WE Charity closing Canadian operations, Kielburgers leaving organization

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WE Charity is shuttering its Canadian operations and the group’s founders, Craig and Marc Kielburger, will leave the organization entirely, in a dramatic reversal of fortune for the two brothers. The surprise announcement came Wednesday. In a statement, the charity said it would sell its assets to establish an endowment fund for existing international humanitarian programs and to digitize its education resources in Canada.

The statement attributed the decision to the disruptions caused by the Covid-19 pandemic and the continued fallout from its cancelled contract with the federal government to administer a student volunteer program. The agreement to administer the Canada Student Service Grant was first announced in June but was cancelled in July amid growing questions about the group’s connections to Prime Minister Justin Trudeau’s family and his former finance minister. The controversy has placed the charity in the middle of political battles and misinformation that a charity is ill-equipped to fight. As a result, the financial math for the charity’s future is clear.

Rather than preventing further damage, the decision to scuttle the government contract marked only the beginning. In the past two months, the charity’s founders, senior staff and former board chair have all testified before parliamentary committees. The affair has led to ethics investigations into Mr. Trudeau and his ex-colleague Bill Morneau, who resigned in August. It also brought to light questions about the organization’s governance, work environment and unregistered lobbying of the federal government.

The double whammy of the pandemic and political firestorm has led to significant financial pressures and a loss of sponsors. It also places blame for a lack of future revenue on the continued controversy in Ottawa, which has an indeterminate length. It adds that continuing to operate would consume savings that are “essential to establishing the endowment fund.

Craig Kielburger said as part of the statement, Through decisive action to preserve our savings, sell our assets and establish an endowment, we hope to sustain global projects for the long-term like our hospital, college and agricultural learning centre that meet critical needs of children and families.

The charity became one of Canada’s best known organizations globally in the not for profit sector. In its statement, WE said it was active in 7,000 Canadian schools and that around the world it built schools and schoolrooms so that 200,000 kids could receive an education. The charity’s statement did not make clear the future of its operations in the U.S. or Britain and didn’t address the future of ME to WE.

The organization said that with the staff cuts it made to respond to Covid-19, it expected to still break even. However, in the 20 months leading up to August, 2019, it reported a loss of $2.7-million and burned through $7.45-million in cash, according to its financial statements. WE Charity told that the losses were on paper only because it deferred millions of dollars of donation revenue which is also a large reason it technically breached the terms of its loans. Lender Royal Bank of Canada waived the requirements.

The endowment fund will be created from the net proceeds of the sale of the WE properties. It will support projects in Latin America, Asia and Africa that are already under way and also fund its large-scale programs such as the Baraka Hospital and WE College in Narok County, Kenya. Going forward, there will be no new schools, water or agricultural projects, and no expansion to new communities in the nine countries where WE Charity is active.

The endowment fund will be managed by an independent board of directors that will be appointed in the coming months. At the request of WE Charity’s board of directors, the Canadian charity’s staff and founders will transition from the organization once it has been wound down.

Marc Kielburger said as part of the statement, We are saddened by these developments. We planned to launch an endowment this year, but not in this way. The new plan leaves him confident that we have found a way forward that protects and continues to support the most vulnerable in the communities where we work, especially the children.