the directors themselves. 

A great example of a constituency cleaning house was the recent successful battle by member-listeners to remove and replace the directors of Toronto's charitable radio station, JazzFM. Faced with allegations that harassment claims made against management had not been handled well, members insisted on a members' meeting that replaced the directors, putting the station back on track.  

Co-operatives, too, have that mechanism built in -- those served by the co-operative are its members, and each has a vote, guaranteed by statute.

Ultimately, what's tragic about the WE saga is that none of the promised $912 million has flowed to those students who couldn’t find summer jobs. The proposed Canada student service grant program that WE Charity was to run was simply cancelled.

Those students are the real victims here.

Brian Iler, of Iler Campbell in Toronto, is a lawyer who frequently advises charities, non-profits and co-operatives on governance issues and has served as a volunteer director for many of them over the years.

Image: Paul Williams/Flickr

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