Foundation Magazine September/October 2020 by Lloydmedia Inc

FOUNDATION The Business & Spirit of Philanthropy in Canada September/October 2020 | Vol. 1 | No. 5

SEP 09, 2020, 17:00 ET WE Charity Canada to wind down operations and set up endowment fund to support education and humanitarian programs AUG 06, 2020, 19:01 ET WE Charity's Statement in Response to Testimony by Charity Intelligence before the Standing Committee on Finance JUL 22, 2020, 19:21 ET WE Charity Response to Testimony of Finance Minister Bill Morneau JUL 22, 2020, 15:13 ET WE Charity Response to Finance Committee Hearing JUL 21, 2020, 18:48 ET WE Charity Seeks Public Apology from Toronto Sun JUL 21, 2020, 15:55 ET WE Charity Named Only Organization to Deliver CSSG Program JUL 21, 2020, 14:15 ET Students Launch Petition Asking for Canada Student Service Grant funds to be Re-allocated to CESB JUL 20, 2020, 17:22 ET Kielburgers to Appear Before Commons Committee JUL 15, 2020, 17:30 ET Planning for the future of WE JUL 03, 2020, 09:50 ET Media Statement - WE Charity MAY 04, 2020, 07:00 ET Sophie Grégoire Trudeau tackles taboos and inspires frank national conversation about mental well-being in new podcast series: WE Well-being APR 29, 2020, 08:00 ET CTV and WE Join Together to Close Out the School Year and Honour Canadian Student Change-Makers with WE CELEBRATE: CLASS OF 2020 PM 4 0 0 5 0 8 0 3

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THE LEAD IN

COURTESY CANADIAN TULIP FESTIVAL

World Around Us

In a world where attractions are disappearing and prices are rising, we turn to our own for one of Canada's signature international events is working hard to continue to provide a world-class Festival that is free to the public. The Canadian Tulip Festival is an outdoor event in 1.2 kilometers of parkland, which allows for a safe, strolling experience every spring. Jo Riding, Executive Director, points out that when the tulips first bloomed in 1946, founder Malak Karsh said tulips brought colour back to a very gray post-war world. Based in Commissioners Park in Ottawa, on the shores of Dow’s Lake and the UNESCO Heritage Site Rideau Canal, the Canadian Tulip Festival raises funds through sales of exclusive Rembrandt Blend tulip bulbs. Proceeds go directly to support the continuation and sustainability of the Canadian Tulip Festival. Growth begats growth. On August 2, 2020, a 37-year-old Pole by the name of Marcin K was sitting on the beach at Julianadorp, northern Netherlands, and talking with his wife on the phone when he saw that a trio of children were in dire straits. “Something’s wrong with kids in the water, I need to hang up,” he told his wife Monika and rushed to the rescue bringing the children to the shore but ending up being pulled back by a wave into the sea. He gave his life to save all of the minors but orphaned three of his own in exchange. Later the sea cast his body ashore. Marcin’s family could hardly believe what happened as he was remembered as a great swimmer. “Marcin would have given his life for his three children [aged 2, 10 and 12] but now he did that for three stranger’s children,” Marcin’s mother-in-law told the Dutch “Algemeen Dagblad” daily. Marcin worked at a mining company in Poland and often did seasonal work in Germany to boost his salary and support a family of five. This year he opted for the Netherlands, where he enrolled with Callantsoog, a lightbulb-producing company. It was a profound choice. Moved by his act of bravery, a Dutch lady from The Hague decided to organise a fundraiser to help Marcin’s family cope with the loss. Martina Jonasz, a Polish-born inhabitant of The Hague, decided to help Marcin’s wife and children by organising a charitable fundraiser. Given the fact that Marcin was the sole bread-winner, the family found it difficult to make ends meet. Mrs. Jonasz started the fundraiser with the help of the Gofundme web service. She set the benchmark to EUR 35,000, but the goal has already been doubled as internet users have already donated over EUR 119,000. The entire sum will be handed over to Monika and the children of heroic Marcin to help them put financial concerns aside for a while. It may be cold, and remote, and dangerous, but the Antarctic isn’t without the need for charitable investment. The planet needs to protect precious Antarctic wildlife and ecosystem diversity for a balanced and sustainable environment. Antarctica is home to uniquely diverse and vulnerable wildlife — from the blue whale, the largest animal to ever live on our planet, to the microscopic plants and animals that are the foundation of the Southern Ocean food web. Many Antarctic species like penguins and seabirds are listed as vulnerable, endangered or near threatened as the result of natural and human impacts on their ecosystems and environment. Your support means we will grow our understanding of Antarctica’s iconic wildlife to inform conservation and management, using cutting-edge technology for the lightest impact. That’s where the Antarctic Science Foundation (ASF) comes in. The Foundation seeks to understand and protect the planet through Antarctic science. They support world class scientific research that advances the understanding and protection of the Antarctic, Southern Ocean and subantarctic natural environments and its impact on the planet. The ASF breaks ground for public-private environmental and science philanthropy and are uniquely placed to bring together science, business, government, philanthropy and community. Antarctica is the engine room of global climate, profoundly influencing the whole planet through its oceans and atmosphere. Climate change threatens the survival of all living things. By supporting climate science in Antarctica, you help us build the vital knowledge that will protect communities around the world from disasters like bushfires, floods, cyclones and storms which are happening at an unprecedented scale. Accurate predictions of global climate will support the survival of generations to come and inform the choices we need to make for a sustainable future. At the ends of the earth, the planet has a foundation looking out for all of us. foundationmag.ca

September/October 2020

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CONTENTS

September/October 2020 | Vol. 1 | No. 5

www.foundationmag.ca

Twitter: @foundationmaga1 PRESIDENT / EDITOR-IN-CHIEF Steve Lloyd - steve.lloyd@lloydmedia.ca EDITOR Brendan Read - brendan.read@lloydmedia.ca DESIGN / PRODUCTION Jennifer O’Neill - jennifer@dmn.ca PHOTOGRAPHER Gary Tannyan CONTRIBUTING WRITERS Cynthia Armour Narinder Dhami Mark Blumberg Kim Fuller Malcolm Burrows Hava Goldberg Chris Carter Chi Nguyen

302-137 Main Street North Markham ON L3P 1Y2 Phone: 905.201.6600 Fax: 905.201.6601 Toll-free: 800.668.1838 EDITORIAL CONTACT: Foundation Magazine is published bi-monthly by Lloydmedia Inc. Foundation Magazine may be obtained through paid subscription. Rates: Canada 1 year (6 issues $48) 2 years (12 issues $70) U.S. 1 year (6 issues $60) 2 years (12 issues $100) Foundation Magazine is an independently-produced publication not affiliated in any way with any association or organized group nor with any publication produced either in Canada or the United States. Unsolicited manuscripts are welcome. However unused manuscripts will not be returned unless accompanied by sufficient postage. Occasionally Foundation Magazine provides its subscriber mailing list to other companies whose product or service may be of value to readers. If you do not want to receive information this way simply send your subscriber mailing label with this notice to: Lloydmedia Inc. 302-137 Main Street North Markham ON L3P 1Y2 Canada. POSTMASTER: Please send all address changes and return all undeliverable copies to: Lloydmedia Inc. 302-137 Main Street North Markham ON L3P 1Y2 Canada

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September/October 2020

COURTESY THE OAKVILLE COMMUNITY FOUNDATION

LLOYDMEDIA INC. HEAD OFFICE / SUBSCRIPTIONS / PRODUCTION:

3 THE LEAD IN 6 SEEN, HEARD & NOTED COLUMNIST

A Case of Mission Drift

Fundraising in a New Era

Wealth Management - Malcolm Burrows Leadership - Kathleen Provost foundationmag.ca

STEVE LLOYD

Kathleen Provost Angus Reid Wendy Rinella

CONTENTS

ON THE COVER

40 Correcting the Record:

What WE wants you to know Top 10 Fallacies and Facts about WE Charity & WE Charity’s involvement in the Canada Student Service Grant Program

THE WE CHARITY SPECIAL REPORT 34 “Who, WE?”

Philanthropy, Pandemic & Political Scandal

The WE Charity affair weakens trust in charities as COVID-19 curtails donor giving The WE Charity Scandal and its Impact on the Canadian Charity Sector

28 WE Charity and we charities

What the WE Charity case means for the rest of us in the sector

30 Lessons in Failure: What Can Be Learned from the WE Movement

32 Learning from WE Charity’s mistakes

Social enterprise is not the answer, and the solution affects us all

Building a Foundation for Successful Corporate Partnerships

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35 We Create Our Own Monsters 46 Focusing too much on branding comes at a price

Watching the Rock Star of Canada’s Charity World Crash and Burn

HISTORIC PLAQUES

45 Historic Plaques Which Honour Philanthropy

Rev Michael Power

Next Issue… Coming in November 2020: .Our 2020 Special Fundraising Issue & AFP Congress 2020 (NOTCongress) September/October 2020

FOUNDATION Magazine

COURTESY CANADAHELPS

SEEN, HEARD & NOTED

Modernized approach to giving: single donation reaches multiple registered charities aligned with a common cause CanadaHelps, one of the largest platforms in Canada for donating and fundraising online, today announced new Cause Funds. This new and innovative way to give enables donors to make an impact for a cause they care about by making a single donation in support of a group of charities focused on the same cause. Donations made to a particular Cause Fund are pooled and then distributed equally among the registered charities in the Fund. Cause Funds democratize support for the charitable sector by easily connecting Canadian donors to the causes they are passionate about while supporting charities of all sizes. “We introduced Cause Funds in response to evolving trends in charitable giving, including an overall decline in charitable donations. Demographic patterns are shifting, and we know that younger generations are more likely to support a specific cause than form relationships with individual charities. Canadians are also 6

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looking for an easier way to give to a cause close to their heart and simultaneously support multiple charities focused on a particular cause,” said Marina Glogovac, President and CEO of CanadaHelps. “Now more than ever, Canadians also want transparency to ensure they can trust that their donations are going to the right organizations and advancing the causes that are important to them. At the same time, charities of all sizes need to receive critical funding to continue to be able to deliver on their missions. Our Cause Funds serve both of these needs while setting a new bar for charitable giving.” Research shows that the charitable sector in Canada, and around the world, is currently experiencing a crisis. Donations are declining, and younger donors are not engaging in charitable giving in the same way older generations have. Cause Funds aims to reverse these trends by providing a modernized way to connect donors and charities around the causes they care about, while ensuring that critical funding reaches the Canadian charities that need it. Cause Funds also provide greater

September/October 2020

transparency, authenticity, and trust throughout the giving process by ensuring that only registered Canadian charities receive donated funds. Donations made to Cause Funds are sent directly to eligible charities, and tax receipts are automatically issued to donors. The following Cause Funds are some of the new Funds offered by CanadaHelps: ❯❯ Housing for All in Alberta – Alberta is in the midst of a housing crisis, with more than 2,900 people in Calgary and 1,900 people in Edmonton experiencing homelessness. This Fund includes more than 50 registered charities that are leading efforts to end homelessness in Alberta. ❯❯ Housing for All in Vancouver – The skyrocketing cost of rent, job loss, and social issues have created a homelessness crisis in Vancouver. Of more than 2,100 Canadians experiencing homelessness in the city, 40 percent of Vancouver’s homeless population identify as Indigenous, and 49 percent are facing chronic homelessness. ❯❯ Literacy for All Fund – In Canada, 17 percent of adults between 16 to 65 years of age struggle with low levels of literacy. This Fund includes over 270 registered charities that are improving literacy rates across Canada. ❯❯ Life with Alzheimer’s Fund – Across Canada,

there are more than 747,000 people living with dementia or Alzheimer’s. Donations to this Fund will reach more than 70 registered charities that provide support services and assistance to affected Canadians and their families. ❯❯ Removing Barriers for People with Visual Impairments Fund – An estimated 1.5 million Canadians live with vision loss and 5.5 million more Canadians live with a condition which could cause loss of vision. Donations to this Fund will reach more than 30 registered charities helping people living with blindness. ❯❯ Autism Community Support Fund – Approximately 1 in 66 children in Canada between the ages of 5 and 17 are diagnosed with an autism spectrum disorder (ASD), and face challenges associated with social interaction, speech and nonverbal communication, or restrictive or repetitive behaviours. This Fund includes over 90 registered charities. ❯❯ End Hunger Fund – 1 in 8 households in Canada are food insecure and struggling to put food on the table. The End Hunger Fund supports more than 400 Canadian charities. ❯❯ Protect the Environment Fund – Less than 11 percent of Canada’s plastics get recycled; the rest end up in our foundationmag.ca

lakes, parks, landfills, and oceans, destroying ecosystems and leaching toxic chemicals. This Fund supports more than 530 Canadian charities working to ensure the health of our planet. ❯❯ Stand Up for Mental Health Fund – An estimated 1 in 5 Canadians will struggle with mental health this year. This Fund will help more than 470 Canadian charities providing critical services such as crisis support, counselling, education, and other types of treatment and professional support services. Cause Funds by CanadaHelps are already proving to be an effective new model for engaging donors. The COVID-19 Healthcare and Hospital Response Fund, COVID-19 Community Care Fund, and the Black Solidarity Fund have already raised millions to support charities across Canada. The two COVID-19 Funds were matched by the Gore Mutual Foundation for $1 million each; the Black Solidarity Fund was matched by P&G Canada for $1 million. CanadaHelps has introduced 29 Cause Funds to date, and plans to launch new Funds on an ongoing basis to address emerging crises and current events – with each falling under one of four categories: General Cause Funds, Community Support Funds, Curated Cause Funds, and Local Funds. foundationmag.ca

COURTESY AMNESTY INTERNATIONAL CANADA

SEEN, HEARD & NOTED

••••••••••••••••••• Amnesty International Writes to the Prime Minister Here’s part of what they wrote: We write this Open Letter, on behalf of 400,000 supporters of Amnesty International across the country, in times of considerable uncertainty, turmoil, injustice and fear; but also of mobilization, courage, determination, and possibility. Against that backdrop, you have indicated that your government’s upcoming Throne Speech will lay out a “plan to rebuild a stronger, more resilient Canada” and offer a “roadmap out of the pandemic towards a society that is fairer and more welcoming.” Central to those goals is the imperative to implement a genuinely transformative human rights agenda. This Throne Speech must acknowledge that respect for human rights will be central to all aspect of adopting laws, developing policy, making budgetary choices and taking action. Towards that vision, we urge you to take up the following seven recommendations:

1. Recognize and uphold economic, social and cultural rights as the essential framework to a just, safe and transformative recovery. 2. Honour your promises to bring forward legislation to implement the United Nations Declaration on the Rights of Indigenous Peoples and fully fund the creation and implementation of a National Action Plan to implement the Calls to Justice from the National Inquiry into Missing and Murdered Indigenous Women and Girls. 3. Commit to concrete action to address systemic racism in Canada, including a ban on carding, street checks and racial profiling by all police and security agencies under federal jurisdiction, strengthening implementation of the federal Anti-Racism Strategy, and initiating consultations towards wider reforms such as options for defunding police. 4. Implement a feminist pandemic recovery

plan which builds upon the Safe Restart Agreement and includes establishment of a fullyfunded national childcare system to provide high quality, accessible, affordable, inclusive childcare for every family in Canada. 5. By the end of the year, adopt legislation and policy, consistent with human rights obligations, that reflect current scientific, Indigenous and international best practices and knowledge to mitigate the global climate crisis, which will ensure a viable future on this planet for future generations and all species, and limit the global temperature increase by 2030 to no more than 1.5˚C. 6. Put in place effective implementation and oversight of Canada’s human rights obligations, particularly in relation to the COVID-19 pandemic. 7. Commit to consistent and unconditional respect for international human rights in all of Canada’s bilateral and multilateral relations. BACKGROUND We ignore today’s urgent challenges to our collective shame and at our collective peril. Amnesty International also called for seven commitments to be reflected in the government’s Throne Speech, backed up by action and resources included in the next federal budget. If you go to their website, you can see the whole letter. Worth reading. Over to you, Sir.

September/October 2020

FOUNDATION Magazine

COLUMNIST

WEALTH MANAGEMENT MALCOLM BURROWS

A Case of

Mission Drift T

Malcolm Burrows 8

FOUNDATION Magazine

September/October 2020

GARY TANNYAN

BY MALCOLM BURROWS

he WE Charity’s story should be a business school case study. Young, idealistic founders. Growth and acclaim. Complexity, political scandal, and collapse. But is WE Charity a case that can teach charities and donors, or is it an outlier? The connection with business school naturally comes to mind with WE Charity and its for-profit social enterprise sibling ME to WE. Craig and Marc Kielburger are self-described “social entrepreneurs”, foundationmag.ca

COLUMNIST

and Craig has an MBA. As Marc told an interviewer in 2007 about their for-profit arm “We run the place with a non-profit philosophy with business principles.” But what are these business principles? And how do they relate to the mission of WE Charity? For starters, at a simple level, businesses have strategy and charities mission. Both involve discipline and focus, yet from the beginning the WE Charity mission evolved, or perhaps more accurately drifted. Craig became the story WE Charity started out in 1995 as a moral crusade of a 12-year-old boy against child labour in the developing world. The charity Craig and his family created in 1997 was called Kids Can Free the Children, which became Free the Children. Its mission was “the eventual elimination of child labour and the exploitation of children”. From the start Craig was a media star — a super articulate kid — but the charity had few substantive programs on the ground. Craig became the story. The child white saviour arriving with media, celebrities and politicians in tow. The mission of Free the Children quickly refocused on more general international development with an education focus. In 1999, Craig announced on Oprah (of course) that they would build 100 schools internationally. By 2003, 300 schools were reportedly completed. Their student clubs reportedly grew to 300,000 members. (Note the round numbers.) Inspiring stuff for a nascent organization, and more concrete than the elimination of child labour. About the same time, elder brother Marc founded the company that was the precursor to the for-profit ME to WE. Its strategy was to earn revenue for the charity through the sale of goods and services. The primary focus was selling international volunteer trips, such as school builds. It was a virtuous travel agency. Later ME to WE added virtuous clothing and bracelets. foundationmag.ca

Many charities run mission trips and sell stuff that is related to the cause without needing a separate legal entity, but the Kielburgers had ambition to scale up their business. As former staffers reported, ME to WE became competitive with the charity for staff and resources within the WE empire. Sell trips v. running international programs.

could be delivered for a cost to sponsors. Corporate sponsorship became a huge part of their revenue mix, reportedly growing to $126 million a year in the Canada, U.S. and U.K. charities. WE Charity’s expenditures, on a percentage basis, shifted from the 86 WE villages in nine countries to domestic programs anchored by WE

“The WE empire is unique in Canadian charity history..due to its celebrity buzz.” Packaged for corporate sponsors The charity and businesses (there were a number) were tied together by strategy, and Free the Children inevitably changed its name to WE Charity in 2016. One brand under one roof. But was ME to WE a supporting business or a rival enterprise that distracted the charity? Some think the major example of mission drift was the creation of WE Days, which started in 2007. These rallies inspired youth to “change the world”, a compelling and vacuous phrase that should always prompt caution. These events featured celebrity speakers, politicians (and their families) and the founders, who had become celebrities themselves. WE Days were an outgrowth of the charity’s student clubs and school programs. They were rewards for students who were active in their community. Strategically, these events tied together the student programs, fundraising, profile building and travel sales. WE Days rapidly became a primary focus on the charity. Kids, get inspired! Convince your parents to buy our trips and become major donors! It wasn’t just Bill Morneau’s family who bought the whole deal. The integrated WE brand and WE Days were packaged for corporate sponsors. WE had a compelling brand, and the hearts and minds of young leaders. These

Days. The international programs were used to inspire northern hemisphere kids and donors to dream — and to purchase authentic life experiences. The focus became northern consumers, not southern beneficiaries. At the centre of the WE empire was the remarkable charisma and energy of the Kielburger brothers. As founders, they were the embodiment of the cause. Founder charities are common in the charitable sector. If the founder become the story, however, these charities often warrant greater scrutiny. Founder dominance can be a form of mission drift. The organization should be bigger than the founders, not the other way around. The WE empire is unique in Canadian charity history due to its celebrity buzz, corporate complexity and spectacular collapse. It was an outlier. For donors, one of the traps of charity is falling for emotions and charisma. Inspiration is compelling, but it is not a good indicator about what was going on underneath. It’s often hard to assess impact and organizational health, but a clue is when words don’t align with deeds. MALCOLM BURROWS is Head, Philanthropic Advisory Services for Scotia Wealth Management of Scotiatrust. He writes this column exclusively for each issue of Foundation Magazine.

September/October 2020

FOUNDATION Magazine

COLUMNIST

COURTESY KATHLEEN PROVOST

LEADERSHIP KATHLEEN PROVOST

Fundraising

in a New Era Kathleen A. Provost, CFRE is the Campaign Director at St. Francis Xavier University in Halifax.

FOUNDATION Magazine

BY KATHLEEN PROVOST

s a professional fundraiser, I always saw my social role as one of a broker. I was the one who facilitates philanthropic gifts in support of charities or philanthropic projects in need. However, our current society is being transformed as we experience a global pandemic. The charitable sector is in chaos and marginalized groups and issues are becoming social priorities that need addressing and for which social tolerance is no longer permitted. Is our charitable sector to blame, or may it be the solution? It was in reading a blog entitled COVID-19: What kind of recovery?, written by Dr. Brett Fairbairn, President and Vice-Chancellor of Thompson Rivers University, that I was introduce to the work of McGill professor Dr. Henry Mintzberg. Mintzberg states that our society goes out of balance and people suffer if one sector of society becomes dominant. He claims there are tree essential sectors who should work in balance for a healthy society: the public, the private, and the “plural” sector. We have witnessed how extreme dominance of one sector may not benefit all. For example, when the public sector dominates under communism, or as the private sector is now doing in the name of capitalism. In Mintzberg’s view, the countries doing the best September/October 2020

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at managing the coronavirus pandemic are the ones with the most balanced relationship between government, business, and community. This statement on dealing with our current pandemic really caused me to reflect further on a greater social quandary. Is the charitable sector, or as Mintzberg calls it, the “plural sector” capable of playing an equitable role in our society? Hence, I ask myself what needs to change? If change is needed, what role do we play as professional fundraisers, as contributing individuals of the charitable sector? Being a facilitator is one thing but is it possible that because we operate in the plural sector, we may have a duty to instigate a more collaborative approach. The end goal is to enable all three sectors to partner together in finding alternative options to an unprecedented social predicament that needs our immediate attention. Understanding the plural sector as seen by Dr. Henry Mintzberg The Plural Sector – A Label Let’s first explore this “three-legged stool” Dr. Mintzberg identifies in our economy. In 2015, the Standford Social Innovation Reviewed published: The Plurality of This Sector by Henry Mintzberg in which his definition of the “plural” sector was explained. Based on his observation, Mintzberg proposes the label “plural sector” for two specific reasons. First, he states that the variety of associations and their range of ownerships influences the forms of ownership structures guiding many of the actors. Secondly, Mintzberg claims this labelling would naturally place this sector alongside the public and private sector. However, the sector itself does not agree on its own label. When referencing this particular sector of the economy we have used third sector, non-profits, nongovernmental organizations (NGOs), voluntary sector, or even civil society. How then can we take this sector seriously? How can this sector become intertwined in our societal model alongside the private and public sector? foundationmag.ca

COURTESY KATHLEEN PROVOST

COLUMNIST

The images represent the three sectors of our society living in harmony and are carved in aspens trees on Big Island, Nova Scotia by Melvin Shaw.

So, is the plural sector going through a natural evolution in which key contributing factors must change to better collaborate in our society? Redefining the plural sector’s role in a post-pandemic society may change the charitable sector as we know it. The Plural Sector – An Entity According to Mintzberg, an association of people, that is neither public nor private, not owned by the state nor by private investors could constitute being called “plural”. Some of these organizations are owned by their members; others are owned by no one person. There are vast numbers of both. These models of association can include clubs, religious orders, think tanks, activist NGOs such as Greenpeace, and service NGOs such as the Red Cross. Most of these associations are legally registered and formally organized, such as “WE Charity”. Some may be more spontaneous associations, in the form of social movements. Social initiatives, in contrast, are usually undertaken by small groups that champion social change, usually in local communities, and can scale-up to become global; Black Lives Matters, come to mind. In the Mintzberg model, governments essentially protect us, businesses supply us, and communities engage us — all are

equal partners. Is 2020 the time in history to be remembered as the beginning of a society aspiring to true partnership across all sectors to address unacceptable social issues? If that is true, we need to reform the plural sector, or charitable sector as we currently call it, to enable this sector to work in an equitable partnership as a force for radical revitalisation in society. Redefining the charitable sector This global pandemic is opening our eyes to the radical thinking needed for the benefit of our society on issues such as: climate change, carbon footprint, conservation, elder care, mental health care, social isolation, cultural inequality and systematic racism to name a few. We have witnessed the “WE Charity” scandal, in which the role of the charitable sector became murky. This problem illustrates clearly the need for a reform for the charitable sector. In June 2019, a Special Senate Committee presented a 190-page report entitled Catalyst for Change: A Roadmap to a Stronger Charitable Sector which included 42 recommendations from 160 witnesses and based on briefs from 90 individuals and organizations. The report itself reflected the size, scope, and complexity of the sector and has

September/October 2020

CONTINUED ON page 44 FOUNDATION Magazine

THE WE CHARITY SPECIAL REPORT

Philanthropy, Pandemic & Political Scandal

The WE Charity affair weakens trust in charities as COVID-19 curtails donor giving

BY STAFF/ANGUS REID

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September/October 2020

measures such as donation matching and direct grants to alleviate shortfalls and encourage Canadians to give again. The WE Charity factor A majority of Canadians from across the donor spectrum — from those who do not give at all to those who have made this a major part of their life — say that the WE scandal is a serious issue. Those who donate the most, categorized as Super Donors, are least likely to feel that the WE ordeal is a symptom of a broader problem with large Canadian charities. That said, half (55 percent) still say that it is. Four-in-five Canadians say they prefer donating to smaller local charities as opposed to larger organizations that operate nationally.

s it has done to nearly every facet of Canadian life, the coronavirus pandemic is also ravaging crucial health programs and social services provided by Canada’s charitable organizations as individual donors face tough spending choices. At a time when many say the need for the help and services Canada’s roughly 86,000 registered charities offer is greater than ever, the non-profit Angus Reid Institute, in partnership with Cardus, Charitable Impact, Imagine Canada, Philanthropic Foundations Canada, United Way, and CanadaHelps, conducted a new major public opinion survey. The survey looked into the WE Charity controversy impact, as well as the ripples of the pandemic and how policy decisions also affected fundraising. What the survey found is that Canadian donors are giving less than they were before the pandemic. Nearly two-in-five (37 percent) Canadians who have donated to at least one charity in the last two years say their donations have decreased since March, when COVID-19 first gripped the nation. Given that individual Canadian donors gave $10 billion to charities in 2018 (the last year for which data is available) — this decrease in giving represents hundreds of millions — if not billions — of lost dollars for such organizations. In addition, the lingering after-effects of the WE Charity Scandal appear to be compounding the crisis. The organization may be winding down operations in Canada (per its announcement, but the blast radius extends far beyond that charity’s fortunes. Indeed, the poll finds a majority of donors of the opinion that the scandal is one that raises questions about governance, transparency, and management that are relevant for the whole charitable sector, while significant segments of donors say it has changed the way they feel about donating to charity overall. Against this backdrop, there is a desire to see the federal government find ways to support the charitable organizations facing massive losses. Overwhelming majorities support

Donors paying attention to the affair Adding to pressure in an already disastrous year, the ongoing high-profile saga involving a high-profile charity. The WE Charity has been at the centre of a political firestorm, one which 92 percent of Canadians are aware of (see detailed tables), and one that has led the organization to disband operations in Canada. WE was granted a no-bid contract to deliver a summer jobs program this year, one which the organization later rescinded after news broke that Prime Minister Justin Trudeau, members of his family, and then-Finance Minister Bill Morneau had previous financial entanglements with the organization. foundationmag.ca

THE WE CHARITY SPECIAL REPORT Nationally, six-in-ten of those following this issue say it is serious and significant. This is statistically unchanged since late July. As was the case earlier this summer, political affiliation drives views on the issue. Regardless of their political bent, the issue has also been of particular interest to Canadian donors, 94 percent of whom have been following the story. Notably, all segments of donors on the spectrum say the issue is serious, though Prompted and Super Donors are more likely to see the issue as overblown:

The Donor Profiles | How Angus Reid Defines Us

STAFF / ANGUS REID

Impact on perception of other charities So, what then does the WE scandal mean for Canadian charities’ future fundraising endeavours? It appears to suggest more scrutiny from donors, at the very least. More than half in each donor segment say the scandal leads them to question the governance and transparency in the charity sector more broadly. As with questions over the gravity of the scandal, Super Donors are once again more likely to opine that it is an isolated incident that shouldn’t reflect on charitable organizations as a whole: Another factor is increased confusion among the public about how Canadian charities operate. At least 43 percent of each donor segment say they are more confused or uncertain about the decision-making processes and machinations involved in charitable organizations, given what they have learned about WE. The final blow speaks directly to the bottom line. While overall, a majority (62 percent) of Canadians say the WE scandal has had no impact on how they feel about giving — a significant segment is more jaded. This is especially true of Casual Donors. While they may not give as much, as often, or as purposefully as Prompted or Super Donors, casual donors attitudes mean charities must now fight to win back every donor’s trust at a time when donations are fewer and more precious. That nearly thirty percent of Super Donors are also feeling differently will give those same charities little comfort: Charity in the time of COVID-19 Two-in-five Canadian donors giving less during the pandemic The COVID-19 pandemic has had myriad impacts on the country as Canadians have been asked to shrink and slow their lives to mitigate the spread of the virus. One of those foundationmag.ca

To better understand the varying degrees of philanthropic giving in Canada, researchers at the Angus Reid Institute group respondents into four segments based on their charitable behaviour: The Non-Donors, The Casual Donors, The Prompted Donors, and The Super Donors. For a detailed explanation of how the Angus Reid Institute arrived at these segments, see “notes on methodology” at the end of this report. Here is a brief overview of some of the characteristics for each group: ❯❯ Non-Donors (13 percent) Indicated they do not provide financial support to any of the twelve causes listed; Most (76 percent) say they have not given money to a single charity over the past year; 70 percent do not donate any sum to charity, one-in-five (19 percent) give up to $100 per year. ❯❯ Casual Donors (35 percent) Donate up to $250 to charity per year, majority (60 percent) give $100 or less; Gave a donation to one or more charitable causes over the past two years, majority (60 percent) gave to between one and three; More than twice as likely to provide a one-time donation (92 percent) than ongoing support in the form of repeated donations over time (43 percent); Are most likely to have a household income of $50K or less per year. ❯❯ Prompted Donors (30 percent) Donate up to $2,500 to charity per year, majority (62 percent) give more than $250; More likely than Casual Donors to give to two or more charities (84 percent compared to 60 percent); Less responsive to different types of charitable appeal than Super Donors, more frequently give in response to a request. ❯❯ Super Donors (23 percent) More likely than Prompted Donors to give to each of the different causes, also more likely to donate acting on their own initiative; Nearly all (93 percent) supported two or more causes and provided “ongoing support” at least some of the time, if not more frequently (96 percent); Responded positively to at least two out of five different modes of charitable appeal; Majority (58 percent) donate more than $500 annually, one-quarter (27 percent) donate at least $2,500. For detailed information about the demographic profiles of Canadian donors, please see the Appendix at the end of this report.

September/October 2020

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THE WE CHARITY SPECIAL REPORT

“Increases in charitable donations appear to be concentrated in Canada’s three most populous provinces.”

clear impacts is a diminishing level of donations to Canadian charities. In March, more than 200 major charities expressed the need for critical help amid funding losses. Asked about their own donation habits, half of Canadians that have given a charitable donation over the past two years (49 percent) say they have not changed their approach, while a significant segment, nearly two-in-five (37 percent) say they are donating less. By contrast, just nine percent say their giving has increased: (Note: Respondents allowed to select both/either of the following responses: “Have been giving MORE to the charities you were already supporting before COVID” and “Have given to DIFFERENT charities than you did before COVID”. Remaining responses were exclusive.)

Super donors giving more Pre-coronavirus donation behaviour appears to play a significant role in how much Canadians are giving, or perhaps able to give, during this time. While at least three-in-ten among all donor segments have given less during the last six months, Super Donors are most likely to say that they are giving more to charities (14 percent), are continuing to give the same amount to their charities of choice (52 percent), and regardless of amount, are also most likely to be giving to different charities since March (nine percent): 14

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Demographic analysis Increases in charitable donations appear to be concentrated in Canada’s three most populous provinces: British Columbia (10 percent), Ontario (10 percent), and Quebec (seven percent). By contrast, fewer than one-in-ten residents in the Prairies (five percent) and Atlantic Canada (two percent) say they have given more to charity during the pandemic. While the percentage of those that say they are now giving more or to different charities remains consistent across age and gender groups, Canadians ages 55 are least likely to say that they have curtailed their donations:

Policy preferences Most prefer smaller local charities Asked to choose between supporting a smaller communityfocused charity or a larger charity working at the national level, four-in-five Canadians would support the former. Notably, one-in-four Super Donors express a preference for donating to larger charities. foundationmag.ca

THE WE CHARITY SPECIAL REPORT

“Three-quarters of Canadians say they support donationmatching programs.” Support for direct grants & matching Due to economic losses in the face of COVID-19, many charitable organizations are facing increased demand for their services whilst also facing a decline in donations. Recent estimates from the non-profit Imagine Canada indicate the charitable sector could experience financial losses between $4.2 billion and $6.3 billion. In March, the federal government announced wage subsidies and additional funding to help charities and non-profits sustain operations, but there has been further discussion about additional ways through which Ottawa could buffer charities and promote giving. Asked about two specific types of funding proposals, threequarters of Canadians say they support donation-matching programs, slightly more than say the same of direct grant programs (69 percent): CONTINUED ON page 39

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September/October 2020

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THE WE CHARITY SPECIAL REPORT

The WE Charity Scandal and its Impact on the Canadian Charity Sector

STEVE LLOYD

BY MARK BLUMBERG

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he WE Charity scandal has now been going on for over three months. It has caused the Minister of Finance to resign, the proroguing of parliament. It has resulted in WE Charity announcing that it will be “winding down the organization’s operations in Canada” and taking their significant real estate holdings in Toronto and turning them into an endowment. Unfortunately, there were few details provided on the “wind down”. The whole announcement with attendant interviews, press releases, etc appears to be a public relations exercise to reduce negative coverage of the WE Charity. WE Charity’s main activities in Canada — WE Days and school activities have been closed for over six months. Major funders have left them months ago. They have fired the vast majority of their employees. They have announced previously that they were selling some real estate. So there was not much new in their announcement except that all the real estate will now be sold and there will be the creation of an endowment. Unfortunately, with respect to the endowment there is almost no information on who will actually own and control it, how much it will disburse each year, etc. Will the “endowment” be held in WE Charity? If not which charity? Certainly, there is no indication it will go to an arm’s length charity that is unaffiliated with those who currently control WE Charity. The announcement of the endowment raises more questions than it answers which is very unfortunate and also means that coverage of the WE Charity or the endowment may unfortunately go on for years. Many, including myself, had thought that the WE Charity scandal would last only days but it has gone on longer than we could have initially imagined. As we have written about elsewhere there are essentially three interrelated stories — the poorly conceived Canada Student Service Grant (CSSG) program, the questionable and conflicted government decision-making, and the choice of WE Charity to implement the program (actually WE Charity Foundation). I have received over the last few weeks many calls and emails from clients trying to understand how the WE Charity scandal is going to impact numerous areas of their operations. So it appears that charities at least are painfully aware of how sometimes things that they did not do and they have no control over can, in fact, have a tremendous impact on their organization. This article is prepared in part to help charities understand how WE Charity was quite unique but not completely unique such that its indiscretions will not affect the reputation of the charity sector September/October 2020

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THE WE CHARITY SPECIAL REPORT and because WE Charity did ‘something’ does not mean it is right or wrong for another charity necessarily. I must admit I am very confused as to the Liberal government’s strategy. Despite the hundreds of articles, thousands of pages of documents released, tens of thousands of social media posts there continues to be more questions about this scandal than answers. The traditional strategy of making it hard for people to find out information will result in the fire being put out through lack of oxygen is obviously not working in this case. It has not worked since the first week. Some quite rightly could say that we have so many other issues to deal with, not just COVID, and this scandal is taking up quite a bit of space, especially for those interested in the charity sector and government but it will not go away unless the public is satisfied that they actually understand what is going on. You can blame the Conservatives, the NDP, the media and the public for the story continuing but I think that it is also the Liberals and WE Charity that are prolonging the story by failing to provide relevant information. The WE Charity scandal could have significant and lasting effects on the non-profit and charity sector and it is by no means clear at this point what those changes will be. It may take years, in some cases, to see the impact. There could be some positive, there also could be some very negative implications. The biggest concern for the charity sector is that the WE Charity scandal will hurt the reputation of the sector, undercut donations and government funding. If I was a fundraiser, I would be particularly concerned about this — there are enough impediments to fundraising without this scandal. Will Canadians trust charities less because of the WE Charity scandal? Will they think that the problems of WE Charity are reflective of the broader charity sector and trust the sector less? It is hard to know. As we noted above, WE Charity is unique. But then again, many charities are unique. The bigger question is it “uniquely unique”? This will be difficult to answer but I will try in this article. While WE Charity is unique, the problem that is confusing to some is that there are elements or parts of elements in what WE Charity has been doing that may be acceptable and done in other charities but there is scrutiny of WE Charity in light of the CSSG and the fallout for the way that they are specifically conducting their activities, such as: ❯❯ using multiple corporations ❯❯ having employees ❯❯ compensation of senior staff ❯❯ working with youth and students ❯❯ reporting and transparency ❯❯ lobbying of government officials ❯❯ partisan activities ❯❯ conducting international activities in multiple countries ❯❯ social enterprise and business activities ❯❯ receiving government funding ❯❯ owning real estate ❯❯ having controversial programs such as voluntourism ❯❯ corporate sponsorships 18

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❯❯ ❯❯

having a “founder” or “co-founders” having board members for long periods of time

I will discuss each of these points below. At the moment there is a lot more information needed on the details of the WE Charity and its operations. Many former employees who want to speak out apparently are silenced by non-disclosure clauses and the disclosure from the Federal government has been slow and sometimes misleading. WE Charity seems to answer almost all questions given to them but sometimes those answers seemingly have little relationship to the questions. In addition, very basic documents like the financial statements for all the for-profit WE entities, which is not currently legally required to be disclosed, has not been disclosed and therefore there will always be lots of nagging questions around WE’s operations. After all, how can you understand the WE organization when the different entities are often lumped together and you are only entitled legally to have information on about 1/2 of those entities! For charities that are worried about the public thinking that all charities are like WE Charity, your lives are made more difficult by WE Charity often saying that what they are doing is similar to other charities. But here are some tentative thoughts (some might even be talking points) for charities about why WE Charity is really unique and why certain things done by WE do not appear to be straightforward or the “normal” way charities operate. Of course cumulatively when you look at all the issues raised with the whole WE organization it is also very concerning, as opposed to each independent issue by itself. This does not mean that everything WE organization did was problematic — they may have done some good things and I am sure that there are some people who benefitted from their programming over 25 years. However, the negatives raised by various groups are significant and the key issue in this article is how much will the public think WE Charity is similar to other charities. It also does not help that the knowledge of both the sector, politicians and the public on charity compliance issues, and what charities are or not allowed to do, is shallow and often, there is more misinformation than information. The lack of knowledge makes it easy for public relations people to argue that a charity’s behaviour was appropriate when it was not and the Finance Committee’s shallow knowledge of charity law means that they don’t challenge some of these assertions. Using multiple corporations If you believe the supporters of WE Charity, many charities are doing exactly what WE Charity did in terms of having multiple corporations and it is not really a big problem here. The Kielburgers in fact admitted in testimony that the structure was probably a little too complex. WE Charity is correct that some charities have multiple entities — for-profits, non-profits and charities and sometimes more than one of each that work together. However, for a Canadian charity of their size, I have foundationmag.ca

THE WE CHARITY SPECIAL REPORT never seen anything like this. As well, there is a difference between having a “for-profit” in a group that is wholly owned by a charity and a for-profit that is owned by two or three private individuals and has a close relationship to the charity that benefits to some extent the for-profit. There is a difference between having multiple corporations with transparency about each corporation and clarity as to how they work together versus having so many corporations that the chair of the charity for 10 years cannot even say how many there are and it is very difficult for many smart people including investigative journalists to understand where one begins and one ends. This is not the first time that there have been questions about charities and non-charitable corporations — remember Kevin Donovan’s coverage of ORNGE air ambulance service which was a charity and that had a non-profit as well. So yes, it often makes sense to have multiple corporations but it is important that there is adequate separation between them, that there is transparency about their role, that the public can easily tell them apart and it is clear that the charity is not in any way unduly providing a private benefiting to a non-charity. CRA has recently revoked a number of charities where there was lack of separation between the registered charity and non-charity. Having employees Some Canadians have the stereotype of charities being small and all-volunteer organizations. Many in fact are that. The public sometimes does not realize that hospitals, universities, large social service agencies are also charities and yes they have employees. So about half of all Canadian charities have employees and there is nothing wrong with paying reasonable salaries. The issue of charities and employment is important and complicated and probably deserves a lot more attention as it involves over 2 million Canadians who are employees of charities and about $147 billion of the $261 billion in expenditures is spent on employees. There are allegations in the media that some WE Charity employees worked long hours at low salaries and were not paid overtime. There are allegations from many former WE Charity employees that there were problems in the work culture or there was a toxic work environment. There are also allegations that some BIPOC employees were not treated well and there was some bullying by some staff people. There is a difference between having employees and adhering to minimum employment standards versus having employees and having them work overtime (without compensation) such that they are earning in some cases less than minimum wage. Problems with human resources in charities are not new situations. Unfortunately they rarely receive the attention that it should. Perhaps the WE Charity scandal will be added impetus for organizations to think carefully about their employees and their work environment and make improvements that are long overdue.

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Compensation of senior staff Charities have to retain some very talented people and compensation is not simple. We wrote about appropriate charity compensation over ten years ago. There were lots of questions around how much did the Kielburgers earn from the charity. This is clearly the wrong question as my understanding was that they did not receive a salary from the charity, but instead from a for-profit affiliate (ME To WE) that received significant payments and had close ties to WE Charity. If you pay an employee through a registered charity, there is some basic disclosure in the T3010 which lists the top 10 employees and their pay bands. Even if the Kielburgers received a salary from the for-profit corporations (I have seen it reported that it was $125,000 each annually) that hardly gives you a good idea of their real compensation. When you look at someone who is both a shareholder and employee of a company, like any small business, their ultimate “compensation” is not just salary but also an increase in the value of their shares of the company which is based on the assets of the company. The more the company is worth when it is ultimately sold, the more the shareholders will gain. We will probably never know, therefore, how much the Kielburgers earned from their involvement with WE Charity and whether or not it is an appropriate amount. There is some latitude given by CRA on the topic of compensation but realize that the public, the media and more importantly your donors may have their own perspectives on what is appropriate and that is not even always fair. Compensation of employees is one of the most important governance decisions for a charity, and in some cases, compensation is the largest expenditure of the charity during the year. Charities should review their employment and compensation practices. A lot of the problems here is that there is so little transparency and therefore are so many wild theories that can then flourish; another reason why transparency is important. Working with youth and students School boards have an obligation to educate students and they try to provide all-round education which can be more than just in class work. Generally, schools are careful about the partners that they are involved with. There will be more written in the future about the school system and WE Charity, but clearly there are roles for charities to play to assist schools in a completely appropriate way to educate children and give children an opportunity to thrive. When should administrators and teachers accept free trips from for-profit companies? Could this put them in a conflict of interest when they are then encouraging thousands of students to take very expensive trips organized by that for-profit? Certainly the issue of came up with the CSSG with teachers being potentially paid to recruit and virtually supervise students doing volunteer activities. There is a difference between educating children as is done in many schools and trying to indoctrinate children into buying products and selling products to the public that may September/October 2020

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THE WE CHARITY SPECIAL REPORT benefit for-profit companies owned by private individuals and their corporate and other sponsors and friends. Needless to say, there are many great charities that can and have worked effectively with school boards and hopefully this saga will not turn schools off dealing with charities. But it would not be shocking that school board re-evaluate their policies and perhaps make it even more difficult for charities to operate in schools and work with students. Reporting and transparency Charities should be transparent about their operations, activities, structure, partnerships, etc. Transparency does not mean putting up large amounts of information on the charity — it means putting up relevant information for different stakeholders, ensuring your T3010 is accurate, filing financials if you are a soliciting corporation under the CNCA, and providing ongoing transparency through your website and social media. In other words, it is crucial to provide your stakeholders with real information on the operations and structure of the charity and its related entities. It also can mean having frank conversations with stakeholders about plans and mistakes that have been made. There are legal requirements around transparency with which registered charities must absolutely comply (i.e. filings financials as a soliciting corporation under the CNCA and filing your T3010 Registered Charity Information Return). However, these are only very basic requirements and the minimum standards that a charity should meet. WE Charity filed that they were a “non-soliciting” corporation for about five years and, therefore, they did not need to file their financial statements! They just fixed that “clerical error” a few weeks ago. The We Charity scandal has definitely made the issue of transparency of charities front and centre. Legally speaking there is no requirement for charities to disclose affiliated forprofits that they don’t own. The public, therefore, has no idea how much money was made by WE Charity’s for-profit arm over the last ten years, what assets it has, etc. One glimmer of hope that I had from watching Canadian parliamentarians trying to obtain basic information about WE Charity is that perhaps more effort will be made to increase transparency in the charity sector. When you look at other countries, such as England and the US, and what they require charities to disclose, then Canada fails miserably. We have a whole directory on transparency in the charity sector. Charities can learn that organizations should first and foremost focus on mandatory legal filings before investing in other communications and transparency such as websites, social media etc. If you cannot get the mandatory legal filings done you might need to change staff or obtain external assistance. But filing inaccurate forms or not doing filings at all is not an option. Calling yourself a transparent charity does not make your charity transparent! We regularly assist clients with understanding what filings they need to do, how their filings may not be accurate and how to improve transparency. For some 20

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organizations these can be quite simple and straightforward — but for others, it is more complicated. Almost all charities can be more transparent than they are now. Lobbying of government officials In light of the tremendous amount of funds granted by governments and the importance of decisions made by government affecting the beneficiaries of charities, it makes sense that Canadian charities are involved with lobbying government on all levels. Recently it came to light that WE Charity had not registered under the Federal Lobbying Act, a comprehensive piece of legislation that is intended to increase transparency regarding the government’s dealings with outside entities. If a charity “communicates with a public officer holder” asking for funds, that will probably constitute lobbying. “Communication”, for purposes of the Lobbying Act, can involve verbal or written communication or a written contact with a public office holder. If a charity spends over 1/5 of a full-time employee over any month (a “significant part of duties” or the “20 percent rule”) then a charity must register under the Lobbying Act. This is the equivalent of, for example, four days in a month totalling all staff time on lobbying. Another way of looking at it is this: if a charity spends about 40 hours or more in a month on lobbying then it will probably have to register under the Lobbying Act. If a charity meets the 20 percent rule, then a senior officer of the charity must register by filing a return no later than two months after the requirement to register arises under the Lobbying Act. The maximum fine for failure to do so is approximately $200,000 and/or imprisonment for a term of up to two years. WE Charity recently filed almost two years’ worth of lobbyist registration information. Interestingly, the WE Charity Foundation Funding Agreement signed in May 2020 contained the following provision: “7.1 The Recipient declares that any person who has been lobbying on its behalf to obtain the contribution that is the subject of this Agreement was in compliance with the provisions of the Lobbying Act (R.S.C., 1985, c. 44 (4th Supp.)), as amended from time to time, at the time the lobbying occurred and that any such person to whom the aforementioned act applies has received, or will receive, no payment, directly or indirectly, from the Recipient that is in whole or in part contingent on obtaining this Agreement.” There is a difference between doing a small amount of lobbying versus a large amount of lobbying and if you meet the criteria for registration then you must register. I hope that charities don’t shy away from dealing with government because of worries about lobbyist registration. I also hope that government does not shy away from meeting with charities because of concerns about the adequacy of charity registrations under the lobbyist registration system. Now is a great time for charities to review their interactions with different levels of government and to see whether registration is required at any of the levels. Otherwise, you might find your charity frozen out foundationmag.ca

THE WE CHARITY SPECIAL REPORT of meetings and communications when you most need to be communicating with government. Partisan activities As you know in December 2018 the Income Tax Act was changed to allow Canadian registered charities to conduct unlimited public policy dialogue and development activities (PPDDA) connected to the stated purpose of the charity, as long as they are not directly or indirectly partisan. PPDDAs are similar to what we used to describe as allowable non-partisan political activities. The old and new rules preclude any partisan activities. Although many candidates and others appeared at WE Days from different parties there are some questions about some of the material produced by WE Charity including a glowing commercial featuring Justin Trudeau and whether it was in fact directly or indirectly supporting a candidate or political party. There are also stories about WE Charity employees being encouraged to attend partisan events put on by candidates. The WE Charity scandal is a reminder to charities that although it may seem like a good idea to do something that is glowingly positive towards a particular party or candidate or very helpful in their re-election campaign, this can come back to haunt the charity and the sector. It is better that charities carefully avoid any behaviour that would appear to indicate that they are supporting or opposing one political party or another. One of my concerns, when the changes were proposed in 2018, was that if charities could conduct unlimited nonpartisan political activities that they would not have to conduct any charitable activities at all. Eventually the organization might morph into becoming a “political” organization or may inch into partisan activities because they are doing so much political activities and not necessarily carefully reviewing their activities in terms of these fine partisan/non-partisan distinctions which some people don’t accept anyway. I would not be surprised if there are some clarifications in the future about charities and how much political activity they can conduct. Hopefully, this will happen before the reputation of the sector is irreversibly harmed. By the way, don’t think that the charity sector losing its reputation is bad for everyone — there are certain special interests — whether they be for-profit companies wanting business from government that charities typically do or others who support agendas that are hostile to the public that would not at all be upset if the charity sector was less trusted and listened to by the public. (Here is an additional perspective on this topic from Adam Parachin.) Conducting international activities in multiple countries International activities are some of the most important activities conducted by Canadian charities. With increasing needs at home and the WE Charity scandal there could be pressure on (and fewer donations to) charities conducting activities abroad. This is very worrying to me. There was a brief discussion in the WE Charity scandal about foundationmag.ca

transfers of property in Kenya from charities to for-profits, and on a separate matter, whether there was some sort of misuse of funds in Kenya by some people. Maybe we will hear more about this in the future but it did not inspire confidence in their foreign operations. To make it worse, it looks like some international development organizations during COVID-19 are pushing aggressively for eliminating the current rules for foreign activities. These rules were developed as a result of 5 court cases over a 20 year span. I am worried that by suggesting the elimination of these rules with some ambiguous replacement that may take years to work out we may see less accountability and transparency when Canadian charities carry out foreign activities. This came across to me as being surprising in the current context and concerns raised about WE Charity’s foreign activities. There were some concerns expressed about WE Charity operating in so many different countries and if this was more “donor” led rather than beneficiary led. WE Charity will not be the only charity that has to deal with those discussions and criticisms and some Canadian charities frequently change their priorities or focus based on funder or donor sentiments. The foreign activity piece got little attention but as we know the WE Charity scandal is not over yet. Charities should review the appropriateness of their foreign activities, their legal compliance in connection with those foreign activities, in order to determine whether any other systems should be implemented to improve oversight, mitigate risk and increase impact. It is not just WE Charity that has been rocked by allegations of different sorts, but a number of prominent global international development organizations have had scandals in the last couple of years that were extremely costly to them. I recently wrote how it is surprising to me that so many people who have spent decades in the international development community can be completely oblivious to some of the misdeeds of international development organizations. I can rattle off five or 10 names of charities that have been revoked for cause, not small charities, but in some cases, charities spending tens of millions of dollars per year (allegedly completely inappropriately) and these veterans of the international development sector have never even heard of these organizations. As these charities were revoked, CRA can disclose the detailed reasons for the revocations. This information is then public. It has always mystified me how some very intelligent people within the charity sector can know every detail of a topic relating to international development but not know anything about these bad actors. As someone from Finance once said to me to helpfully explain ‘some people are paid a lot to not notice’. If you live in a world where international development organizations only do good and wonderful work then I can understand loosening or eliminating rules. I don’t think we live in that world and ignoring the harm caused by a “few” bad apples can result in a lot of victims and a loss of trust by the public in international development organizations, September/October 2020

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THE WE CHARITY SPECIAL REPORT their governance and oversight. If I was on the fundraising side of international development and humanitarian assistance, I would be following the WE Charity scandal carefully and hoping that it does not have a very negative impact on fundraising for international philanthropy in the future. Social enterprise and business activities Using business activities to make the world a better place has probably been around since business was first developed. Yes, it is not a new concept and not all business activities make the world a better place. However, there are limits to the extent that a Canadian registered charity can carry on business activities. After all, at a certain point, if you are doing unlimited business activities it really is not a charity, just a nice business. The rules allowing charities to conduct business activities are called “related business rules” and essentially charities can conduct lucrative related business within the charity as long as they are “related” to the objects of the charity or carried out 90 percent or more by volunteers. Related business activities are not only about charities making money but often, more importantly, providing jobs to certain people who may otherwise be unemployed or carrying out activities that can be very beneficial to society but may not be charitable. Marc Kielburger in his testimony said that charities cannot make a profit. This is not accurate. He was arguing the rules meant that they needed to set up a separate for-profit corporation to do the voluntourism and sales of bracelets etc. As noted above, when charities have for-profit arms they are usually owned by the charity so any increase in value of the shares can benefit the charity. Charities often have very profitable related businesses — for which I might add, by the way, they pay no income taxes on that profit. Have you ever parked at a hospital parking lot in downtown Toronto? Do you think the hospital that owns that parking lot is breaking even or losing money! While there are some advocates for allowing charities to conduct almost unlimited business activities I don’t think that ultimately that will either be in the best interest of charity beneficiaries or the sector. Because the term “social enterprise” can mean so many different things to different people it probably should be retired or sparingly used. There are different rules for for-profits, non-profits and charities conducting business activities and often people confuse those rules. Charities should understand the related business rules and whether their business operations are compliant with those rules. Often changes can easily be made to bring them into compliance. Hopefully, the WE Charity scandal will not cause charities to avoid conducting business activities or the public to get angry at charities for conducting those business activities. Receiving government funding A big part of the WE Charity scandal was the WE Charity Foundation receiving a funding agreement for over $543 million to implement the CSSG program. This has highlighted foundationmag.ca

the issue of government grants and contributions to charities. Some were upset that WE Charity received the funds because they did not like the details of the CSSG program (which cannot really be pinned on WE Charity) but others were concerned that WE Charity seemed to have little capacity to actually implement the program especially the supervision of volunteers after terminating so many employees and having almost no presence in Quebec. This was a sole-sourced contract and some might believe that Mr. Morneau might have encouraged it — after all his office and WE Charity were “besties”. The charity sector really relies on government funds, mostly from provincial governments, but also at the Federal and municipal levels. As we have noted in our Blumbergs’ Charity Sector Snapshot 2017, “Government revenue totaled $184 Billion including from the federal government ($9 Billion), provincial governments ($165.4 Billion) and municipal/ regional governments ($9.3 Billion)” This is over 2/3 of the revenue of the charity sector. For those who have been watching government procurement, there really has not been anything like this. WE Charity, with annual revenue of $65 million receiving a $543 million grant to undertake a program over 3 months. If this grant was annualized revenue it would be the equivalent of them receiving $2 billion in a year! What is also amazing is that apparently to prepare the proposal, WE Charity only spent a “handful” of hours. I cry when I think of the time, before COVID, over weeks or months that many charities have to spend to even get a few hundred thousand dollars from government. Many government departments have extensive processes for grantmaking or procurement and some of them I would argue are unnecessarily complicated or too burdensome. This was on the other extreme — the CSSG grant was more like “Grants Gone Wild”. Governments need to have appropriate mechanisms to vet charities and their work and hopefully, governments across Canada will not tighten up the application and grant-making process inappropriately as a result of the WE Charity scandal. When governments provide contracts to charities in the future, it will not only be based on the “capacity” of the charity to implement the project, but also on the public’s perception of the appropriateness of the contract. There is a delicate balance between the charity sector and government when it comes to implementing programs. Sometimes it is quite clear that government is better able to implement a program and sometimes it is the charity sector. Usually, when there is an inappropriate diversion of funds from a government program, or what could be a government program, it is a right-wing government that is trying to reduce government “bureaucracies” involvement in society! Trudeau made the statement that “The WE Charities are evaluated by our public service as being the best and only organization able to deliver on the scale that we need to make sure that young people have service opportunities this summer…”. This statement alone was viewed by some in the sector as being very insulting to many organizations that regularly manage volunteers September/October 2020

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THE WE CHARITY SPECIAL REPORT across the country. It was also viewed as insulting to the public service who has managed the summer grants program as well as a number of recent COVID programs that are a lot bigger in size and complexity. There is a happy medium and I certainly hope that programs that should be run by government are not outsourced to charities that have questionable capacity and programs that should be run by charities should not be cut back because this one government made a terrible decision, which admittedly they quickly backtracked on by cancelling the CSSG program. Owning real estate There is nothing wrong with charities owning real estate. While most Canadian charities don’t own real estate — some small charities operate out of one of their volunteer’s home, others rent space or receive it for free, and some own real estate. It depends in part on the needs of the charity and probably more so the limited resources of many charities. Owning real estate, in the long run, can save charities funds for renting, also there can be appreciation in the value of the real estate and in hard times the real estate can be borrowed against or sold if necessary to maintain the organization’s activities. Canadian charities own about $255 billion worth of real estate. It would not be surprising that Alberta Health Services owns about $10 billion in real estate, U of T has about $5 billion in real estate, UBC and the Toronto District School Boards have each about $4 billion in real estate. WE Charity apparently had over $43 million in real estate in downtown Toronto — one large building and many smaller houses/offices. This was a lightning rod for criticism. Was it that they owned real estate or how they owned the real estate? While 22,000 charities own real estate of some sort, over 10,000 charities have real estate valued at over $1 million and over 640 charities had real estate which was worth more than the $43 million of real estate held by WE Charity. The main issue was that WE Charity has held itself out in the past as first and foremost an international development and poverty alleviation charity. In the old days, they said “Free the Children has two main purposes: To free children from poverty, exploitation and abuse. To give children a voice, leadership training, and opportunities to take action on issues which affect them from a local to an international level.” In 2018 WE Charity says on its T3010s that it spent $19.5m on foreign activities. Is it appropriate for an international development charity of the size of WE Charity to hold $43m in real estate? People will differ in their views but, just to give you some examples of what others are doing: World Vision Canada in 2018 spent $362 million on foreign activities and only had $18m in real estate. Oxfam-Quebec spent $32 million on foreign activities and had $1.9 million in real estate. Clearly to conduct foreign activities at the scale that WE Charity was doing does not require that much real estate and the argument can be made that the push to buy real estate could have gotten in the way of supporting beneficiaries in other countries (or foundationmag.ca

even those in Canada). Directors should balance the interest of long-term sustainability, including the need for real estate and reserves, with that of assisting the beneficiaries of the charity who are ostensibly the reason people are donating to your charity. I have dealt with many international development charities over the last 20 years and when I see the lengths some of them go to save money (sometimes extreme and perhaps penny smart and pound foolish) I can imagine why some might resent the huge amounts spent by WE Charity on real estate in Toronto. Some of the media and public were concerned that funds raised by the public was used to purchase this real estate. WE Charity says that is not accurate and only funds from certain large donors were used to purchase real estate. Practically, if a large individual donor is receiving 60 or 70 percent tax benefit when they donate to charity then taxpayers are still footing a large part of the bill when a charity buys real estate using funds from private individual donors. Certainly, in many cases, it makes sense for charities to own real estate but some charities could find themselves being criticized if the real estate does not seem to fit with the mission or is no longer necessary to be held and could be deployed in better ways to support the charity’s beneficiaries. Many charities are regularly reviewing their policies and approaches to real estate and hopefully the public’s criticisms of this one charity’s real estate holdings will not negatively affect the discussion around charities having real estate when necessary, reasonable and proportionate. With COVID many charities have had to already rethink their relationship with real estate (such as having staff work from home) and hopefully the scrutiny on WE Charity will force charities to make sometimes difficult decisions more quickly. Having controversial programs such as voluntourism Canadian charities undertake a huge variety of programs and they are not all equally understood or appreciated by the public. While providing basic medical care to children is probably universally accepted other activities, such as proselytizing by some religious groups helping the poor and conversion therapy against LGBTQ people, have received a lot of scrutiny and criticism. A concern covered by the media (which applies to many organizations) is that ME to We, the for-profit affiliate of WE, does voluntourism and makes a large amount of money sending Canadian high school students and others to developing world countries on expensive short term trips to do work that some would argue could be better done by local people. Many charities carry out some sort of mission trips or voluntourism and depending on how they are conducted — the cost, the benefits to the public etc can be different. No question that many charities will be looking at the recent discussions and thinking about some of their own programs. The problem with some charities is they assume that whatever they are doing is beneficial to the public and if they did more of September/October 2020

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THE WE CHARITY SPECIAL REPORT that program it is just more beneficial. There is an interesting project from Boston called “Do no harm” which challenges these assumptions. Every charity should start by considering that their interventions could in some cases be causing more harm than good and try carefully to have more public benefit than detriment. I certainly hope that the public does not think that most of the work of charities is controversial or questionable but if they do this will be very problematic for the charity sector. Corporate sponsorships Corporations make donations to charities. Some of them are anonymous or without much fanfare. Corporations also enter into sponsorship arrangements — they are essentially giving funds to the charity to obtain advertising or positive exposure. These are not donations as the corporation is typically receiving more of an “advantage” than they are providing in funds. This scandal has shown us that if a charity faces major issues that become public knowledge it may find its corporate partners making a quick exit. These ‘partnerships’ are not really partnerships per se but are a form of sponsorship and advertising, and major brands have very limited tolerance for negative publicity. The corporate partnership angle received little attention. The partnerships that were most discussed were those by media organizations with WE. The Globe and Mails refused to cancel their partnership and are letting it expire at the end of August 2020. Will this make corporations more reticent to work with charities? I don’t think so but I do think they really need to do better due diligence on their “partners”. After all, many of the issues involving WE Charity were known for many years in the sector. I think that some major corporations have been and will be asking hard questions over the next months about how they could have supported WE Charity and how can they avoid this happening again, and that is a positive development. On the other hand, if corporations are more reticent to sponsor charities it could result in a decline in revenue for charities. Having a “founder” or “co-founders” Many organizations were created originally by a founder or “co-founders”. Often it is the initiative of one or two or a few people that gets an organization going. It is not that different in the business world. Sometimes the continued involvement of a founder beyond the first few years can be very positive or it can be quite negative. There have been lots of fights between founders and others within the organizations they created and in some cases, the founders were right and in other cases, I would argue the founders had overstayed their involvement. Many founders will establish an organization and at a certain point hand over control of the organization to others to continue the work. As groups grow, they require different strengths and talents in their leadership. It is very unlikely that one or two people will have all of those skills necessary for an organization over decades. 26

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In this case, two brothers founded the organization and 25 years later they are still seemingly having a lot of involvement and exercising significant control over the organization, although there are other people with titles such as Executive Director etc.. It is still not clear why almost all of the board suddenly resigned in March and April of 2020. Was there a conflict between the founders and the board? WE Charity says that the board turnover was part of a long-planned process. There is a lesson here for founders — not that you should not found an organization, but at a certain point it is a good idea to “let go” or really let others run the organization — or your organization and all the work you put in over decades may be hurt or destroyed. As well your reputation can suffer significantly. There is no magic time when a founder has overstayed their stay — but hopefully everyone will recognize when the time comes and act on it. It also raises a serious question around charities that spend a lot of time talking about their founders and the “birth” story rather than focusing on the beneficiaries and their work. I admit that many people like to hear these stories and fundraisers often like to tell interesting stories. A focus on founders or other leaders can be an indication that the organization is overly reliant on those leaders. In some cases, a founder dies or is caught up in a scandal and the organization quickly implodes. Those organizations that make it beyond the founders presumably have significant internal strengths outside of the founders and in some cases, they even become stronger after the departure of the founders. In this case, it appears from a review of the articles and by-law of WE Charity that WE Charity had two classes of membership and the “Founding Members” were able to exercise significant control over the organization because they could replace the board at any time. Whether that was a problem here, or not, is not yet clear. Funders (whether foundations or governments etc) often don’t know that much about how charities, who are very different from them, run or should run and hopefully we will not be seeing more ill-considered governance suggestions like charities should all have open and large memberships in response to the WE Charity scandal. We have recently prepared a course on membership entitled “Membership of Non-Profits and Charities in Canada: Who has control over your organization?” and there is no one size fits all — we discuss 6 different models of membership which can be useful in different scenarios and there are pros and cons of each. Having board members for long periods of time There were a number of articles discussing long service of directors on the WE Charity board. The Chair had apparently been on the board for 14 years and been chair for the last 10 years. Other board members had also served on the board for a very long time. In my article Top Tips for Serving as a Director of a Canadian Registered Charity I discuss one of the most difficult issues facing a board member namely knowing when it is time to leave. foundationmag.ca

THE WE CHARITY SPECIAL REPORT Generally, one leaves when your term is up. Sometimes it is best to leave earlier. If you cannot make meetings you should definitely leave. Making the meetings is really the minimum — in some cases if you cannot read the material and prepare for the meeting you might not be positively contributing even if you show up. If your life changes dramatically and you cannot commit to the organization in the way you had it might be time to leave. If you are going to have an ongoing conflict of interest you should seriously think about leaving. Board service is a very important volunteer contribution but it is not a prison sentence. If you are often having emotionally charged arguments with other board members and you are alone or in a small minority it may be time to leave gracefully and either find another role in the organization or find another organization that wants your skills, connections and views. The topic of term limits for directors can sometimes be a sensitive issue and there are many arguments both for and against them. What I find most interesting is how many times someone is adamantly in favour of term limits and when their own service on the board is going to be ended by term limits the corporation is coming to us for advice on how to remove the term limits or adjust them to allow this very ‘valuable’ director to remain on the board. It usually starts with the chair or other senior officers on the board being able to stay for another term so not six years but nine years. Then a few later that does not work anymore so there is a new by-law and the term limits start over! Not a great way to govern an organization and clearly term limits are a weak and partial solution at best. Fundamentally the term limit discussion is a luxury as many organizations have tremendous trouble finding skilled and capable board members at all. We usually recommend to groups not to place term limits in their By-laws as often times imposing term limits results in forcing valued board members to step down while the organization would have liked to retain them on the board for their knowledge, experience, continuity in leadership, etc. Term limits in By-laws can be a blunt tool that can eliminate valuable directors. On the other hand, term limits can also have a purpose, such as refreshing the board, facilitating board succession planning, etc. In our experience, they usually don’t accomplish the latter purposes and in fact, we are often asked to amend the by-laws many years later to allow for exceptions which undercuts the whole notion of having term limits. Organizations instead should have regular elections, a careful review of each board member each year or two as to whether they are still contributing to the organization and organizations should not wait six years for a director’s second three-year term to be up but remove the director if they are no longer contributing to the organization. I am worried that the WE Charity scandal will result in simplistic ideas about governance — ‘if only WE Charity had term limits none of this would have happened’!

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Conclusion Clearly with each of the areas above context is important but sometimes those details are lost. It doesn’t help that the main self-proclaimed umbrella organization for the ‘voluntary sector’ was silent for weeks at the beginning of the scandal and then notified the sector in a blog that said umbrella organization was apparently involved in the disastrous CSSG program and wanted to receive funding as part of the program to evaluate the program. Few details are available. One thing is clear — it is unlikely that there will be a “build back better” in the charity sector if it has the same leadership and same policy positions. One commentator noted that on the plus side none of the leaders of the charity sector came to the defence of WE Charity. I guess if the standard we aspire to as a sector when a major event happens affecting the sector and its reputation, is to have silence — then we are real winners as a sector. As the WE Charity scandal happened at the same time as COVID it might be hard to disaggregate their impacts or to tell whether in some cases certain changes were caused by one or the other. Also, the WE Charity scandal is by no means over so it may develop in different directions. While I think some days that it is possible that the WE Charity scandal will have limited impact, that is perhaps wishful thinking on my part! Charities need to contemplate both the impact of COVID and the WE Charity scandal and how it can impact their operations. Failure to carefully consider these two events can undermine the ability of a charity to respond to the changing environment and undercut the likelihood of success for that charity. Some compliance problems are very easy to spot and others are more difficult. It is also a good practice for charities to conduct external, informal risk reviews on an ongoing basis in terms of compliance issues. Here is an article on that point. These informal risk reviews can help catch and fix issues as soon as possible and before they become a CRA compliance issue or public topic of discussion. Charities can learn from other Canadian charities that have had issues. One important method for achieving legal compliance is through hiring/ involving the right people and continuing to educate them. It is important that charities have volunteers and staff who truly understand legal compliance requirements so that they follow them and ask the right questions. Continuing education can be very helpful in this regard as people forget the rules or there may be turnover in your organizations. So with COVID, WE Charity and the uncertain U.S. election season, charities should pray for the best but prepare for many things including the worst. MARK BLUMBERG is a charity lawyer based in Toronto with Blumberg Segal LLP and has worked for over 25 years on issues relating to non-profits, registered charities and philanthropy, in Canada and abroad. Mark has written and lectured extensively on these topics. He is the editor of two blogs namely www.CanadianCharityLaw.ca and www.GlobalPhilanthropy.ca™ and manages www.charitydata.ca and www.smartgiving.ca.

September/October 2020

FOUNDATION Magazine

THE WE CHARITY SPECIAL REPORT

COURTESY THE OAKVILLE COMMUNITY FOUNDATION

WE Charity and we charities

What the WE Charity case means for the rest of us in the sector

BY WENDY RINELLA

lthough there is a lot of discussion about the potential backlash against the entire charitable sector from this scandal, I would point out the absence of other charity leaders rushing to the aid of WE Charity in these discussions. The silence has been deafening, which speaks to how peers viewed their activities. I worry that the lack of commentary regarding the anatomy of this scandal — the “how” this could have happened in our sector is contributing to the collateral damage. With that in mind I am stepping into this void. While there are specific operational and governance issues at WE Charity that contributed to their integrity challenges, I think that there are broader issues that need examination. In that vein, I want to share that I have no doubt that Free the Children which evolved to WE Charity began with good intentions. However there are a number of sector issues that I see directly impacting its journey, specifically: 1) When donor engagement becomes the charitable activity; 2) The hidden costs of charity overhead; and 3) What qualifies as a social enterprise? When donor engagement becomes the charitable activity As many colleagues and friends know, I referred to “Me to We” as “Me to Concert.” I saw it as a transactional relationship -if a youth did good deeds they would be rewarded with a ticket to a celebrity-filled concert. I did not see this as instilling “philanthropy”, but I was careful to check my criticism because the youth empowerment message was positive. I will also share that The Foundation’s Youth Philanthropy Initiative at Oakville high schools was in part a reaction to the local Me to We chapters’ focus on international development. Our Youth Philanthropy initiative is grounded in connecting students to their local neighbourhood and it’s needs. WE’s youth empowerment message seems to have morphed 28

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into a “donor first” impact. The charity was focused on how many students participated in their local school chapters, contributed to fundraising and went on school building trips, not on the benefits or impact on the intended recipients (the students at these new international schools). WE’s youth engagement became the driver in order to attract the sponsors and government funding. With the focus on youth participation, the charity’s impact seems to have become secondary and evolved into “philanthropic tourism,” offering a concert ticket or a paid travel opportunity, with nominal impact on the intended recipients. This is a broad issue for our sector — the challenge, and often demands, of donors to be meaningfully engaged in the charitable activities they support. If the focus is on the meaningful participation of the donor in the activity, what is the tipping point where the donor becomes more important than the client? The challenge of meaningfully engaging donors is a careful balancing act. How much do you include donors in solution-development and charity activities? What is appropriate in terms of the resources allocated to engaging donors? What are reasonable requests from donors; what are unreasonable? Corporations are known to put demands on charities for meaningful employee engagement activities. Donors should be aware that the time spent addressing their requests are resources not spent on helping people. I don’t have answers to these questions but these are issues that need to be aired. If you have answers I would be happy to hear them. The hidden costs of charity administration In the past two decades, charity watchdogs in the US and Canada began to focus on charity administration to ensure that donations were addressing needs, not building fancy offices or padding executive expense accounts and salaries. The foundationmag.ca

THE WE CHARITY SPECIAL REPORT fewest dollars spent on charity overheads has been greeted as a virtuous state by many donors. In response to this unrealistic expectation, charities have tried to downplay their overhead costs by renaming them or aligning them to program expenses. Or in the case of WE Charity, create a shell game of multiple entities to hide overhead costs. For some context on charity administrative overheads, charities are employers. Imagine Canada estimates that there are 2 million people employed in the sector which is largely within the social services sector. Stats Canada reports On average, about one-third of operating expenses in the service industry goes toward paying salaries and wages. The share is even higher in industries reliant on highly-trained employees. Charities employ many professionals like health care providers, counsellors, researchers, accountants, who need paid-income to support themselves and their families. I am often asked — why can’t a charity rely on volunteers? I respond that I don’t think you want your donation to support an unqualified volunteer to lead an addiction, mental health or grief counselling session or support an Alzheimer patient for example. It could do more harm than good. Volunteers can be wonderful but they are also not a reliable workforce. In addition to employing professionals, a number of charity activities have high overhead costs, specifically running a large “charitainment” event like WE Days. This expectation that charities can operate with significantly less overhead than comparable for-profit or government operations has had some unintended outcomes, like the operational complexity of the WE universe. One of the main criticisms levelled at WE Charity and Me to WE is the multiplicity of organizations and structures involved in its operations. Free the Children which became WE Charity is the charitable arm. ME to WE is a private for-profit business that was created as a “social enterprise” to support the operations of WE Charity as described on its website. WE Charity was an early champion of the less than 10 percent administrative overhead. Its website indicates that it “consistently exceeds industry standards” of being below 10 percent administrative costs. In response to its Question “How are you able to keep your administrative costs low?” WE lists: ❯❯ We don’t hire high-priced fundraising consultants ❯❯ We do not pay for advertising space ME to WE provides significant in-kind support to WE Charity to directly reduce expenses It then describes these in-kind services as motivational speakers for WE Days, travel for staff and free office space. So the overhead costs of the event entertainment, office overhead and staff travel are donated in-kind to the charity. I can see how creating the separate for-profit, ME to WE could have seemed like a good idea. Uploading overhead costs to the for-profit business would seem like an effective remedy to reduce overheads. It appears that the original motive was foundationmag.ca

for WE Charity to keep its overheads low with in-kind support from Me to WE. The website declares that $20 million in cash and in-kind support was transferred from the for-profit to the charity. However, Charity Intelligence reports that funds were flowing back and forth between the two organizations. WE Charity paid ME to WE $11 million over two decades. Perhaps charities need to disclose in their CRA filing, called the T3010, whether another related organization provides any of its operating costs and if so how much. The other oversight that may be required is the relationship between a charity and its for-profit business. The Charities Accounting Act in Ontario limits when a charity can hire a person or business “connected” to a board member to only situations when it is in the best interests of the charity. The Kielburgers were not board members but influential founders. So their Me to WE enterprise was not captured by this legal requirement. Maybe our legal community has thoughts in this regard? Perhaps there are other disclosure remedies that readers may want to suggest? What qualifies as a social enterprise? ME to WE, the for-profit business is described as a “social enterprise”. My view is that ME to WE is not a social enterprise. It does not appear to have used its revenues exclusively to support positive social or environmental outcomes or charitable activities. My bet is if the ME to WE expenses are revealed, it will show its biggest expenditures as paying for WE Day celebrity fees and travel. Being a social enterprise is not a partial undertaking. Unless your organization is “all in” using its profits to fund a charitable activity like Habitat for Humanity’s ReStores solely funding their operations or having an impact like Bestpac which employs the Community Living Oakville clients, it doesn’t deserve the title. So let’s stop calling it a social enterprise as we are mislabelling what is an important vehicle for meeting community needs. So that is my view on a social enterprise, but what are the standards? Social enterprise seems to be on the basis of selfproclamation at the moment. I think that we need an accreditation or quality standard for social enterprises. About the closest thing I can think of is a Certified B Corp. But I don’t believe that it fits all scenarios. I would love to hear more ideas on this suggestion. So I have stepped into the fray to help explain some of the likely drivers behind WE’s decisions, to fill the void so this doesn’t only become an issue of poor decisions by a few individuals, but rather what can happen when some fundamentals like engaging donors, realistic overheads and social enterprise standards are lost within the charitable sector. Those are some of the issues that I have been thinking about. I am interested in hearing your reflections and maybe I will share this blog space with you. WENDY RINELLA is CEO of the Oakville Community Foundation. Since their establishment in 1994, the foundation has become the largest charitable asset in the Town of Oakville dedicated to building community through philanthropy. September/October 2020

FOUNDATION Magazine

THE WE CHARITY SPECIAL REPORT

Lessons in Failure: What Can Be Learned from the WE Movement

BY NARINDER DHAMI AND CHI NGUYEN

ver the past few months, as nearly every facet of our lives has been turned upside, the charitable and non-profit sector has seen massive disruption. The societal reckoning that kicked off in late spring with the deaths of George Floyd and Regis KorchinskiPaquet called into question every aspect of our institutions, organizations and social movements. Against this backdrop, the federal government announced that it would partner with WE Charity to deliver a $912 million grant program. Many were stunned by this decision because of what the WE organization represented: neocolonial programming, failed governance and an operating model that included an intentional complex web of legal entities. These mounting concerns were the reason that an ad hoc group of leaders in the sector came together to call on the federal government and WE to put the brakes on this program, Canada Student Service Grants. Concerned that this program would allow one problematic organization to hold an extremely outsized ability to move public resources to those within their networks, without the strong focus on equity that all public investments deserve, we mobilized. Days after the announcement, we were part of a team of predominately BIPOC and queer voices that launched #WeHaveAProblem — a change.org petition with nearly 6,000 signatures focused on providing critical and constructive feedback about this new program. Why WE had a problem For many of us who came of age in the 1990s, the Kielburger brothers were held up as examples of what young people could achieve. Their work to challenge and end child labour, and to 30

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September/October 2020

protect human rights of children became synonymous with doing good, making change — and having an impact. The two golden boys from Thornhill have enjoyed a status as Canadian darlings through their twenty-five year history in Canadian public life. We have seen the implicit and explicit privileging of the Kielburgers’ work. So, as the WE movement ceases one of their many Canadian operations, we see this as an opportunity to ask: have we finally arrived at a true moment of reckoning in the charitable sector? Ending the new colonialism For decades, many Canadian charities have been involved in leading efforts helping communities at home and abroad. The Kielburgers work, originally as Free the Children began with that same framing. But, ever since the Kielburgers found themselves in the media spotlight, specifically around their appointment as lead partners on the Canada Student Service Grants, many of us within the charitable and non-profit sector have been sitting with a number of questions. While there have long been whispers and concerns about their work and approach, those within the sector were reluctant to speak for fear of repercussions and lawsuits. For many young Canadians, a formal introduction to “doing good” and “making a difference” came through an introduction to the WE movement through their schools. This approach to charity created a model that elevated a kind of White Saviourism: that nice, do-gooding teenage Canadians had things of value to offer to the Global South. The WE brand successfully made the outdated and criticized model of missionary work look cool, particularly by hosting massive celebrity-focused events. WE’s work has been a significant and subtle way of signalling white supremacy, while trying to do good. And, while ME to WE, their for-profit arm, sold travel opportunities to those able to pay and experience the Global South, they emphasized the experience of those participants, rather than addressing systemic solutions in deep collaboration and the leadership foundationmag.ca

THE WE CHARITY SPECIAL REPORT of the community. WE is part of a billion dollar voluntourism industry that exploits kids of colour globally through poverty tourism. WE’s work fails the first principle for any social programming: do no harm. This flawed approach was communicated boldly by WE and amplified through the voices of Canada’s elite, global celebrities, Royalty and the brand of Canada. This is not a Canadian export we should proudly celebrate. It appears through WE’s actions, they felt they were building what was right for communities. Any respectable practitioner of social impact sees these flaws: for long term impact and sustainability, programs and initiatives should be built with community, with their interest trumping financial gain. Effective community impact is driven through systemic efforts that “support and build collective action and movements, taking direction from organizations led by people they represent and acting on the concept of “nothing about us, without us”1. A failure in oversight and governance A critical input for good governance is transparency and open information systems. As the Parliamentary Hearings took place this summer, we watched WE Charity’s former board chair Michelle Douglas share how she worked with limited visibility into the operations and finances of the organization, amid significant layoffs and restructuring of staff.2 Michelle noted in her testimony that on March 25, 2020, Craig Kielburger asked her to resign from the board of directors of WE Charity. From her testimony, it became evident that WE Charity’s board had limited visibility in the multiple sister entities leveraging a shared WE brand. Many conveniently also shared the same Chief Financial Officer. What followed Ms. Douglas’ departure was the replacement of nearly all board members in March. While normal board turnover is a healthy part of any board, an unplanned transition void of overlap is not. With Craig’s former teacher as the only remaining board member, a new board was formed. This board includes former WE employees and educators, but notably absent are legal, financial and human resource competencies. For boards that oversee the operations of this scale (such as hospitals or foundations), best practice suggests that this mix of skills and competencies is critical. Good governance exists when boards of directors actively lead, steward and sustain an organization. The board sets the strategy to ensure the health and impact of the organization. But, too often in the social sector, boards can spin their wheels on the wrong challenges, particularly if they have insufficient information to take on their accountability work. The Kielburgers perfected performance: from virtue signalling to an elevated external image, they established an unbreakable and unquestionable status. This negated the need for oversight and diligence from government and funders. While many corporate and celebrity donors have halted their financial support of WE in recent months, they remain quiet publicly, issuing well crafted press releases that say little foundationmag.ca

and acknowledge no wrongdoing by WE. Transparency and accountability would help to strengthen the charitable sector, while underwhelming oversight and poor diligence creates opportunities for abuse. When you need a map: Labyrinthian operational models ME to WE, the for-profit retail and consumer-facing arm is one of over 10 organizations known to be part of the WE empire. It exists to prioritize profits and to build a brand with the notional idea of conspicuous consumerism as do-gooding. ME to WE shares its brand and identity with the broader WE movement. This brand value, that generates significant private benefit, has been created through its charitable counterpart. Counting the various entities within the WE empire is a task in itself. Dissecting their purpose, profits and interconnectedness is a job for a forensic auditor. As practitioners in philanthropy and social finance, it is clear that this complexity is unnecessary to achieve their impact objectives. Where does all this leave us? As we build back better, we need to prescribe new approaches. Colonialism is out-dated. We must build with community and not for community. It’s time for all directors in the social sector to freshen up on their governance skills. Simplicity and clarity is not overrated. WE has exhausted Canada and the social sector. As they continue their international activities, and operate many of their Canadian entities, and undertake a listening tour on allegations of racism in the workplace from 150 current and former employees, their story has not concluded. But, for Canada, it may be time to re-envision who and how we lead in the social sector. NARINDER DHAMI is the Managing Partner at Marigold Capital. CHI NGUYEN advises charities and non-profits on innovation, equity and social impact. 1 Principles for Feminist Fundraising https://canadianwomen.org/wp-content/ uploads/2020/05/Feminist-Philanthropy.pdf 2 Principles for Feminist Fundraising https://canadianwomen.org/wp-content/ uploads/2020/05/Feminist-Philanthropy.pdf https://www.theglobeandmail.com/politics/article-read-former-we-charity-board-chairmichelle-douglass-opening-remarks/

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THE WE CHARITY SPECIAL REPORT

Learning from WE Charity’s mistakes

Building a Foundation for Successful Corporate Partnerships

BY HAVA GOLDBERG, CFRE

f you had asked me about WE Charity’s corporate partnerships at this time a year ago, I would have told you their partner list read like a fundraiser’s dream, pages upon pages on some of Canada’s largest companies, spanning everything from children’s toy companies to management consulting firms. However, in the wake of the breakdown of the Canada Student Service Grants (CSSG), and the ensuing media hailstorm, many of those corporations began pulling the plug on their partnerships with WE. While this is certainly not the sole reason for the organization’s downfall, there is no doubt that the shaky ground on which WE solicited corporate sponsorships contributed to the organization’s pitfalls. 32

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September/October 2020

The most successful corporate-charitable partnerships are built with a shared vision, open communication, mutual accountability and common understanding about measurement. But before any of this can happen, there are several key pieces of groundwork a charity should have in place. There is much that charities (and corporations) can learn about the foundation of building a strong corporate partnerships program from examining WE’s mistakes: Prevent over-reliance on corporate sponsorship According to their 2018 annual report (the 2019 report is not yet available), corporate partnerships accounted for 40 percent of all of WE Charity’s income.1 This had grown from 31.5 percent in 2017. In fundraising, like in investing, diversification foundationmag.ca

THE WE CHARITY SPECIAL REPORT is important. Relying so heavily on one stream of funding, particularly one that, as COVID-19 has demonstrated is prone to economic volatility, can be risky. WE, of course, did try to mitigate that risk with the funds generated by their social enterprise ME to WE (a can of worms I won’t delve into in this piece), but could have also made more of an effort to round out their program with a broader set of fundraising programs. Connected to the need to diversify funding streams is the need for charities to work with corporations as true partners not simply as transactional sponsors of an event. WE was able to attract millions of dollars in sponsorship to WE Day. A successful corporate-charitable partnership may start with one event but it should not end there. If charities want to build deep, enduring, mutually beneficial partnerships, they should offer their corporate partners ongoing touchpoints which provide engagement and education.

“It is not clear whether WE Charity had a vetting process in place for its corporate sponsors.” Invest in financial accountability WE charity was one of Canada’s largest charities, receiving more than $60 million each year in support. The public expects Canada’s largest companies to use top tier auditors to indicate their credibility, and our largest charities should be held to the same account. However, WE charity used the same local GTA accounting firm as their auditors throughout their existence. As Charity Intelligence Canada has suggested, investing in a top-tier firm would have strengthened WE’s relationship with donors and corporate sponsors.2 And perhaps, it could have also allowed them to proactively address some of the complex accounting issues which came to light in the wake of this scandal. Develop strong mechanisms for ethical decision making As the CSSG chaos unfolded, one of the concerns brought forward by WE Charity employees was the organization’s broken moral compass. In a July 2020 CBC article, one employee went on record to say that he and his colleagues were encouraged to pursue partnerships with corporations, who he believes, did not align with the mission and values of WE.3 It is not clear whether WE Charity had a vetting process in place for its corporate sponsors. It is crucial that charities of any size have sound gift acceptance policies and procedures in place that have been approved by both the organization’s board and executive leadership. Ideally, this gift acceptance policy foundationmag.ca

should be shared on the organization’s website (no such policy is shared publicly by WE). At minimum, employees should be aware of the existence and use of a gift acceptance framework. This will mitigate reputational risk and safeguard against allegations, like those flung at WE, that the charity is a vessel for corporate interests. Quash Founder’s Syndrome There is no question that WE suffered from Founder’s Syndrome. Marc and Craig Kielburger’s identities are inextricably wound up in the organization. While many allegations have been made against the brothers, one thing is clear, the brothers maintained significant influence over the organization, more than two decades after founding it. A founder’s authority often adds to the bureaucracy of the organization, and can hinder the strategic decision making necessary to developing sound corporate partnerships. Despite having the ability to influence the organization, as co-founders, Marc and Craig did not hold the fiduciary and reporting responsibility for the organization. Boards of Directors of charities with active founders should be mindful of limiting the power that founders yield over the organization and putting policies and procedures in place that ensure the organization stays mission centered, not people centred. Over the months the WE Charity scandal has unfolded, leaders across the charitable sector have expressed concern that donors and funders will see WE as the canary in the coal mine. While it important that the public is aware that most charities do not operate like WE, the onus is also on the charitable sector ourselves to ensure that we are doing our utmost to avoid these pitfalls. One proactive tactic which charity law expert, Mark Blumberg recommends to charities is to invest in ongoing external, informal risk reviews to safeguard against issues that can turn into CRA compliance issues or unwanted media attention.4 This year has been fraught with challenges for the charitable sector, many of which have been beyond our control. But what is in our control, is ensuring that the organizations which we (sector employees, board members and even donors) hold dear have the strong foundations in place that are crucial to corporate partnerships, fundraising success and organizational accountability. HAVA GOLDBERG is proud to be a leader in the fundraising sector, with over a decade of experience building relationship with donors and corporate partners. 1 WE Charity, “2018 Annual Report,” https://online.flippingbook.com/view/260275/10-11/ 2 https://www.charityintelligence.ca/research-and-news/ci-views/43-charity-news/661-wecharity-next-steps 3 https://www.cbc.ca/radio/thecurrent/the-current-for-july-28-2020-1.5665445/ we-charity-worker-says-organization-sacrificed-ethical-integrity-to-serve-as-vessel-forcorporate-interests-1.5665495 4 Mark Blumberg, “The WE Charity scandal and its impact on the Canadian Charity Sector,” https://www.canadiancharitylaw.ca/blog/the-we-charity-scandal-and-its-impact-on-thecanadian-charity-sector/ September/October 2020

FOUNDATION Magazine

THE WE CHARITY SPECIAL REPORT

“Who, WE?” Social enterprise is not the answer, and the solution affects us all

BY CHRIS CARTER

ven before the effects of COVID-19 were felt, nonprofits and charities were struggling for funding: many donors don’t understand the concept of administrative costs and other necessary expenses, and accordingly prefer donating to program-only expenses; as well, the proliferation of channels has meant increasing costs simply to have a viable presence in front of your donors, so more “overhead”. However, just because donors don’t like admin costs doesn’t mean the cost disappears — what does a cashstrapped organization do solve this problem? To fill this funding gap, some saw social enterprise as a solution: recognizing that the admin ratio is a consideration that doesn’t apply to social enterprise, charities and nonprofits could launch a revenue-driven arm with fewer limitations, helping to lessen the funding shortfall. The problem Unfortunately, the focus on reducing/suppressing admin costs is leading fundraising organizations down a path fraught with unintended consequences. Moreover, it is an ill-fitting solution to a manufactured problem: instead of explaining to donors that “overhead” is as necessary and inevitable as groceries, many have avoided the topic altogether, so that a small perceived problem became a bigger perceived problem as years went on. The resulting “solution” was worse than the problem it was to have fixed, having now caused deep and lasting mistrust in charities generally, across the country. While restrictions and requirements around financing and charitable status can be time-consuming, they serve their purpose well: to ensure donors and the public at large can have complete confidence in the charitable sector, especially those organizations they support. Given both the necessity and effectiveness of this reporting and transparency, why is it suddenly okay for social enterprise run by a charity or nonprofit to have 95 percent of costs — entirely “overhead” — completely unmonitored? Why is it that nonprofits are under intense scrutiny, but their for-profit counterparts are held to such vastly different standards? The WE Charity scandal is a scandal, yes, and rightly so — but not a surprising one. It is a natural consequence of 34

FOUNDATION Magazine

September/October 2020

hiring individuals who don’t necessarily have any concern for mission; who work at an organization that instead focuses on a capitalism-like churn of big events, big exposure, big celebrity names, and big dollars. And lather, rinse, repeat. Unfortunately, in the constant churn, it tarnished the whole nonprofit sector, including those who for years have been working to build trust in their supporters with transparent, responsible fiscal management. What does this mean? While some are still saying social enterprise is a viable solution, I disagree: we need to go back to basics. ❯❯ Think about the impact your organization is making, and share it with supporters. ❯❯ Think about the benchmarks we need to hit to ensure our work is properly funded, this year and the next and so on. While creative funding solutions may deliver short-term wins, they are detrimental to the sector as a whole. Charities should be rewarded for making an impact and achieving their mission. Time and again, results have shown that donors support impact and mission. If you get a gift because your spokesperson is a celebrity, you will have a harder time renewing them than someone who joins due to the value of your mission and its impact. If you get a gift from chatting up wealthy donors, your model is networking-based, not impact-based; and you will have to chat them up again to get another gift, regardless of your organization’s impact with their gift. To that end, the sector needs some serious introspection, not only in terms of this year’s scandal, but of scandals waiting to surface. While there have been rumblings of harassment against major giving staffers, there has not yet been an earthshaking story with consequences on the major giving model as there has for the social enterprise model. However, that doesn’t mean the sector isn’t rife with such stories, and it doesn’t mean a reckoning isn’t long overdue. Major giving is a model based on individual staff soliciting donations from individuals with means. When someone has complete discretion over a decision, it is a worrying power CONTINUED ON page 37 foundationmag.ca

THE WE CHARITY SPECIAL REPORT

We Create Our Own Monsters

BY CYNTHIA ARMOUR, CFRE

’ve lived by a motto for most of my adult life that says “We create our own monsters… but that means we have the ability to slay them”. This philosophy helps me take responsibility for the unexpected and examine how I may have contributed to the situation. The worry has been that if the monster remains lurking mysteriously, I’m left with a moving target and limited arrows in my quiver. Part of the solution is getting to the crux of the matter. That can be a challenge. In strategic planning, I encourage board and staff teams to delve discerningly into what obstacles are blocking the organization from achieving its vision. Typically, people prefer to suggest solutions before they’ve really identified the problems. From a medical perspective that’s like treating an undiagnosed illness with random medication. Identifying what caused the WE Charity to derail will be the subject of case studies for many years. I’m saddened by all the headlines that further erode the public’s trust in the already fragile charitable sector, particularly during COVID-19 when so many organizations’ limited resources have been cut significantly. Charities that struggled with sustainability prepandemic may not survive and now we know, even one that had a stellar reputation and considerable assets has fallen from grace. Despite my expertise in fund development I needed to understand the bigger picture when I began freelancing almost thirty years ago. Charities would seek help for what they thought was a fundraising problem and the more I listened, the more I heard leadership and management issues. The symptoms only surfaced when they were unsuccessful asking the public for financial support. York University’s (now defunct) voluntary sector certificate program provided an excellent framework for me to comprehend the multi-faceted pieces in the not-for-profit puzzle...until of course I tried to construct the opaque WE Charity jigsaw which is only a portion of WE’s highly complex international network of charities and private businesses! Ideally the Board of Directors and Chief Executive (CEO or ED) work in partnership: one covers governance and the other management. WE Charity’s board was a savvy mix of academics, educators, human rights activists, a chartered accountant and a lawyer. With increased expectations and requirements from foundationmag.ca

funders and investors, the buck is intended to stop with the board; they are the team that provides the necessary oversight and acts as the public’s “trustees” — that is their fiduciary duty. In my experience, the board’s role is far more demanding than is usually communicated to volunteers. The reason for this is two-fold: naïveté on the part of many; or for those wellversed in the true scope of responsibilities, a reluctance to be completely transparent, knowing it would make recruiting committed leaders, to donate time, talent and treasure, even harder than it is already.

“In my experience, the board’s role is far more demanding than is usually communicated.” Well beyond WE Charity’s board and its Canadian Executive Director, the network is driven by its founders, Craig and Marc Kielburger. Without going too far down the “founder’s syndrome” rabbit hole, suffice it to say, the passion and energy that ignites the flame of any worthy cause can also sabotage its success. In WE’s case the Kielburgers — together — potentially doubled both the strengths and the risks. Given their impressive and elite education in business, law, and international relations coupled with access to seasoned advisors, it’s probable that the complex structure was entirely intentional. What shocked me the most was listening to the former board chair Michelle Douglas’ public testimony to the House of Commons Finance Committee on July 28th. She reported that as the news of a world pandemic unfolded last March, and well before there was any announcement of the Canada Student Service Grant, WE Charity began layoffs. Understandably, we were in an unprecedented lockdown, schools were closed indefinitely, public events were banned and WE Days became September/October 2020

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THE WE CHARITY SPECIAL REPORT impossible to run; the Executive Team was making staff cuts in the hundreds (eventually more than 400). Douglas went on to say, with concern for the organization’s employees and its many other stakeholders the board convened an Ad Hoc committee. They received briefings daily but nothing was provided in writing despite requests to the Executive Team. The committee wanted evidence, reports and raw data to justify the massive layoffs. They requested meetings with the Chief Financial Officer and two were scheduled and then cancelled. Finally the committee demanded the documents and according to her response to MP Angus’ probing, Marc “abruptly concluded” the call and the following day Craig asked Michelle Douglas for her resignation which she submitted March 27, 2020 followed by an accelerated process in early April that replaced the remainder of the board except one Canadian member and two from the U.S.. In response to MP Barrett’s question regarding the role of a founder Douglas stated “...In this case they had significant governance power because the bylaws allowed them to make decisions on dismissing the board of directors or obligated the board of directors to refer to the founders and inform and consult them on significant directional shifts in the organization.” How stunning to learn that a board which is there to provide oversight and accountability can be “fired” by the founders when pressured to comply. So, I agree with many that “what part of conflict of interest don’t you get Justin Trudeau?” but the evisceration of WE Charity — both at the staff and board levels — occurred before there was any announcement of funding from the feds which in my mind, made the organization even less equipped to handle such a project. But more to my point, how is it that the founders maintained such extreme power with no fiduciary responsibility or disclosure requirements? In conversations with well-respected governance colleagues, that fact has left us all surprised. Regrettably, it’s tomorrow’s leaders, and charities in general that are losing the most. Inspiring youth to engage and volunteer is at the heart of committed citizenship. Not only have we lost an established avenue to motivate them, but this case fuels Canadian disillusionment. I hate that “the scandal” gets boiled down to provocative headlines that provide a convenient excuse for people not to invest in the extraordinary work so many charities conduct daily…during depressing and desperate times when we need their services the most. I don’t know how to slay this monster. I can only keep trying to unearth the facts, reflect and synthesize. I certainly hope this dedicated issue of Foundation Magazine will provide essential ingredients for the kind of generative dialogue that promotes a commitment to learn from our mistakes and ultimately instigates changes for the better. CYNTHIA ARMOUR (CFRE) is a specialist in governance, fundraising and communications. Over the past 29 years she has helped board members and chief executives from grassroots to national charities take a team approach to their community outreach. Contact her at 705-799-0636 or cja@elderstone.ca. Visit her website at www.elderstone.ca. foundationmag.ca

“Who, WE?” Social enterprise is not the answer, and the solution affects us all CONTINUED FROM page 34

imbalance. Not only does it mean we are putting fundraisers— primarily women, almost certainly people with less power and wealth than those they solicit—in a vulnerable position. Moreover, in a non-diverse sector with non-diverse donors, we are almost inevitably putting staff—minority staffers among them—in a situation where securing a major gift means ignoring micro-agressions, outright ignorance, or worse. Also problematic are other consequences of outsized influence: a significant donor asks about a job opportunity for their offspring; a board member suggests hiring someone they know for a sizable contract; a long-time supporter offers space for free but makes suggestions on decisions not in their purview. These are significant risks but are also unsurprising consequences of this funding model, which can focus on securing gifts at the expense of mission and impact. Fundraising organizations need to reconcile these lesserdiscussed ethical considerations with the sector’s existing best practices. Many charities and nonprofits have rules about accepting gifts from vendors — a relatively small problem with large attention paid to it — but not what to do with undue influence from significant funders or other “insiders”, with leadership’s responsibility to hire staff and vendors that best serve the mission, and with protecting and supporting staff experiencing harassment — or ideally, with setting up a system that prevents it from happening in the first place. What’s next? The pressure on admin funding makes clear both that change is needed and that there is already a clear cost of maintaining the status quo. Move away from fundraising models that allow the possibility of poor ethical decisions, like conflict of interest or the appearance of it, corruption or the appearance of it, and relying on staff to be in vulnerable positions without a clear way out. In short: there is a reason political campaigns have giving caps, and the rest of us should have taken this lesson long ago. Given all this — the challenge of funding administrative costs, the risks of social enterprise and the outside influence of major donors — mass fundraising should be the path forward. A fundraising organization can raise as much money from people giving smaller amounts without compromising the organization’s values to meet one person’s expectations. A shift to mass fundraising won’t solve all of the problems in our sector, but it’s a start. We can’t ignore the glaring issues highlighted by the WE Charity scandal, demonstrating that while our system may not be broken, it is chipped and in need of repair. CHRIS CARTER is president of Candela Strategies and has a strong track record of success in direct marketing and fundraising. He is also principal of Chris Carter Marketing in Toronto. September/October 2020

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TORONTO’S CORPORATE PATHFINDER TO CHARITABLE INVESTMENT

THE WE CHARITY SPECIAL REPORT CONTINUED FROM page 15

A key component of support for these funding programs is partisanship. The vast majority of past Liberal and NDP supporters are in favour of both proposals. Past CPC and Bloc voters, however, are less likely to voice support for each proposal, particularly direct grants, as the WE Charity was funded by the Trudeau government via such a program. Federal assistance and the donor spectrum There may be significant support for these programs, but would either have any influence on Canadian donors? Under a matching program, two-in-five (41 percent) of those that already give charitable donations would consider giving more. In addition, one-in-five (22 percent) of those that do not currently donate say they would re-consider if their donations were matched. That said, for half of Canadians overall, it would have no impact: Looking at this by different donor segments, a potential matching program appears to resonate most with those already donating considerable amounts. Nearly half of Super Donors would consider increasing the amount they donate to charity if a matching program were in place: By contrast, Canadians’ response to charitable giving under a potential direct grant program appears less enthusiastic. Just 17 percent of those that already donate to charity would consider giving more if such a program where implemented, compared to 11 percent of those who do not currently give that say the same. Notably, a grant program would de-incentivize a significant number of Canadians overall from donating to charity, as one-in-four say they would give less with it in place: Opinions on how, if at all, a grants program would impact personal contributions remain fairly consistent among all donor segments, though, perhaps troublingly, 27 percent of Super Donors say they would donate less under such a program: For detailed results by age, gender, region, education, and other demographics, visit the Angus Reid website. THE ANGUS REID INSTITUTE (ARI) was founded in October 2014 by pollster and sociologist, Dr. Angus Reid. ARI is a national, not-for-profit, non-partisan public opinion research foundation established to advance education by commissioning, conducting and disseminating to the public accessible and impartial statistical data, research and policy analysis on economics, political science, philanthropy, public administration, domestic and international affairs and other socio-economic issues of importance to Canada and its world. foundationmag.ca

Keys to the Research

Demographic Analysis of the Canadian Donor Spectrum Each of the four segments is represented across various income groups, though to different degrees. One-in-three Canadians with annual household earnings greater than $100 thousand belong to either the Super Donors (32 percent) or the comparably generous Prompted Donors (34 percent). Notably, in both other income groups Casual Donors are the largest segment: Young people are more likely than their older peers to be Casual Donors, but a considerable portion among each generation are divided between the Casual, Prompted and Super Donor groups. Regionally, Quebec hosts the highest percentage of Non-Donors (20 percent) and Casual Donors (48 percent). British Columbia is the only region where Super Donors make up the largest group within the population. Methodology To streamline the survey data regarding Canadians’ overall charitable giving, ARI researchers sorted respondents into four main donor types; in relative order of their respective involvement in charitable giving, these four groups are: Non-Donors, Casual Donors, Prompted Donors and Super Donors. This analytical exercise first involved assigning an a priori definition to the two “goalpost” groups: The 13 percent of those that qualify as “Non-Donors” indicated they provide financial support to none of the 12 causes assessed in the survey, reported they gave to a maximum of three charities in a typical year, and that their annual charitable donations total less than $100. Super Donors, meanwhile, reflect the opposite disposition. First, Super Donors supported one or more causes. They also had to qualify by responding positively to the different modes of charitable appeal assessed in the core of the survey. Finally, the 23 percent of Canadians we have qualified as Super Donors give a minimum of $100 to charity per year. Then, dealing with the two-thirds of Canadians landing in between these two poles involved some further analysis of people’s reactions to different modes of charitable appeal. The Prompted Donors group are 30 percent of the total population who — while not so highly responsive that they qualify as Super Donors — do respond (at least twice in the past two years) to different types of charitable appeals. This approach identifies some sub-groups with more focused charitable responses. Casual Donors include one-in-three (35 percent) Canadians that exceed the thresholds set for Non-Donors — they give to more causes, in more ways, and to a higher dollar amount. But Casual Donors, by definition, also fall relatively short on these core giving thresholds and also do not distinguish themselves for having any of the focused approaches to charitable giving associated with the Prompted Donors. SOURCE: ANGUS REID

September/October 2020

FOUNDATION Magazine

THE WE CHARITY SPECIAL REPORT

Correcting the Record: What WE wants you to know

Top 10 Fallacies and Facts about WE Charity & WE Charity’s involvement in the Canada Student Service Grant Program

FALLACY 1: The Canada Student Service Grant (CSSG) was a billiondollar program that in delivering, WE Charity stood to make of millions of dollars to benefit the charity.

FACTS: First, the total value of the contribution agreement was $543.5M, not the $900M to $1 billion number that has been widely, and incorrectly, reported (see a copy of the agreement, https://staticsb.we.org/ f/52095/x/9808f0596d/cssg-agreement-finalannotated-with-footnotes.pdf?). WE Charity’s role did not allow for any “profit” (by definition, a charity cannot generate or earn profits) or financial gain for the organization whatsoever. The contribution agreement has 26 references to the fact that WE Charity would only be reimbursed for “eligible expenditures” as identified in the agreement. To be eligible, the expenditures must be “directly related to the carrying out of the Project.”

The theoretical maximum expense reimbursement to WE Charity was $34.78M if all 100,000 students engaged in the program, not the $43M routinely cited by the media. These costs were for all aspects of the program including its design, delivery, disbursement of grants, third-party costs etc. This was not a set payment, and only a maximum amount to reimburse expenses. For more about WE Charity’s role in the CSSG (see https://www.we.org/en-CA/about-we/get-intouch/press/press-center-resources/#cssg.)

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September/October 2020

FALLACY 2: WE Charity was chosen to administer the program due to political connections.

FACTS: WE Charity was chosen for this project because of its 25-year record of engaging and inspiring students and youth in meaningful service learning. In April, WE Charity was approached by the foundationmag.ca

THE WE CHARITY SPECIAL REPORT Government of Canada about delivering the Canada Student Service Grant (CSSG) program to support post-secondary students through the COVID-19 pandemic. Specifically, on Sunday, April 19, 2020, Rachael Wernick, Senior Assistant Deputy Minister at Employment and Social Development Canada, called Craig Kielburger to introduce the idea of the CSSG and asked for WE Charity’s help to deliver this national student service program for the summer of 2020. Here is the email from Ms. Wernick to WE Charity’s co-founder asking for the conversation (https://staticsb.we.org/f/52095/928x1158/ b139cab345/april-19-email-exchange-rachel-wernick-and-craigkielburger.jpg?). As stated by Ian Shugart, Clerk of the Privy Council and Secretary to the Cabinet, in his remarks to the Standing Committee on Finance in July, WE was chosen for its track record: “What WE was able to provide… was the full range of services that would go to the heart of this matching program that would put young people in contact with not-for-profits so they could gain the relevant experience; their ability to promote the program with a massive social media following; experience in other situations of matching young people to service opportunities; …existing database information; representation right across the country with partnerships with other charities.” Please see (https://staticsb.we.org/f/52095/x/ b6c7d1da95/why-we-july-21-final.pdf?)

WE accommodation. At the end of that trip, the family donated $50,000, and later followed up with a second $50,000 donation. All international flights and related expenses to Kenya and Ecuador were paid directly by the families. In July 2020, Bill Morneau contacted WE Charity in order to pay the highest possible amount that could have been incurred for arranging similar visits, which was estimated at $41,000 for all family members. To be clear, these did not represent actual expenses incurred by WE Charity to host the guests at their project sites, but represented the absolute maximum costs that could be incurred for such trips by the same number of people. (For more details, please see https://staticsb.we.org/f/52095/ x/1f11b5a9ce/finance-minister-statement-july-22-final.pdf?).

“The use of multiple corporate entities to isolate liabilities...is not uncommon.”

FALLACY 3: Trudeau and Morneau families gained exorbitant benefits from WE Charity.

FACTS: Margaret Trudeau was engaged through a Speaker’s Bureau to assist with various WE Charity events. Started in 2015, she was engaged 28 times for multiple events per engagement, receiving a total of $180,000 (plus 20 percent speaking bureau commission). Similarly, Alexandre Trudeau was engaged for 9 events in 2017 and 2018 for a total $36,000 (plus 20 percent speaking bureau commission). Many media have conflated honorariums with travel and accommodation expenses, which do not benefit the individuals. For more details, please see here. In 2017, WE Charity invited noted philanthropist Nancy McCain and her daughter, who were in Kenya visiting programs the family had philanthropy supported, to see the WE Charity programs. This prompted a second visit from the full McCain-Morneau family in 2017 to WE Charity’s Ecuador projects. WE Charity hosted the family at the project sites in foundationmag.ca

FALLACY 4: The WE Charity Foundation, which was the organization WE used to sign the CSSG contribution agreement, is just a shell company used to hold real estate.

FACTS: Much has been written about so-called complex systems, but there are two ultimately entities: WE Charity and ME to WE Social Enterprise. ME to WE Social Enterprise incorporates each social enterprise line as a separate entity for ease of operations (ME to WE Trips, ME to WE Chocolate etc.). WE Charity over the past 25-years has established three related charitable entities to assist with donor wishes, managing liability etc. WE Charity is the founding or sole member of each of these charitable entities, which gives the WE Charity Board of Directors specific legal rights over each entity. (This information and the financials are transparently online https://www.we.org/en-CA/about-we/we-charity/governance/ financial-report). WE Charity Foundation is a registered charity. From a legal standpoint, WE Charity is the founding or sole member of the charity, which gives WE Charity specific legal rights over the WE Charity Foundation. Contrary to incorrect media reporting and statements by politicians, WE Charity Foundation has never held WE Charity real estate assets, and prior to the CSSG, it never operated nor held any funds for any purpose. Its mandate was adjusted with the CRA for the purpose of the CSSG. The WE Charity Foundation was created to manage legal liability. The use of multiple corporate entities to isolate liabilities for particular projects is not uncommon for groups as large as WE Charity. The Government of Canada required that the charity indemnify the government from all losses related to the participation of the first 40,000 students as well as the Non-Profit Partners who were engaging those students. WE Charity was therefore assuming significant possible legal liability for the program, especially considering the service work would be done during a global health pandemic. Such liability could overwhelm WE Charity, and counsel advised that the contracting party would preferably be WE Charity Foundation. September/October 2020

FOUNDATION Magazine

THE WE CHARITY SPECIAL REPORT

FALLACY 5: The CSSG program was doomed to fail.

FACTS: WE Charity has a successful trackrecord of building large-scale service programs for students. Over 7,000 Canadian schools use WE Charity service-learning programs. In the United States, AP with WE Service is active in all 50 states, and provides the only on-transcript service designation for college applications. WE Charity built a successful CSSG platform, as evident by the rapid success within one week after launch: ❯❯ A coalition of 83 not-for-profit partners with 24,000 service placements, a number that was growing each day. ❯❯ More than 35,000 students applied — including from every province and all three territories ❯❯ There was a wide diversity of applicants, with 64 percent visible minority and 10 percent LGBTQ2+. ❯❯ An average of 3,000 new applications were being received each day.

“The federal concept of lobbying is not limited to advocating for something from government.”

These metrics demonstrate that WE Charity’s experience in working with 130+ school districts and agencies across Canada made it an ideal partner to design, launch and deliver this national service program in a matter of weeks. WE Charity incurred over five million dollars in expenses to build and launch the CSSG. WE Charity waived all reimbursement from the Government of Canada. It is highly unfortunate that the students and community did not benefit from these service opportunities. FALLACY 6: WE Charity was in bad financial shape and needed the CSSG to save the organization.

FACTS: WE Charity was in a strong financial position prior to the onset of the pandemic in March. WE Charity had multi-year partnerships locked in, revenues were steady or

FOUNDATION Magazine

rising for 5 years straight, with a strong asset. However, due to the impact of COVID-19, like most organizations, WE Charity was affected financially and forced to make tough staffing decisions to right-size the organization. Following these staffing transitions, WE Charity was in stable financial standing with multi-year sponsorship contracts and eight months’ worth of operational assets. As such, it would be inaccurate to make any link between the charity’s financial status and the awarding of the CSSG contribution agreement to WE Charity. Further, as the CSSG contribution agreement clearly states multiple times, WE Charity would only be reimbursed for expenses to deliver the CSSG, and the organization did not stand to make a profit from it in any way. However, the political fall-out has significantly negatively impacted the charity. As a result of the political fall-out from the CSSG, WE Charity proactively reached out to its corporate supporters and educational partners to pause partnerships. WE Charity wanted to act honourably to protect the brand of its partners, and felt that they should not be drawn into this political matter.

September/October 2020

FALLACY 7: WE Charity relies heavily on Government of Canada funding and regularly lobbies for government contracts.

FACTS: During the last fiscal year, WE Charity received approximately one percent of its operating budget from the federal government. Lobbying has never been a core function of WE Charity. In fact, WE Charity had only one employee handling both “Government and Stakeholder Relations,” at all levels. As the title suggests, this role involved engaging both “stakeholders”, including individual donors and foundations, and "government”, including municipal, provincial and federal governments. The federal concept of lobbying is not limited to advocating for something from government. Responding to a Government of Canada invitation can be considered lobbying. (This is unlike the law in most provinces.) The volume of noted interactions with the government in early 2020 owed directly to the fact that WE Charity was working with the government to establish, design and roll out the CSSG program, foundationmag.ca

THE WE CHARITY SPECIAL REPORT at the request of the government itself. (See https://www. we.org/en-CA/about-we/get-in-touch/press/press-center-resources/ lobbyist-registration and https://www.we.org/en-CA/about-we/ get-in-touch/press/press-center-resources/proactive-disclosurefederal-government-contacts).

FALLACY 8: We Charity has weak governance structures.

FACTS: WE Charity is fortunate to have eight dedicated and experienced members of the North American Board of Directors who provides strong leadership and oversight of the organization in Canada and the United States. Through their expertise in the non-profit sector, academia, education, legal, finance, government, private enterprise and social enterprise, the Board of Directors provides legal, financial and social impact oversight to WE Charity's projects and activities. WE Charity has publically recognized and thanked Michelle Douglas, former Chair of the Canadian Board for her service. Ms. Douglas resigned during the height of the pandemic, in March 2020. There was a difference of opinion between Ms. Douglas and WE Charity senior management regarding pandemic-related staff reductions. In March there were 14 briefing calls with Board members, a full Board meeting, and multi-scenario financial modeling. It was a trying time for everyone, and the outcome was regrettable. Michelle Douglas transitioned in a manner different than other Board members that year. As with any Board of Directors, there are term limits, transition plans, and strategic reviews in a normal course of operations. WE Charity launched in 2019 a strategic review of the Board of Directors to help plan for the organization’s 25th anniversary in 2020. A number of Board members remain in their roles, some retired, while other new members joined, in accordance with a skills matrix to best lead the organization.

FALLACY 9: WE Charity’s real estate takes away from its charitable mission.

FACTS: WE Charity’s real estate assists in delivering its charitable programs, and provides financial security for the organization. WE Charity’s main property, accounting for about $35M of its “holdings”, is the WE Global Learning Centre (WE GLC) in Moss Park, Toronto. It was funded through a 20th anniversary capital campaign. It employs advanced technology to connect educators and youth anywhere in the world. The entire the first floor of the WE GLC is an open community space, dedicated to providing access to resources and mentorship opportunities to visiting school groups and other not-for-profits. For its 25th anniversary in 2020, WE Charity embarked on a capital campaign to create a “campus for good” to retrofit a series of buildings to provide free space for youth-led nonprofits and social enterprises. (The Toronto Star published an article on this on December 18th, 2019)

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To correct misconceptions, no funds from youth or international development funds were used for these purchases. Unfortunately, the COVID-19 pandemic stalled the plan for the WE SEC, indefinitely. (Read more about our real estate philosophy https://www.we.org/en-CA/about-we/wecharity/governance/real-estate-philosophy.) FALLACY 10: ME to WE Social Enterprise is just a cash generator for WE Charity.

FACTS: The Canadian Revenue Agency significantly limits the ability of a Canadian charity to operate a business. ME to WE Social Enterprise was founded in 2009 to provide economic opportunity in WE Village communities and a sustainable source of funding for WE Charity. ME to WE Social Enterprises supports the work of WE Charity through three principle avenues: Creating over 1,800 empowering jobs in underserved rural WE Villages regions around the world in eco-travel, artisans products, and Fairtrade consumables to help families lift themselves out of poverty. Providing services to assist the charity, especially establishing hosting facilities in rural regions of developing countries for WE Charity donors who are visiting WE Charity projects and youth service trip scholarship. This has resulted in millions of dollars directly donated by these funders to WE Charity building schools, healthcare facilities and more. 100 percent of all ME to WE Social Enterprises profits since its founding have been donated to the charity or invested in the social mission. Annual donations averaging over 90 percent of its profits to WE Charity (Read more https://staticsb.we.org/ f/52095/x/eced57f bcb/2014-2018-m2w-donation-summaryfinal-dec19-1.pdf?), with the balance reinvested to launch the next enterprise. Over the years, ME to WE Social Enterprise has donated in excess of 20-million dollars in cash and costoffsetting in-kind services to WE Charity. ME to WE Social Enterprise acts with transparency providing detailed information, including auditor confirmations of donations, founder salaries etc. (here https://www.we.org/enCA/transparency-reporting/me-to-we), and been subjected to multiple third-party reviews (here https://www.we.org/en-CA/ transparency-reporting/me-to-we). The interactions with WE Charity are approved by the WE Charity Board, the auditor, and detailed on WE Charity audits (here https://www.we.org/ en-CA/about-we/we-charity/governance/financial-reports), and overwhelming benefit WE Charity. To learn more about ME to WE Social Enterprises, please click for detailed transparency information see (https://www.we.org/en-CA/transparencyreporting/me-to-we).

THIS REPORT is directly from the statement issued by WE Charity publicly to address their position on the developments which defined the evolution of the claims made about the organizational operations, structure and administrative work. September/October 2020

FOUNDATION Magazine

COLUMNIST CONTINUED FROM page 11

yet to turn the recommendations into actions. A review by Imagine Canada stated that the report only laid out a roadmap, and that “if adopted, it could be transformative for organizations, the people and communities we serve”. This global pandemic is offering us an opportunity to see the issues, and to do something about it. Changing the role of the charitable sector by enabling organizations to become more financially sustainable may be the innovative way for the charitable sector to become a true social partner. For this to happen, we must remain focus on where the funds go, as opposed to how they are raised. Building the sustainability of the charitable sector will allow it to partner equitably with the private and public sector, as opposed to maintaining the dependency relationship that currently exists with these two sectors. Identifying innovations in the sector Let’s envision the current charitable sector becoming Mintzberg’s “plural sector”. To become an equal collaborative partner, the plural sector needs to become sustainable. Imagine if we had access to debt financing, loan guarantees, venture capital, equity investments, insurance products, start-up funding for social enterprises, and the possibility to support research and pilot new approaches. Things have to change fundamentally for the charitable sector, we need to innovate in ways we never thought possible. A few key recommendations in the Senate Committee report Catalyst for Change: A Roadmap to a Stronger Charitable Sector may be the beginning of a very “desirable” process. Amongst the many recommendations of the Senate Committee is a re-write of the Canada Revenue Agency so that it can offer guidance on possible business activities for charities. Experimenting with the “destination of funds” in a wider range of business activities could facilitate the re-engagement of charities in socioeconomic issues. Imagine what it would mean for us, as fundraisers if 44

FOUNDATION Magazine

such business activities occurred in the charitable sector. The Senate report also recommended that the Income Tax Act evolve from only offering charitable giving rules to providing economic regulations. The report suggests a comprehensive review of the Income Tax Act rules governing charities every five years, so that necessary rules can be updated to reflect a changing world. These rules have not kept pace with situations such as charities acting as landlords. Since our current economy is at a standstill because of a global pandemic, we should take the time to revisit innovative ideas. The Ottawa Community Foundation is predicting a social deficit gap, estimated to be $26 billion by 2026, which needs addressing with funding reform around earned income. The key fundamental is whether or not funds can further the organization’s charitable purposes. If this is true, in less than a decade, social-purpose organizations will need billions more than they currently have to deliver services. The time is now to act and propose innovation. Recruiting change agents It is possible for Government studies to play a significant role in influencing government policy in diverse areas such as poverty reduction, science policy, health care, or Indigenous treaty rights. But if we are going to shape tomorrow’s charitable sector to take its rightful place in socioeconomic activities, we need change agents, individuals or groups,

who carry out the task and instigating action by managing change within the organization. Fundraisers are natural collaborators. We build relationships. We actively listen to align affinities between donors and charitable projects or organizations. This is an opportunity for leaders in the fundraising field to directly or indirectly reform what tomorrow’s charitable sector can look like. The jury is still out on the exact data, but we can safely estimate that the “voluntary sector” is made up of more than two-thirds women, and women have remained at the core of the sector throughout its growth. According to Dr. Mintzberg; “Women may be much better at engaging all kinds of people who don't lead individually, because women lead collectively.” As a result, it is possible to use this post-pandemic moment to develop a more balanced society. With fundamental reform in the charitable sector, and contributing individuals, such as fundraisers, we can bring about an equitable public, private and plural collaboration. This post-pandemic moment will only happen once in our lifetime, if there was ever a time to work together towards systematic change and establish a collaborative approach towards a renewed society, now is the time. KATHLEEN A. PROVOST, CFRE is the Campaign Director at St. Francis Xavier University in Halifax. She brings over 25 years of fundraising experience within the charitable sector. She writes this column exclusively for each issue of Foundation Magazine.

Further & Suggested Reading

September/October 2020

❯❯ https://www.tru.ca/president/blog/covid-19-what-kind-of-recovery.html ❯❯ https://www.cbc.ca/radio/sunday/the-sunday-edition-formay-3-2020-1.5547652/countries-effectively-managing-covid-19-havebalanced-public-private-and-plural-sectors-says-expert-1.5547811 ❯❯ https://ssir.org/articles/entry/time_for_the_plural_sector ❯❯ https://sencanada.ca/content/sen/committee/421/CSSB/Reports/ CSSB_Report_Final_e.pdf ❯❯ https://imaginecanada.ca/en/360/senate-report-seeks-reforms-charities ❯❯ https://www.ocf-fco.ca/wp-content/uploads/2019/10/Communityfoundations-and-the-senate-report-on-the-sector.pdf

foundationmag.ca

HISTORIC PLAQUES

STEVE LLOYD

Historic Plaques Which Honour Philanthropy

STEVE LLOYD

The House of Providence | St. Paul’s Basilica

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One of Toronto’s largest charities, the House of Providence stood in downtown for more than a century. A Roman Catholic charitable institution, the organization still operates and has been active since 1857. Commissioned by Armand-FrançoisMarie de Charbonnel, the second Roman Catholic Bishop of Toronto, the institution provides help to “the needy, the immigrants, the old, the invalid, and destitute”. The original building on Power Street, just south of the St. Paul’s Basilica, was for many years a landmark in the city of Toronto. Designed by architect William Hay, construction on the building began in 1855 and was completed in 1858. The organization began to use the building in 1857 after the majority of the construction was completed. In 1962 the building was demolished to make way for the Don Valley Parkway. In 2017, Providence celebrated 160 years of providing a culture of community, compassion and innovation in care. Irish immigrants were buried in the adjacent graveyard of St. Paul’s Basilica Parish after a pandemic in 1847, during which the R.R. Michael Power “laid down his life for the fever-stricken members of his flock.”

September/October 2020

FOUNDATION Magazine

THE WE CHARITY SPECIAL REPORT

Focusing too much on branding comes at a price

Watching the Rock Star of Canada’s Charity World Crash and Burn

BY KIM FULLER

his is one of the hard lessons learned from the recent demise of WE Charity. As one of Canada’s largest charities, with a reported annual revenue of $66 million for 2019, its brand recognition went well beyond our borders, attracting big named celebrities and multinational corporate sponsors. Its raison d’etre morphed from an international aid organization back in 1995, when it was known as Free the Children, to its most recent iteration as a complex conglomeration dedicated to hyping the philanthropic youth movement world wide. Big charities often have a hard time coming up with a concise description of what they do. The elevator pitch is not just used as a preamble to exchanging business cards — it should answer an existential question; why do you exist as an organization? Having an unclear identity sows distrust, no matter the size of the organization. Instead of spending the needed time on some soul searching and to really question your purpose in the philanthropic ecosystem, an automated response kicks in leading to heavy investment in brand awareness as a solution to an obvious identity crisis. WE marketed its brand so well that most people don’t know what they did. Were they an international development charity, rally organizers for young people, volunteer program facilitators for teens, education curriculum suppliers, jewellery and t-shirt wholesalers? It doesn’t really matter because you know the brand — “WE” — it seems that 46

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awareness was more important than their social impact. An easily recognizable brand does not make your organization more effective and more aligned with the primary purpose of our sector — advancing social and economic justice does. Measure what matters Having reach is one thing but you need to ask if the people who have become dedicated to your organization are there to make a sincere impact. Most would say yes, but with WE the answer is not so clear. Although their marketing claims that 1 million young people have attended a WE Day event, the “positive change” the organization was hoping to achieve is a little harder to quantify. By simply being part of the event, and performing all of the needed fundraising/volunteering necessary to participate, has the youth market really embraced philanthropy for good or has it been manipulated into a movement where they become the target audience for corporate and political interests? They bang the drum, buy the merchandise, but are they dedicated to international development and the real social change that implies? I would argue no — they are dedicated to the brand, for now. We often hear how transparency is the answer to weed out dubious charitable organizations, and it is an essential element in clearly showing the public how organizations operate and how funds get used. But there is another other key factor that is often neglected; measuring impact overtime on the wider issues underpinning the very existence of charities.

September/October 2020

There is no need to grapple over the issues, the United Nations has made it easy for the whole sector to get their pencils out and start tallying up how much of an impact they are collectively making. The Sustainable Development Goals are not a bunch of lofty ideals that should be addressed by nation states, they should be used as a benchmark for each and every charity in Canada as a way to measure how they are contributing, or not, to moving the dial towards a more just and equitable world. If we have anything to learn from the WE Charity denouement it is that bigger is not always better. Having a name that everyone recognizes doesn't mean that the impact is going to be effective in making a dent in the inequities that we are currently facing around the world. Let's look towards smaller organizations that are doing things right. 57 percent of Canadian charities have an operating budget under $250 000. They are the lifeblood of the sector and should be the ones championed and showcased for their important work. It is not by watching a million dollar car crash that we will learn anything of substance about how egos get in the way of making good decisions. Everyone loves a scandal — and what we are collectively doing is watching the rock star of Canada’s charity world crash and burn. Time to shift our gaze and focus on what really matters — taking action in a measurable way, to have a tangible impact in our communities, and to inspire Canadians, young and old, to believe in charitable giving and altruism once again. KIM FULLER is Founder & CEO of Phil.ca and is an incurable optimist, serial social entrepreneur, and non-profit specialist. foundationmag.ca