Audit We CRA Letter (1) - d3n8a8pro7vhmx.cloudfront.net

{02384897 v4.1}T 403 571 1520 F 403 571 1528 800, 304 - 8 Avenue SW, Calgary, Alberta T2P 1C2 www.jssbarristers.ca

Direct Line: (403)571-1509Email: [email protected] - Jennifer Samaco (403)571-4319File No: 13268-002

VIA EMAIL ([email protected])

July 22, 2020

Compliance Division, Charities DirectorateCanada Revenue AgencyOttawa ON, K1A 0L5

Dear Sir or Madam:

Re: Letter of Complaint Regarding Charitable Status of WE Charity

We act for Rebel News Network Ltd. (“Rebel News”). We are writing on behalf of Rebel News tolodge a complaint about WE Charity, a charity registered (registration no. 88657 8095 RR0001)with the Canada Revenue Agency (“CRA”). We would like you to determine whether or not WECharity is in contravention of the CRA policies, the Income Tax Act, RSC 1985, c 1 5th Supp(“ITA”) or the Common Law.

SUMMARY

There are several issues that suggest that WE Charity may be in contravention of the ITA.Specifically:

Significant amounts of money moving from WE Charity to an associated for-profitcompany: ME to WE Social Enterprises Inc. (“ME to WE”);

The level at which WE Charity’s accounting appears to be intertwined with ME to WEand a lack of board oversight related to its accounting practices;

WE Charity’s unusual and significant acquisition of real estate assets; and

WE Charity’s clear support of Prime Minister Justin Trudeau, his Cabinet, and the LiberalParty of Canada.

We request that, in light of these issues, the CRA undertake a review of the charitable status ofWE Charity.

{02384897 v4.1}T 403 571 1520 F 403 571 1528 800, 304 - 8 Avenue SW, Calgary, Alberta T2P 1C2 www.jssbarristers.ca

Direct Line: (403)571-1509Email: [email protected] - Jennifer Samaco (403)571-4319File No: 13268-002

VIA EMAIL ([email protected])

July 22, 2020

Compliance Division, Charities DirectorateCanada Revenue AgencyOttawa ON, K1A 0L5Ottawa ON, K1A 0L5

Dear Sir or Madam:Dear Sir or Madam:

Re: Letter of Complaint Regarding Charitable Status ofLetter of Complaint Regarding Charitable Status of WE Charity

We act for Rebel News Network Ltd. (“Rebel News”). We are writing on behalf of Rebel News toWe act for Rebel News Network Ltd. (“Rebel News”). We are writing on behalf of Rebel News tolodge a complaint about WE Charity, a charity registered (registration no. 88657 8095 RR0001)lodge a complaint about WE Charity, a charity registered (registration no. 88657 8095 RR0001)with the Canada Revenuewith the Canada Revenue Agency (“CRA”). We would like you to determine whether or not WEAgency (“CRA”). We would like you to determine whether or not WECharity is in contravention of the CRA policies, theCharity is in contravention of the CRA policies, the Income Tax Act, RSC 1985, c 1 5th Supp, RSC 1985, c 1 5th Supp(“ITA”) or the Common Law.(“ITA”) or the Common Law.(“ITA”) or the Common Law.

SUMMARY

There are several issues that suggest that WE Charity may be in contravention of the ITA.There are several issues that suggest that WE Charity may be in contravention of the ITA.Specifically:

Significant amounts of money moving from WE Charity to an associated for-profitSignificant amounts of money moving from WE Charity to an associated for-profitcompany: ME to WE Social Enterprises Inc. (“ME to WE”);company: ME to WE Social Enterprises Inc. (“ME to WE”);

The level at which WE Charity’s accounting appears to be intertwined with ME to WEThe level at which WE Charity’s accounting appears to be intertwined with ME to WEand a lack of board oversight related to its accounting practices;

WE Charity’s unusual and significant acquisition of real estate assets; and

WE Charity’s clear support of Prime Minister Justin Trudeau, his Cabinet, and the LiberalParty of Canada.

We request that, in light of these issues, the CRA undertake a review of the charitable status ofWE Charity.

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If you find that WE Charity is in contravention of any of the above referenced policies or laws,then we request that you consider whether WE Charity should have its charitable statusrevoked or otherwise be sanctioned by the CRA.

WE CHARITY BACKGROUND

WE Charity is one of several organizations founded by Kielburger brothers, Craig Kielburger andMarc Kielburger. WE Charity, formerly known as Free the Children, was founded in 1995 andhas grown exponentially since then.

WE Charity’s describes itself and its program as follows:

WE Charity is an international charity and educational partner. Our organizationis unique in that it operates collaborative programs both domestically andinternationally. In the US, Canada, and the UK, WE Day and WE Schools areinitiatives of WE Charity that educate and empower young people. WE Schools isa year-long service-learning program that nurtures compassion in students andgives them the tools to create transformative social change. And WE Day is aseries of inspiring events that celebrate youth making a difference in their localand global communities.

In Africa, Asia and Latin America, we partner with communities to implement WEVillages, a holistic, five-pillar international development model designed toachieve sustainable change. Together with local leaders and families, wetransform lives with solutions that are adaptive, effective and sustained longterm by the community itself.1

WE Charity is related to other ventures of the Kielburger brothers including ME to WE. ME toWE is a privately held, for-profit “social enterprise” founded in 2009 by the Kielburger brothers.Its stated mission is:

to provide economic opportunity in WE Village communities and a sustainablesource of funding for WE Charity.2

ME to WE describes itself as:

an innovative social enterprise that creates socially conscious products andexperiences that enable people to change lives through their everyday choices.At minimum 50% of profits are donated to WE Charity to help support itsinternational development work.3

1 WE Charity, “About WE Charity”, https://www.we.org/en-CA/about-we/we-charity/.2 WE Charity, “About ME to WE”, https://www.we.org/en-CA/about-we/me-to-we/about-me-to-we/3 WE Charity, “About WE”, https://www.we.org/en-CA/about-we/about-us

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If you find that WE Charity is in contravention of any of the above referenced policies or laws,then we request that you consider whether WE Charity should have its charitable statusrevoked or otherwise be sanctioned by the CRA.

WE CHARITY BACKGROUND

WE Charity is one of several organizations founded by Kielburger brothers, Craig Kielburger andMarc Kielburger. WE Charity, formerly known as Free the Children, was founded in 1995 andhas grown exponentially since then.

WE Charity’s describes itself and its program as follows:

WE Charity is an international charity and educational partner. Our organizationis unique in that it operates collaborative programs both domestically andinternationally. In the US, Canada, and the UK, WE Day and WE Schools areinitiatives of WE Charity that educate and empower young people. WE Schools isa year-long service-learning program that nurtures compassion in students andgives them the tools to create transformative social change. And WE Day is aseries of inspiring events that celebrate youth making a difference in their localand global communities.

In Africa, Asia and Latin America, we partner with communities to implement WEVillages, a holistic, five-pillar international development model designed toachieve sustainable change. Together with local leaders and families, wetransform lives with solutions that are adaptive, effective and sustained longterm by the community itself.1

WE Charity is related to other ventures of the Kielburger brothers including ME to WE. ME toWE is a privately held, for-profit “social enterprise” founded in 2009 by the Kielburger brothers.Its stated mission is:

to provide economic opportunity in WE Village communities and a sustainablesource of funding for WE Charity.2

ME to WE describes itself as:

an innovative social enterprise that creates socially conscious products andexperiences that enable people to change lives through their everyday choices.At minimum 50% of profits are donated to WE Charity to help support itsinternational development work.3

1 WE Charity, “About WE Charity”, https://www.we.org/en-CA/about-we/we-charity/.2 WE Charity, “About ME to WE”, https://www.we.org/en-CA/about-we/me-to-we/about-me-to-we/3 WE Charity, “About WE”, https://www.we.org/en-CA/about-we/about-us

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ME to WE sells a variety of products (chocolate, coffee, bracelets)4 to the public as well as travelpackages5 including luxury signature vacations.6 Unlike WE Charity, ME to WE is meant to makea profit; it is privately held and does not have any disclosure requirements. The workings of MEto WE are not publicly available.7

The Kielburger brothers also control several other WE-related organizations including, but notlimited to, ME to WE Asset Holdings, ME to WE Foundation and Imagine 1 Day InternationalOrganization.8

The Law

In order to be charitable at law, an organization must be established and operated for onlycharitable purposes and a charitable organization is required to devote all of its resources tocharitable activities. The ITA states the following in section 149.1(1):

…

charitable organization, at any particular time, means an organization, whetheror not incorporated,

(a) constituted and operated exclusively for charitable purposes,

(a.1) all the resources of which are devoted to charitable activities carriedon by the organization itself,

(b) no part of the income of which is payable to, or is otherwise availablefor, the personal benefit of any proprietor, member, shareholder, trusteeor settlor thereof,

…

charitable purposes includes the disbursement of funds to a qualified donee

…

qualified donee, at any time, means a person that is

…

4 ME to WE, “Shop ME to WE”, https://shop.metowe.com/en-CA/5 ME to WE, “Travel and Make an Impact: ME to WE Trips”, https://travel.metowe.com/en-CA/6 See: https://metowelodges.com/7 CBC: The Current, “July 13, 2020 episode transcript,” https://www.cbc.ca/radio/thecurrent/the-current-for-july-13-2020-1.5647242/july-13-2020-episode-transcript-1.56478178 See: https://torontosun.com/opinion/columnists/lilley-we-charity-listed-real-estate-holdings-worth-43-7-m-in-2018

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ME to WE sells a variety of products (chocolate, coffee, bracelets)4 to the public as well as travelpackages5 including luxury signature vacations.6 Unlike WE Charity, ME to WE is meant to makea profit; it is privately held and does not have any disclosure requirements. The workings of MEto WE are not publicly available.7

The Kielburger brothers also control several other WE-related organizations including, but notlimited to, ME to WE Asset Holdings, ME to WE Foundation and Imagine 1 Day InternationalOrganization.8

The Law

In order to be charitable at law, an organization must be established and operated for onlycharitable purposes and a charitable organization is required to devote all of its resources tocharitable activities. The ITA states the following in section 149.1(1):

…

charitable organization, at any particular time, means an organization, whetheror not incorporated,

(a) constituted and operated exclusively for charitable purposes,

(a.1) all the resources of which are devoted to charitable activities carriedon by the organization itself,

(b) no part of the income of which is payable to, or is otherwise availablefor, the personal benefit of any proprietor, member, shareholder, trusteeor settlor thereof,

…

charitable purposes includes the disbursement of funds to a qualified donee

…

qualified donee, at any time, means a person that is

…

4 ME to WE, “Shop ME to WE”, https://shop.metowe.com/en-CA/5 ME to WE, “Travel and Make an Impact: ME to WE Trips”, https://travel.metowe.com/en-CA/6 See: https://metowelodges.com/7 CBC: The Current, “July 13, 2020 episode transcript,” https://www.cbc.ca/radio/thecurrent/the-current-for-july-13-2020-1.5647242/july-13-2020-episode-transcript-1.56478178 See: https://torontosun.com/opinion/columnists/lilley-we-charity-listed-real-estate-holdings-worth-43-7-m-in-2018

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(b) a registered charity,

…

These definitions require a charitable organization to devote its resources either to charitableactivity carried on by it or as gifts to qualified donees. WE Charity could qualify as both a“charitable organization” and a “qualified donee.” However, as outlined in more detail below,WE Charity may no longer be complying with the requirements of these definitions and,therefore, their status should be reconsidered.

Revocation of registration of charitable organization

149.1(2) The Minister may, in the manner described in section 168, revoke theregistration of a charitable organization for any reason described in subsection168(1) or where the organization

(a) carries on a business that is not a related business of that charity;

…

(c) makes a disbursement by way of a gift, other than a gift made

(i) in the course of charitable activities carried on by it, or

(ii) to a donee that is a qualified donee at the time of the gift.

Charitable purposes

149.1(6.2) For the purposes of the definition charitable organization insubsection (1), an organization that devotes any part of its resources to thedirect or indirect support of, or opposition to, any political party or candidate forpublic office shall not be considered to be constituted and operated exclusivelyfor charitable purposes.

Notice of intention to revoke registration

168 (1) The Minister may, by registered mail, give notice to a person described inany of paragraphs (a) to (c) of the definition qualified donee in subsection149.1(1) that the Minister proposes to revoke its registration if the person

…

(b) ceases to comply with the requirements of this Act for its registration;

…

(e) fails to comply with or contravenes any of sections 230 to 231.5;

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(b) a registered charity,

…

These definitions require a charitable organization to devote its resources either to charitableactivity carried on by it or as gifts to qualified donees. WE Charity could qualify as both a“charitable organization” and a “qualified donee.” However, as outlined in more detail below,WE Charity may no longer be complying with the requirements of these definitions and,therefore, their status should be reconsidered.

Revocation of registration of charitable organization

149.1(2) The Minister may, in the manner described in section 168, revoke theregistration of a charitable organization for any reason described in subsection168(1) or where the organization

(a) carries on a business that is not a related business of that charity;

…

(c) makes a disbursement by way of a gift, other than a gift made

(i) in the course of charitable activities carried on by it, or

(ii) to a donee that is a qualified donee at the time of the gift.

Charitable purposes

149.1(6.2) For the purposes of the definition charitable organization insubsection (1), an organization that devotes any part of its resources to thedirect or indirect support of, or opposition to, any political party or candidate forpublic office shall not be considered to be constituted and operated exclusivelyfor charitable purposes.

Notice of intention to revoke registration

168 (1) The Minister may, by registered mail, give notice to a person described inany of paragraphs (a) to (c) of the definition qualified donee in subsection149.1(1) that the Minister proposes to revoke its registration if the person

…

(b) ceases to comply with the requirements of this Act for its registration;

…

(e) fails to comply with or contravenes any of sections 230 to 231.5;

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…

The registration requirement that is relevant in our case steps from the definition of the term“charitable organization in subsection 149(1) of the ITA (and replicated in part above).

Records and books

230(2) Every qualified donee referred to in paragraphs (a) to (c) of the definitionqualified donee in subsection 149.1(1) shall keep records and books of account— in the case of a qualified donee referred to in any of subparagraphs (a)(i) and(iii) and paragraphs (b), (b.1) and (c) of that definition, at an address in Canadarecorded with the Minister or designated by the Minister — containing

(a) information in such form as will enable the Minister to determinewhether there are any grounds for the revocation of its registrationunder this Act;

…

WE Charity, as a qualified donee, is required to comply with section 230(2).

CONCERNS RELATED TO WE CHARITY

1. MONEY MOVING FROM WE CHARITY TO A NON-QUALIFIED DONEE

Charity Intelligence Canada (CI), is an independent charity watchdog group that helps donors“Be informed. Give intelligently. Have impact.”9 CI reviews charities’ management andoperations, analyzes financial data and assesses a charity's social results from the informationposted on its website and in annual reports, newsletters, impact reports, etc. 10

CI has identified issues with “donor confusion” and “blurred lines” between WE Charity and MEto WE.11 WE Charity and ME to WE are so closely connected that Kate Bahen, the ManagingDirector of CI, stated that they were “joined at the hip.”12

CI highlights the flow of funds between WE Charity and ME to WE on its website:

WE Charity buys promotional goods and travel services from ME to WE. In F2019WE Charity paid ME to WE $3.6m for travel, leadership training services, andpromotional goods. In F2019, ME to WE contributed $4.4m to WE Charity in

9 Charity Intelligence Canada, “Giving with Impact”, https://www.charityintelligence.ca/giving-with-impact.10 Ibid.11 Charity Intelligence Canada, “WE Charity”, https://www.charityintelligence.ca/charity-details/82-we-charity12 CBC: The Current, “July 13, 2020 episode transcript,” https://www.cbc.ca/radio/thecurrent/the-current-for-july-13-2020-1.5647242/july-13-2020-episode-transcript-1.5647817

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…

The registration requirement that is relevant in our case steps from the definition of the term“charitable organization in subsection 149(1) of the ITA (and replicated in part above).

Records and books

230(2) Every qualified donee referred to in paragraphs (a) to (c) of the definitionqualified donee in subsection 149.1(1) shall keep records and books of account— in the case of a qualified donee referred to in any of subparagraphs (a)(i) and(iii) and paragraphs (b), (b.1) and (c) of that definition, at an address in Canadarecorded with the Minister or designated by the Minister — containing

(a) information in such form as will enable the Minister to determinewhether there are any grounds for the revocation of its registrationunder this Act;

…

WE Charity, as a qualified donee, is required to comply with section 230(2).

CONCERNS RELATED TO WE CHARITY

1. MONEY MOVING FROM WE CHARITY TO A NON-QUALIFIED DONEE

Charity Intelligence Canada (CI), is an independent charity watchdog group that helps donors“Be informed. Give intelligently. Have impact.”9 CI reviews charities’ management andoperations, analyzes financial data and assesses a charity's social results from the informationposted on its website and in annual reports, newsletters, impact reports, etc. 10

CI has identified issues with “donor confusion” and “blurred lines” between WE Charity and MEto WE.11 WE Charity and ME to WE are so closely connected that Kate Bahen, the ManagingDirector of CI, stated that they were “joined at the hip.”12

CI highlights the flow of funds between WE Charity and ME to WE on its website:

WE Charity buys promotional goods and travel services from ME to WE. In F2019WE Charity paid ME to WE $3.6m for travel, leadership training services, andpromotional goods. In F2019, ME to WE contributed $4.4m to WE Charity in

9 Charity Intelligence Canada, “Giving with Impact”, https://www.charityintelligence.ca/giving-with-impact.10 Ibid.11 Charity Intelligence Canada, “WE Charity”, https://www.charityintelligence.ca/charity-details/82-we-charity12 CBC: The Current, “July 13, 2020 episode transcript,” https://www.cbc.ca/radio/thecurrent/the-current-for-july-13-2020-1.5647242/july-13-2020-episode-transcript-1.5647817

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donated time and services and cash. ME to WE is also a corporate partner of WEDays. 13

Speaking to CBC’s “The Current,” Bahen stated:

So, what we know about ME to WE is that it does an awful lot of business withWE Charity. And ME to WE’s business says that since it was founded, it has given$20 million in support to WE Charity. Now, what is less well known is how muchmoney WE charity gives to ME to WE. Over the last 10 years, WE Charity hasgiven and paid ME to WE, $11 million. And in the last two years, 2018 and 2019,seven per cent and eight per cent of WE Charity's total revenues have flowed toME to WE, the private business of the Kielburgers.

The arrangement, which sees the transfer of funds from the charity to the for-profitorganization is something Bahen states is rare and unique to WE.

Many companies, big companies, public companies have philanthropic arms. So,you will see a corporation have a foundation, but we've never seen thebackwash before. Normally it's the corporation, you know, giving its profits backin, to a charity, whether it be a Canadian Tire with its Jumpstart initiative, banksmaybe having foundations. That's where you're seeing the company, give moneyto the charity. It's very, I think it's very unique, this complex structure betweenWE and ME to WE. And I'm not aware of situations where we see the charitygiving money to the for-profit business.14

Bahen fleshed out the concerns that CI has with WE Charity in a recent interview withCanadaland:

WE Charity Moved Millions to Private Kielburger Company

Jesse Brown - July 18, 2020

“Massive red flag,” says charity watchdog

The idea that WE Charity was uniquely capable of executing the government’s$912m student volunteer program is challenged by an analysis of their auditedfinancial statements by Charity Intelligence (CI), an independent charitywatchdog group that helps donors “give intelligently and have impact with theirgenerosity.”

CI’s legitimacy as a neutral authority on the charitable sector was recognized bynone other than WE Charity itself, who previously used its CI rating to challengeCanadaland’s investigation.

13 Ibid.14 Ibid

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donated time and services and cash. ME to WE is also a corporate partner of WEDays. 13

Speaking to CBC’s “The Current,” Bahen stated:

So, what we know about ME to WE is that it does an awful lot of business withWE Charity. And ME to WE’s business says that since it was founded, it has given$20 million in support to WE Charity. Now, what is less well known is how muchmoney WE charity gives to ME to WE. Over the last 10 years, WE Charity hasgiven and paid ME to WE, $11 million. And in the last two years, 2018 and 2019,seven per cent and eight per cent of WE Charity's total revenues have flowed toME to WE, the private business of the Kielburgers.

The arrangement, which sees the transfer of funds from the charity to the for-profitorganization is something Bahen states is rare and unique to WE.

Many companies, big companies, public companies have philanthropic arms. So,you will see a corporation have a foundation, but we've never seen thebackwash before. Normally it's the corporation, you know, giving its profits backin, to a charity, whether it be a Canadian Tire with its Jumpstart initiative, banksmaybe having foundations. That's where you're seeing the company, give moneyto the charity. It's very, I think it's very unique, this complex structure betweenWE and ME to WE. And I'm not aware of situations where we see the charitygiving money to the for-profit business.14

Bahen fleshed out the concerns that CI has with WE Charity in a recent interview withCanadaland:

WE Charity Moved Millions to Private Kielburger Company


“Massive red flag,” says charity watchdog

The idea that WE Charity was uniquely capable of executing the government’s$912m student volunteer program is challenged by an analysis of their auditedfinancial statements by Charity Intelligence (CI), an independent charitywatchdog group that helps donors “give intelligently and have impact with theirgenerosity.”

CI’s legitimacy as a neutral authority on the charitable sector was recognized bynone other than WE Charity itself, who previously used its CI rating to challengeCanadaland’s investigation.

13 Ibid.14 Ibid

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“The information shared by Canadaland in its questioning aboutbudgeting, data and numbers is incorrect….Charity IntelligenceCanada awarded WE Charity a perfect four-star rating.”

-Victor Li, CPA, CGA, CFO, WE (May 17,2019)

When the pandemic began, WE Charity promptly laid off the majority of itsworkforce. Media reports assumed that this was a direct result of COVID-19, withits obvious impacts on donations and live events.

But in an interview with Canadaland, CI’s Managing Director Kate Bahen sharesinformation from WE’s own audited financial statements that tells a differentstory – one of an organization that appeared to already be in crisis and makingstrange financial transactions when COVID hit, to anyone who bothered to look.

***

Jesse Brown: Kate, what was the first inkling you had that all was not perfectwith WE Charity?

Kate Behan: I’m glad that people wave those star ratings around. But when youscratch beneath the veneer, there were lots of red flags. I hope that donorswould read what was actually written in the text.

J: Your practice is based on numbers. It’s based on going through their auditedfinancials line by line. What is it in their audited financial statements thatraised concerns for you?

K: You could see the real estate holdings right there on the balance sheet. Youcould see the properties. This wasn’t a charity that had a lot of cash…It wasinvesting heavily in real estate. The concern was also the leverage.

When you build a hospice, when you build a homeless shelter, you will go intodebt very often and you will have a long term mortgage with regularly scheduledpayments. But all of WE Charity’s debt was short-term, revolving, demand loans,at the beck and call of the banks. But it was the amount of debt on theseproperties. And it was always changing. So we always looked at the debt levels.

And then in 2018, the auditor flagged for the first time that WE Charity was inbreach of its bank covenants. That is a massive, massive red flag. I have neverseen that on any other charity in its audited financial statements.

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“The information shared by Canadaland in its questioning aboutbudgeting, data and numbers is incorrect….Charity IntelligenceCanada awarded WE Charity a perfect four-star rating.”

-Victor Li, CPA, CGA, CFO, WE (May 17,2019)

When the pandemic began, WE Charity promptly laid off the majority of itsworkforce. Media reports assumed that this was a direct result of COVID-19, withits obvious impacts on donations and live events.

But in an interview with Canadaland, CI’s Managing Director Kate Bahen sharesinformation from WE’s own audited financial statements that tells a differentstory – one of an organization that appeared to already be in crisis and makingstrange financial transactions when COVID hit, to anyone who bothered to look.

***

Jesse Brown: Kate, what was the first inkling you had that all was not perfectwith WE Charity?

Kate Behan: I’m glad that people wave those star ratings around. But when youscratch beneath the veneer, there were lots of red flags. I hope that donorswould read what was actually written in the text.

J: Your practice is based on numbers. It’s based on going through their auditedfinancials line by line. What is it in their audited financial statements thatraised concerns for you?

K: You could see the real estate holdings right there on the balance sheet. Youcould see the properties. This wasn’t a charity that had a lot of cash…It wasinvesting heavily in real estate. The concern was also the leverage.

When you build a hospice, when you build a homeless shelter, you will go intodebt very often and you will have a long term mortgage with regularly scheduledpayments. But all of WE Charity’s debt was short-term, revolving, demand loans,at the beck and call of the banks. But it was the amount of debt on theseproperties. And it was always changing. So we always looked at the debt levels.

And then in 2018, the auditor flagged for the first time that WE Charity was inbreach of its bank covenants. That is a massive, massive red flag. I have neverseen that on any other charity in its audited financial statements.

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source: WE Charity 2018 audited financials


J: For those of us who are less financially literate, when you say they’re inbreach of their bank covenants — they’re racking up big debt to the bank whilethey’re buying major pieces of property. Am I getting that right?

K: It’s leveraged, they’re not using cash.

Some people live a certain lifestyle and you only ever see one side of the balancesheet. You don’t see how much debt that person has. WE Charity had the bigoffices, had the Global Learning Center, had all the assets, properties on QueenStreet, but these were all backed — its lending practices were getting close tothe max. Kind of like your credit card. You know, if you’ve got a credit card limitof ten thousand dollars, these guys were always at nine thousand five hundred.It was always pushing, pushing the limits.

So it was you know, [they] have to go to the bank every year and renegotiate thisloan. God forbid the bank says ‘no’ this year. It’s kind of like a high wire act. Itjust isn’t seen in charities. So WE is different on so many fronts.

J: Your analogy to a soup kitchen or a hospice — those are facilities thatdirectly do charitable work. The Toronto SUN’s Brian Lilley reported that WEquickly acquired $38.7m in Toronto real estate. How much money were theyspending each year on their actual charitable works instead of on theirheadquarters and things like that?

K: That’s not disclosed. So I don’t see that. Let’s say that they bought a buildingon Queen Street for three million dollars to help children in Ethiopia, and they

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J: For those of us who are less financially literate, when you say they’re inbreach of their bank covenants — they’re racking up big debt to the bank whilethey’re buying major pieces of property. Am I getting that right?

K: It’s leveraged, they’re not using cash.

Some people live a certain lifestyle and you only ever see one side of the balancesheet. You don’t see how much debt that person has. WE Charity had the bigoffices, had the Global Learning Center, had all the assets, properties on QueenStreet, but these were all backed — its lending practices were getting close tothe max. Kind of like your credit card. You know, if you’ve got a credit card limitof ten thousand dollars, these guys were always at nine thousand five hundred.It was always pushing, pushing the limits.

So it was you know, [they] have to go to the bank every year and renegotiate thisloan. God forbid the bank says ‘no’ this year. It’s kind of like a high wire act. Itjust isn’t seen in charities. So WE is different on so many fronts.

J: Your analogy to a soup kitchen or a hospice — those are facilities thatdirectly do charitable work. The Toronto SUN’s Brian Lilley reported that WEquickly acquired $38.7m in Toronto real estate. How much money were theyspending each year on their actual charitable works instead of on theirheadquarters and things like that?

K: That’s not disclosed. So I don’t see that. Let’s say that they bought a buildingon Queen Street for three million dollars to help children in Ethiopia, and they

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declare that the property is for that overseas work. Well, we are analysts, notauditors.

J: Any other [concerns]?

K: Related party transactions. So (the for-profit company) ME to WE is related toWE Charity by the two founders, Craig and Marc Kielburger. What ME to WE wasgiving to WE Charity and what WE Charity was paying ME to WE is a related[party] transaction and it needs to be reported. There’s a professional obligationby the auditors to report those.

It wasn’t just ME to WE, it’s very convoluted between holding companies andsubsidiaries. It just didn’t make any sense.

In 2016, there was the WE 365 app and teachers were told that if you get kids todownload this app, for every download a child will get vaccinations.

But the app didn’t work and it was glitchy. And, now if you go to the App Storeand try and download it, there is no such thing as WE 365 to download.

But, you know, it was sold to WE Charity [by WE 365] for one dollar and all thedebts incurred in creating this app that doesn’t exist anymore [now belonged toWE Charity], which is just bizarre.

J: That’s significant.

K: No, it’s not! We’re just talking about a $265,000 transaction at a $60m charity.Let’s focus on the $4.9m of debt that WE Charity had to pay the banks in May2020. And it’s got another $4.3m due at the end of October. So let’s focus on thebig numbers.

J: Ok, let’s focus on them. Were those dates determined before the pandemic?Were they in that kind of financial trouble before COVID?

K: Yes! And that’s what I’ve been sort of jumping up and down on thegovernment’s due diligence. Before you give them an agreement to distribute$912m dollars, look at the board of directors.

Did WE Charity inform the government that its board had resigned or wasreplaced just weeks before, and that there was a gap in governance andoversight at the charity?

And if you read the audited financial statements, there it is in black and white,WE Charity is in breach of its bank covenants. Oh and by the way — it has noboard.

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declare that the property is for that overseas work. Well, we are analysts, notauditors.

J: Any other [concerns]?

K: Related party transactions. So (the for-profit company) ME to WE is related toWE Charity by the two founders, Craig and Marc Kielburger. What ME to WE wasgiving to WE Charity and what WE Charity was paying ME to WE is a related[party] transaction and it needs to be reported. There’s a professional obligationby the auditors to report those.

It wasn’t just ME to WE, it’s very convoluted between holding companies andsubsidiaries. It just didn’t make any sense.

In 2016, there was the WE 365 app and teachers were told that if you get kids todownload this app, for every download a child will get vaccinations.

But the app didn’t work and it was glitchy. And, now if you go to the App Storeand try and download it, there is no such thing as WE 365 to download.

But, you know, it was sold to WE Charity [by WE 365] for one dollar and all thedebts incurred in creating this app that doesn’t exist anymore [now belonged toWE Charity], which is just bizarre.

J: That’s significant.

K: No, it’s not! We’re just talking about a $265,000 transaction at a $60m charity.Let’s focus on the $4.9m of debt that WE Charity had to pay the banks in May2020. And it’s got another $4.3m due at the end of October. So let’s focus on thebig numbers.

J: Ok, let’s focus on them. Were those dates determined before the pandemic?Were they in that kind of financial trouble before COVID?

K: Yes! And that’s what I’ve been sort of jumping up and down on thegovernment’s due diligence. Before you give them an agreement to distribute$912m dollars, look at the board of directors.

Did WE Charity inform the government that its board had resigned or wasreplaced just weeks before, and that there was a gap in governance andoversight at the charity?

And if you read the audited financial statements, there it is in black and white,WE Charity is in breach of its bank covenants. Oh and by the way — it has noboard.

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J: Everything you’ve said so far might describe an organization that had a follywith an app that didn’t work out, that maybe got overambitious with itsspending on properties. But that doesn’t really explain the other side of this,which is that money was flowing from charity to private company, in theopposite direction that it was supposed to.

K: The backwash. ME to WE backwash.

J: You have been public that in 2019, the same year that found them in breach[with the bank], that same year when they needed money, seven percent of allWE Charity’s revenue flowed to their privately held company.

K: That had grown. Before, it was one percent, two percent. What you see isthem ramp up in fiscal 2018 when eight percent of WE Charity’s total revenuesare going into the private business and in 2019, seven percent. And you’redealing with a 60 million dollar charity here, so we’re not talking chump change.


J: Kate, people have said to me there’s nothing to see here. Sometimes acharity has to buy a few things from its related business. That’s true, isn’t it?

K: Yes.

J: So what’s wrong with this?

K: It’s the magnitude. Some private corporations play a little hard with theircharities and say, you know, ‘we want you to pay the going rate’ and all the restof it. But it’s [typically] a few hundred thousand dollars on a six million dollarcharity. It’s not like this.

J: Have you ever seen this level of backwash?

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J: Everything you’ve said so far might describe an organization that had a follywith an app that didn’t work out, that maybe got overambitious with itsspending on properties. But that doesn’t really explain the other side of this,which is that money was flowing from charity to private company, in theopposite direction that it was supposed to.

K: The backwash. ME to WE backwash.

J: You have been public that in 2019, the same year that found them in breach[with the bank], that same year when they needed money, seven percent of allWE Charity’s revenue flowed to their privately held company.

K: That had grown. Before, it was one percent, two percent. What you see isthem ramp up in fiscal 2018 when eight percent of WE Charity’s total revenuesare going into the private business and in 2019, seven percent. And you’redealing with a 60 million dollar charity here, so we’re not talking chump change.


J: Kate, people have said to me there’s nothing to see here. Sometimes acharity has to buy a few things from its related business. That’s true, isn’t it?

K: Yes.

J: So what’s wrong with this?

K: It’s the magnitude. Some private corporations play a little hard with theircharities and say, you know, ‘we want you to pay the going rate’ and all the restof it. But it’s [typically] a few hundred thousand dollars on a six million dollarcharity. It’s not like this.

J: Have you ever seen this level of backwash?

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K: No.

J: You would think that in the year when all their debts are due, that would bethe year when they need to keep that money in the charity. But instead,they’re flowing it into their private company.

K: Yes

WE Charity’s response:

In the most extreme and, frankly, inaccurate, calculations, ifsomeone dismisses (i) removed all value from the purchase of MEto WE services; (ii) removes all in-kind contributions from ME toWE, then WE Charity has still received $1.3-million more from MEto WE over the last five years.

J: Their argument has been: If you look at this the right way, overall, thecharity comes out on top. Overall, the charity is benefiting from thisrelationship. Is that true?

K: The level of disclosure in their audited financial statements does not allow meto verify that claim.

J: You don’t have the information you would need to say, ‘yeah, that looksright.’

K: What it does say in the audited financial statement is not that ME to WE“donates” to WE Charity but that ME to WE “contributes” to WE Charity.

J: What’s the difference?

K: A donation is money. A contribution can be time, money or goods.

J: So when the WE Charity pays the Kielburgers’ private company, they pay incash. But when their private company pays the charity, it’s a mixture ofmoney, time and other benefits — and we don’t know the mix. Is that correct?

K: That’s correct.

J: If WE’s auditor were to dig down on that, you might find that everything’sfine. That in fact, it is cash going back to the charity. Or you might find thatthere’s no money or very little.

K: KRP have audited the books of WE Charity since these teenagers fromThornhill began over 25 years ago. It specializes in tax and small businesses. Ibelieve WE Charity is the only charity it audits.

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K: No.

J: You would think that in the year when all their debts are due, that would bethe year when they need to keep that money in the charity. But instead,they’re flowing it into their private company.

K: Yes

WE Charity’s response:

In the most extreme and, frankly, inaccurate, calculations, ifsomeone dismisses (i) removed all value from the purchase of MEto WE services; (ii) removes all in-kind contributions from ME toWE, then WE Charity has still received $1.3-million more from MEto WE over the last five years.

J: Their argument has been: If you look at this the right way, overall, thecharity comes out on top. Overall, the charity is benefiting from thisrelationship. Is that true?

K: The level of disclosure in their audited financial statements does not allow meto verify that claim.

J: You don’t have the information you would need to say, ‘yeah, that looksright.’

K: What it does say in the audited financial statement is not that ME to WE“donates” to WE Charity but that ME to WE “contributes” to WE Charity.

J: What’s the difference?

K: A donation is money. A contribution can be time, money or goods.

J: So when the WE Charity pays the Kielburgers’ private company, they pay incash. But when their private company pays the charity, it’s a mixture ofmoney, time and other benefits — and we don’t know the mix. Is that correct?

K: That’s correct.

J: If WE’s auditor were to dig down on that, you might find that everything’sfine. That in fact, it is cash going back to the charity. Or you might find thatthere’s no money or very little.

K: KRP have audited the books of WE Charity since these teenagers fromThornhill began over 25 years ago. It specializes in tax and small businesses. Ibelieve WE Charity is the only charity it audits.

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J: Well, that is weird.

K: It’s unsettling.

J: Back to the board of directors. WE has said the former board members werealmost done their 5-year terms, and WE wanted a refresh. Is that not a credibleexplanation?

K: If a charity was to take the strategic decision to radically replace its entiregovernance structure, that needs to be signaled to donors and corporatesponsors well ahead. That needs to be posted on a web site. Everybody needs toknow what’s going on, so that it isn’t a surprise that you find out on Twitter thatthe chairman of the board resigned in March…and since the chair of their boardresigned, that doesn’t jibe with their story.

So you have an unprecedented turnover in governance that was not signalled.

When you have a scandal or a crisis at an organization, it’s the chairman thatsteps up and testifies in front of Congress. It’s the board chair who steps up andtakes the mike.

And now we go into a crisis with a rookie slate of directors.

J: The new board of directors, as I understand them, have long relationshipswith the Kielburgers. The new chair of the board, Greg Rogers, was MarcKielburger’s high school teacher.

K: It’s a mismatch.

J: Did something happen for this sudden turnover in the board? When I look atall of these things together — not only do they have all this debt that’s comingdue. At the same time, they’re flowing money out of the charity, into theirprivate company. And then the board leaves. Do those all seem to you likediscrete and unrelated events?

K: I guess it’s a compilation. Jesse, it’s just too many things.15

ME to WE is not a qualified donee under the ITA. We submit, in light of the above informationregarding the unusual event of significant amounts of money passing from a charity to anassociated for-profit company, the CRA should investigate whether WE Charity used some of itsresources to pay ME to WE for purposes that were not charitable.

15 Canadaland, “WE Chariy Moved Millions To Private Kielburger Company”,https://www.canadalandshow.com/we-charity-was-in-financial-trouble-before-covid-says-charity-watchdog/

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J: Well, that is weird.

K: It’s unsettling.

J: Back to the board of directors. WE has said the former board members werealmost done their 5-year terms, and WE wanted a refresh. Is that not a credibleexplanation?

K: If a charity was to take the strategic decision to radically replace its entiregovernance structure, that needs to be signaled to donors and corporatesponsors well ahead. That needs to be posted on a web site. Everybody needs toknow what’s going on, so that it isn’t a surprise that you find out on Twitter thatthe chairman of the board resigned in March…and since the chair of their boardresigned, that doesn’t jibe with their story.

So you have an unprecedented turnover in governance that was not signalled.

When you have a scandal or a crisis at an organization, it’s the chairman thatsteps up and testifies in front of Congress. It’s the board chair who steps up andtakes the mike.

And now we go into a crisis with a rookie slate of directors.

J: The new board of directors, as I understand them, have long relationshipswith the Kielburgers. The new chair of the board, Greg Rogers, was MarcKielburger’s high school teacher.

K: It’s a mismatch.

J: Did something happen for this sudden turnover in the board? When I look atall of these things together — not only do they have all this debt that’s comingdue. At the same time, they’re flowing money out of the charity, into theirprivate company. And then the board leaves. Do those all seem to you likediscrete and unrelated events?

K: I guess it’s a compilation. Jesse, it’s just too many things.15

ME to WE is not a qualified donee under the ITA. We submit, in light of the above informationregarding the unusual event of significant amounts of money passing from a charity to anassociated for-profit company, the CRA should investigate whether WE Charity used some of itsresources to pay ME to WE for purposes that were not charitable.

15 Canadaland, “WE Chariy Moved Millions To Private Kielburger Company”,https://www.canadalandshow.com/we-charity-was-in-financial-trouble-before-covid-says-charity-watchdog/

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All of this is particularly concerning as it has emerged just today, in reporting by Global News16,that the Government had misrepresented, at the time of their announcement and since, whothey had awarded the contract to administer the sole-source $912-million student volunteerprogram to, reporting:

Both a government and charity official confirmed the controversial Canada StudentService Grant contract was not with WE Charity, as Trudeau announced.

Rather, the government gave the contract to the WE Charity Foundation, which is adistinct charity with no track record.

As such, it appears the “donor confusion” and “blurred lines” identified by CI as existingbetween WE Charity and ME to WE extends to other WE entities; this suggests this may be abroader, more systemic problem within the WE organization.

In the event that any of the money from WE Charity to ME to WE was not charitable, WECharity could, (and, we submit, should) be found to not be in compliance with subsection149.1(1)(a)-(b) of the ITA and, as such, pursuant to section 149.1(2) and 168(1) of the ITA,revoke WE Charity’s registration.

2. ACCOUNTING OF ME CHARITY AND ME TO WE INTERTWINED

According to CI, the same individual is overseeing the money going back and forth between WECharity and ME to WE.17

Victor Li, the CFO of WE Charity, simultaneously serves as the CFO of ME to WE, the CFO of WECharity in the United States, and the treasurer of the U.S. ME to WE Foundation.18

The following article from Canadaland suggests the accounting departments of both the charityand the for-profit company are tightly intertwined.

What’s The Deal With WE Charity’s Accounting Department?


Charity watchdog issued "donor advisory" about WE

Charity Intelligence (CI) is an independent charity watchdog that has previouslygiven top marks to WE Charity.

16 Global News, “Trudeau gov. contract for $912M student program was with WE Charity’s real estate holdingfoundation”, https://globalnews.ca/news/7203337/trudeau-we-charity-foundation-real-estate-holding-company/17 Charity Intelligence Canada, “WE Charity”, https://www.charityintelligence.ca/charity-details/82-we-charity18 Canadaland, “What’s The Deal With WE Charity’s Accounting Department?”https://www.canadalandshow.com/whats-the-deal-with-we-charitys-accounting-department/

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All of this is particularly concerning as it has emerged just today, in reporting by Global News16,that the Government had misrepresented, at the time of their announcement and since, whothey had awarded the contract to administer the sole-source $912-million student volunteerprogram to, reporting:

Both a government and charity official confirmed the controversial Canada StudentService Grant contract was not with WE Charity, as Trudeau announced.

Rather, the government gave the contract to the WE Charity Foundation, which is adistinct charity with no track record.

As such, it appears the “donor confusion” and “blurred lines” identified by CI as existingbetween WE Charity and ME to WE extends to other WE entities; this suggests this may be abroader, more systemic problem within the WE organization.

In the event that any of the money from WE Charity to ME to WE was not charitable, WECharity could, (and, we submit, should) be found to not be in compliance with subsection149.1(1)(a)-(b) of the ITA and, as such, pursuant to section 149.1(2) and 168(1) of the ITA,revoke WE Charity’s registration.

2. ACCOUNTING OF ME CHARITY AND ME TO WE INTERTWINED

According to CI, the same individual is overseeing the money going back and forth between WECharity and ME to WE.17

Victor Li, the CFO of WE Charity, simultaneously serves as the CFO of ME to WE, the CFO of WECharity in the United States, and the treasurer of the U.S. ME to WE Foundation.18

The following article from Canadaland suggests the accounting departments of both the charityand the for-profit company are tightly intertwined.

What’s The Deal With WE Charity’s Accounting Department?


Charity watchdog issued "donor advisory" about WE

Charity Intelligence (CI) is an independent charity watchdog that has previouslygiven top marks to WE Charity.

16 Global News, “Trudeau gov. contract for $912M student program was with WE Charity’s real estate holdingfoundation”, https://globalnews.ca/news/7203337/trudeau-we-charity-foundation-real-estate-holding-company/17 Charity Intelligence Canada, “WE Charity”, https://www.charityintelligence.ca/charity-details/82-we-charity18 Canadaland, “What’s The Deal With WE Charity’s Accounting Department?”https://www.canadalandshow.com/whats-the-deal-with-we-charitys-accounting-department/

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Last spring, in a statement to Canadaland defending the organization, WE’s CFO,Victor Li, hailed its CI score.

“Charity Intelligence Canada awarded WE Charity a perfect four-star rating,” hewrote, “measured on donor accountability, quality of reports and social results,financial transparency, and audited financial statements.”

Since then, CI has downgraded WE to three stars, given the organization a “fair”rating on demonstrated impact (the second lowest level on a scale of five), andissued a “donor advisory” concerning the rapid turnover of the charity’s board ofdirectors. The full assessment can be accessed here.

CI’s managing director, Kate Bahen, has also expressed alarm at the charity’sunusual financial activity.

“We’ve never seen the backwash before,” she said this week on CBC’s TheCurrent, expressing surprise about the movement of funds from the charity toits for-profit sister company, ME to WE Social Enterprises.

The publicized model of the WE organization is that ME to WE exists to supportand fund WE Charity, with at least half of its profits put toward it (and the restback into itself). But the audited financial statements analyzed by CI show thatthe money was also flowing in the opposite direction, from the charity to theprivate company.

“It’s the magnitude of the funds that is the issue,” Bahen tells Canadaland.

Bahen also raised concerns that the CFO of WE Charity simultaneously servesas the CFO of ME to WE Social Enterprises, the CFO of WE Charity in the UnitedStates, and the treasurer of the U.S. ME to WE Foundation.

“Too many people wearing multiple hats,” says Bahen.

CFO Victor Li runs WE’s accounting department from the top floor of their GlobalLearning Centre (GLC) in downtown Toronto.

Former employees tell Canadaland that it’s unlike any other part of theorganization.

“It was an oddly separate entity from everything else,” recalls a former managerat WE who worked in a different department.

WE’s GLC is a modern building that became the organization’s headquarters in2017, filled with free-flowing, open-concept workspaces. For a period, theaccounting department was run out of its own discrete building a few doorsover, former employees tell Canadaland.

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Last spring, in a statement to Canadaland defending the organization, WE’s CFO,Victor Li, hailed its CI score.

“Charity Intelligence Canada awarded WE Charity a perfect four-star rating,” hewrote, “measured on donor accountability, quality of reports and social results,financial transparency, and audited financial statements.”

Since then, CI has downgraded WE to three stars, given the organization a “fair”rating on demonstrated impact (the second lowest level on a scale of five), andissued a “donor advisory” concerning the rapid turnover of the charity’s board ofdirectors. The full assessment can be accessed here.

CI’s managing director, Kate Bahen, has also expressed alarm at the charity’sunusual financial activity.

“We’ve never seen the backwash before,” she said this week on CBC’s TheCurrent, expressing surprise about the movement of funds from the charity toCurrent, expressing surprise about the movement of funds from the charity toCurrentits for-profit sister company, ME to WE Social Enterprises.

The publicized model of the WE organization is that ME to WE exists to supportand fund WE Charity, with at least half of its profits put toward it (and the restback into itself). But the audited financial statements analyzed by CI show thatthe money was also flowing in the opposite direction, from the charity to theprivate company.

“It’s the magnitude of the funds that is the issue,” Bahen tells Canadaland.

Bahen also raised concerns that the CFO of WE Charity simultaneously servesas the CFO of ME to WE Social Enterprises, the CFO of WE Charity in the UnitedStates, and the treasurer of the U.S. ME to WE Foundation.

“Too many people wearing multiple hats,” says Bahen.

CFO Victor Li runs WE’s accounting department from the top floor of their GlobalLearning Centre (GLC) in downtown Toronto.

Former employees tell Canadaland that it’s unlike any other part of theorganization.

“It was an oddly separate entity from everything else,” recalls a former managerat WE who worked in a different department.

WE’s GLC is a modern building that became the organization’s headquarters in2017, filled with free-flowing, open-concept workspaces. For a period, theaccounting department was run out of its own discrete building a few doorsover, former employees tell Canadaland.

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The department later moved to the third floor of the GLC but is walled off fromthe rest of the operations, for “security and privacy reasons,” according to aformer senior employee.

The office of WE co-founder Marc Kielburger is also located within this area,Canadaland is told.

Li’s profile on WE Charity’s website takes the form of a Q&A.

The first question is, “What qualifications do you have to manage the finances ofa global organization?”

“I am professionally certified in accounting in four different countries — Canada,the U.S., UK, and China,” he is quoted as saying.

Li is a certified general accountant in Canada, but Canadaland has been unable toverify Li’s certification in the U.S., the U.K., or China.

Neither the names Victor Li, nor Qingtao Li, as he is identified on his sparseLinkedIn page, appear in official directories of certified public accountants in theU.S. or of the Certified Public Accountants Association in the UK.

When reached by Canadaland over the phone, Li declined to answer questionsabout his credentials. “It is not convenient for me to talk to you personally,” hesaid, directing our questions to WE.

Canadaland asked WE Charity to explain why Victor Li is not listed as a CPA in theU.S. or the U.K., and to provide documentation that Li is certified as anaccountant in China. They did not directly answer.

Instead, they told Canadaland that “WE Charity operates with proper controlsand oversight,” and quoted former Ontario Court of Appeal justice StephenGoudge, who WE had retained to conduct various independent reviews on theirbehalf. “Mr. Li is qualified to act as WE Charity’s CFO,” he wrote.

Li has been with the WE organization for more than 20 years. A relative of his,WE tells Canadaland, is WE Charity’s country director in China.

According to multiple former employees, including a former director and aformer manager with very recent experience within WE, the accountingdepartment that Li runs handles the books for both WE Charity and ME to WE,and individual employees within the department routinely work for bothentities. When asked if individual staffers in the accounting department workfor more than one WE entity, WE Charity told Canadaland that “there areseven people in [the] WE Charity accounting team who work on WE Charity

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The department later moved to the third floor of the GLC but is walled off fromthe rest of the operations, for “security and privacy reasons,” according to aformer senior employee.

The office of WE co-founder Marc Kielburger is also located within this area,Canadaland is told.

Li’s profile on WE Charity’s website takes the form of a Q&A.

The first question is, “What qualifications do you have to manage the finances ofa global organization?”

“I am professionally certified in accounting in four different countries — Canada,the U.S., UK, and China,” he is quoted as saying.

Li is a certified general accountant in Canada, but Canadaland has been unable toverify Li’s certification in the U.S., the U.K., or China.

Neither the names Victor Li, nor Qingtao Li, as he is identified on his sparseLinkedIn page, appear in official directories of certified public accountants in theU.S. or of the Certified Public Accountants Association in the UK.

When reached by Canadaland over the phone, Li declined to answer questionsabout his credentials. “It is not convenient for me to talk to you personally,” hesaid, directing our questions to WE.

Canadaland asked WE Charity to explain why Victor Li is not listed as a CPA in theU.S. or the U.K., and to provide documentation that Li is certified as anaccountant in China. They did not directly answer.

Instead, they told Canadaland that “WE Charity operates with proper controlsand oversight,” and quoted former Ontario Court of Appeal justice StephenGoudge, who WE had retained to conduct various independent reviews on theirbehalf. “Mr. Li is qualified to act as WE Charity’s CFO,” he wrote.

Li has been with the WE organization for more than 20 years. A relative of his,WE tells Canadaland, is WE Charity’s country director in China.

According to multiple former employees, including a former director and aformer manager with very recent experience within WE, the accountingdepartment that Li runs handles the books for both WE Charity and ME to WE,and individual employees within the department routinely work for bothentities. When asked if individual staffers in the accounting department workfor more than one WE entity, WE Charity told Canadaland that “there areseven people in [the] WE Charity accounting team who work on WE Charity

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and related charitable entities. There are three people in the ME to WE SocialEnterprise accounting team who work on ME to WE Social Enterprise.”

Last week, Canadaland revealed that WE mistakenly paid a portion of MargaretTrudeau’s speaking fees with funds from the charity instead of the for-profit.WE blamed an “error in billing/payment” that they say has since beenaddressed.

Lawyer Mark Blumberg, who specializes in Canadian charity law at BlumbergSegal LLP, tells Canadaland in an email that it’s not uncommon for organizationsto have a multiple-entity structure.

“However,” he cautions, “if an organization plans to have multiple corporateentities, and especially if one of them is a registered charity, it is vital that theorganization ensures that there is sufficient separation between the registeredcharity and other entities.”

WE has asserted that the distinction between WE Charity and ME to WE is clearlyset out on their websites and that each donor or customer is advised whichentity it is dealing with prior to any transaction.

“While some may think it is a good idea to have a seamless ‘one organization’approach with branding, governance, and operations, it will be a huge problemfrom a legal perspective in Canada, because the benefits of being a ‘registeredcharity’ do not apply to that ‘one organization,’ the resources of the registeredcharity can only be used for the purposes and activities of the registeredcharity, and there needs to be a clear separation/distinction between theregistered charity and the other, non-qualified donees.”

Blumberg explains that because of the many rules and restrictions governing theoperation of charities, especially when it comes to money and other assets, anorganization needs to ensure compliance so that they do not lose theirregistered charity status.

Blumberg cited a number of cases in recent years in which, he said, the CRA hasrevoked an organization’s charitable status “for improper relationships with anon-charity.”

Charity Intelligence’s Kate Bahen told the CBC that while ME to WE boasts ofhaving given WE Charity $20 million in contributions since its 2009 founding,over the last decade, WE Charity has paid $11 million to ME to WE.

WE responded to this in a statement to Canadaland:

In the most extreme and, frankly, inaccurate, calculations, ifsomeone dismisses (i) removed all value from the purchase of ME

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and related charitable entities. There are three people in the ME to WE SocialEnterprise accounting team who work on ME to WE Social Enterprise.”

Last week, Canadaland revealed that WE mistakenly paid a portion of MargaretTrudeau’s speaking fees with funds from the charity instead of the for-profit.WE blamed an “error in billing/payment” that they say has since beenaddressed.

Lawyer Mark Blumberg, who specializes in Canadian charity law at BlumbergSegal LLP, tells Canadaland in an email that it’s not uncommon for organizationsto have a multiple-entity structure.

“However,” he cautions, “if an organization plans to have multiple corporateentities, and especially if one of them is a registered charity, it is vital that theorganization ensures that there is sufficient separation between the registeredcharity and other entities.”

WE has asserted that the distinction between WE Charity and ME to WE is clearlyset out on their websites and that each donor or customer is advised whichentity it is dealing with prior to any transaction.

“While some may think it is a good idea to have a seamless ‘one organization’approach with branding, governance, and operations, it will be a huge problemfrom a legal perspective in Canada, because the benefits of being a ‘registeredcharity’ do not apply to that ‘one organization,’ the resources of the registeredcharity can only be used for the purposes and activities of the registeredcharity, and there needs to be a clear separation/distinction between theregistered charity and the other, non-qualified donees.”

Blumberg explains that because of the many rules and restrictions governing theoperation of charities, especially when it comes to money and other assets, anorganization needs to ensure compliance so that they do not lose theirregistered charity status.

Blumberg cited a number of cases in recent years in which, he said, the CRA hasrevoked an organization’s charitable status “for improper relationships with anon-charity.”

Charity Intelligence’s Kate Bahen told the CBC that while ME to WE boasts ofhaving given WE Charity $20 million in contributions since its 2009 founding,over the last decade, WE Charity has paid $11 million to ME to WE.

WE responded to this in a statement to Canadaland:

In the most extreme and, frankly, inaccurate, calculations, ifsomeone dismisses (i) removed all value from the purchase of ME

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to WE services; (ii) removes all in-kind contributions from ME toWE, then WE Charity has still received $1.3-million more from MEto WE over the last five years.

Bahen said, “I think it’s very unique, this complex structure between WE and MEto WE, and I’m not aware of situations where we see the charity giving money tothe for-profit business.”

The two organizations are “fully separate and legally distinct entities,” WEstates.19

[Emphasis added]

This article suggests that, not only might the accounting departments be entangled, there isconfusion among the accounting departments for the two entities (if they are, in fact, separatedepartments) leading to, on at least one occasion, speaking fees that were supposed to be paidby the for-profit company were paid by the charity.

Subsection 230(2) of the ITA includes a requirement that a charity maintain sufficientinformation to enable the Minister to determine whether there are any grounds to revoke thecharity's registration.

The Federal Court of Appeal has determined in several cases that “if a charity's books andrecords are insufficient for the CRA to assess whether the charity is in compliance with itsobligations under the Act, this may be sufficient ground upon which to revoke the charity'scharitable status.”20

The Court in Ark Angel Foundation v Canada (National Revenue), 2019 FCA 21 found that evenwhere there is no issue with respect to the recording of revenue or expenditure in the books ofaccount, if the records did not demonstrate sufficient board oversight or internal controls, thiscould be an issue under subsection 230(2)(a).21

There has certainly been a lack of board oversight in the past several months. The chairs of boththe Canadian and U.S. boards of directors for the WE Charity resigned in the spring. The vastmajority of the other board members in the two countries have been replaced as well, and staffhave been laid off in response to the COVID-19 pandemic.22

19 Canadaland, “What’s The Deal With WE Charity’s Accounting Department?”https://www.canadalandshow.com/whats-the-deal-with-we-charitys-accounting-department/20 Ark Angel Foundation v Canada (National Revenue), 2019 FCA 21 at para 43 [Ark Angel]. See also HumaneSociety of Canada for the Protection of Animals and the Environment v Minister of National Revenue, 2015 FCA 178at paras 76-79, leave to appeal to SCC refused, 36688 (March 10, 2016) [2016 CarswellNat 601 (SCC); andOpportunities for the Disabled Foundation v. Minister of National Revenue, 2016 FCA 94 at paras 37-39.21 Ark Angel, at para 1022 CBC, “We Charity saw resignations, departures from senior ranks before landing government contract”,https://www.cbc.ca/news/politics/we-charity-pandemic-covid-coronavirus-trudeau-1.5635379

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to WE services; (ii) removes all in-kind contributions from ME toWE, then WE Charity has still received $1.3-million more from MEto WE over the last five years.

Bahen said, “I think it’s very unique, this complex structure between WE and MEto WE, and I’m not aware of situations where we see the charity giving money tothe for-profit business.”

The two organizations are “fully separate and legally distinct entities,” WEstates.19

[Emphasis added]

This article suggests that, not only might the accounting departments be entangled, there isconfusion among the accounting departments for the two entities (if they are, in fact, separatedepartments) leading to, on at least one occasion, speaking fees that were supposed to be paidby the for-profit company were paid by the charity.

Subsection 230(2) of the ITA includes a requirement that a charity maintain sufficientinformation to enable the Minister to determine whether there are any grounds to revoke thecharity's registration.

The Federal Court of Appeal has determined in several cases that “if a charity's books andrecords are insufficient for the CRA to assess whether the charity is in compliance with itsobligations under the Act, this may be sufficient ground upon which to revoke the charity'scharitable status.”20

The Court in Ark Angel Foundation v Canada (National Revenue), 2019 FCA 21 found that evenwhere there is no issue with respect to the recording of revenue or expenditure in the books ofaccount, if the records did not demonstrate sufficient board oversight or internal controls, thiscould be an issue under subsection 230(2)(a).21

There has certainly been a lack of board oversight in the past several months. The chairs of boththe Canadian and U.S. boards of directors for the WE Charity resigned in the spring. The vastmajority of the other board members in the two countries have been replaced as well, and staffhave been laid off in response to the COVID-19 pandemic.22

19 Canadaland, “What’s The Deal With WE Charity’s Accounting Department?”https://www.canadalandshow.com/whats-the-deal-with-we-charitys-accounting-department/20 Ark Angel Foundation v Canada (National Revenue), 2019 FCA 21 at para 43 [Ark Angel]. See also HumaneSociety of Canada for the Protection of Animals and the Environment v Minister of National Revenue, 2015 FCA 178at paras 76-79, leave to appeal to SCC refused, 36688 (March 10, 2016) [2016 CarswellNat 601 (SCC); andOpportunities for the Disabled Foundation v. Minister of National Revenue, 2016 FCA 94 at paras 37-39.21 Ark Angel, at para 1022 CBC, “We Charity saw resignations, departures from senior ranks before landing government contract”,https://www.cbc.ca/news/politics/we-charity-pandemic-covid-coronavirus-trudeau-1.5635379

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This is something that Behan and CI flagged as a “gap in governance and oversight at thecharity.”23

We request that the CRA consider whether WE Charity’s books and records comply withsubsection 230(2) of the ITA and ensure there is sufficient board oversight or internal controlsrelated to WE Charity’s accounting.

3. NON-CHARITABLE ACTIVITIES OF WE CHARITY

WE Charity and, in fact, the entire WE organization has seen tremendous growth over the last10 years and one of its most significant areas of grown has been in the real estate market.

The following National Post article outlines the real estate that WE Charity and other WEorganizations hold and raises questions regarding the extent of the land and buildings held bythe charity and whether accumulating assets to the extent done so by WE Charity is properly a“charitable activity”.

Property brothers: Kielburgers facing scrutiny over WE organization's $50Mreal estate empire

July 20,2020

The WE organization at the centre of a major federal government controversywas founded 25 years ago by the Kielburger brothers, Marc and Craig. On thesurface, it appears that the charity — one of the largest internationaldevelopment organizations in the country — successfully built a global initiativethat quickly began attracting millions in donations and support from topcelebrities and politicians, including Prime Minister Justin Trudeau and FinanceMinister Bill Morneau.

But both Trudeau and Morneau are now facing questions about awarding a$900-million student volunteer contract to WE’s charity arm, despite beinglinked through family to WE. While the contract was cancelled whenuncomfortable questions were raised about political conflicts of interest amongsenior Liberals, it has provoked interest not just in the government’s decision,but in the WE organization as well, given Trudeau’s claims that WE was the onlyorganization capable of fulfilling what he intended for the contract to achieve.

The non-profit entity of WE — WE Charity — has grown exponentially over thelast 10 years with its annual revenue more than doubling over that period oftime. But one of its most significant areas of growth of the entire WEorganization has been in the real estate market.

23 Canadaland, “WE Charity Move Millions To Private Kielburger Company”,https://www.canadalandshow.com/we-charity-was-in-financial-trouble-before-covid-says-charity-watchdog/

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This is something that Behan and CI flagged as a “gap in governance and oversight at thecharity.”23

We request that the CRA consider whether WE Charity’s books and records comply withsubsection 230(2) of the ITA and ensure there is sufficient board oversight or internal controlsrelated to WE Charity’s accounting.

3. NON-CHARITABLE ACTIVITIES OF WE CHARITY

WE Charity and, in fact, the entire WE organization has seen tremendous growth over the last10 years and one of its most significant areas of grown has been in the real estate market.

The following National Post article outlines the real estate that WE Charity and other WEorganizations hold and raises questions regarding the extent of the land and buildings held bythe charity and whether accumulating assets to the extent done so by WE Charity is properly a“charitable activity”.

Property brothers: Kielburgers facing scrutiny over WE organization's $50Mreal estate empire

July 20,2020

The WE organization at the centre of a major federal government controversywas founded 25 years ago by the Kielburger brothers, Marc and Craig. On thesurface, it appears that the charity — one of the largest internationaldevelopment organizations in the country — successfully built a global initiativethat quickly began attracting millions in donations and support from topcelebrities and politicians, including Prime Minister Justin Trudeau and FinanceMinister Bill Morneau.

But both Trudeau and Morneau are now facing questions about awarding a$900-million student volunteer contract to WE’s charity arm, despite beinglinked through family to WE. While the contract was cancelled whenuncomfortable questions were raised about political conflicts of interest amongsenior Liberals, it has provoked interest not just in the government’s decision,but in the WE organization as well, given Trudeau’s claims that WE was the onlyorganization capable of fulfilling what he intended for the contract to achieve.

The non-profit entity of WE — WE Charity — has grown exponentially over thelast 10 years with its annual revenue more than doubling over that period oftime. But one of its most significant areas of growth of the entire WEorganization has been in the real estate market.

23 Canadaland, “WE Charity Move Millions To Private Kielburger Company”,https://www.canadalandshow.com/we-charity-was-in-financial-trouble-before-covid-says-charity-watchdog/

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Over the last five years, the WE international development empire hascumulatively amassed over $50 million in real estate spread across more than10 different commercial properties in Toronto’s east end, purchase prices fromproperty records indicate.

Most of that value comes from the WE Global Learning Centre, the flagshipheadquarters of WE Charity, a sprawling 40,000 square foot restored heritagebuilding at the intersection of Queen Street and Parliament Street that theorganization’s latest financial statements state is worth more than $30 million.

But for the charity’s founding family the real estate holdings extend beyond WECharity. ME to WE Social Enterprises Inc. — the for-profit entity under the WEumbrella, founded in part to fund the operations of WE Charity — and ME to WEFoundation has itself accumulated roughly $12 million worth of commercialproperty in the same Toronto neighbourhood of Cabbagetown, according toproperty records and answers to the Post’s queries provided by WE.

The entities effectively own an entire block of row houses on Queen Street East,adjacent to and opposite the WE Global Learning Centre.

The transactions associated with WE entities acquiring various pieces of propertyare sometimes complex. In one instance, a numbered company registered toFred and Theresa Kielburger, the parents of Marc and Craig, sold a buildingdirectly to the ME to WE Foundation for $2.6 million.

As of August 31, 2019, WE Charity had real estate holdings in the form of landand buildings worth $43 million, audited financial statements show. A decadeago, by contrast, the organization owned just $6 million worth of land andbuildings.

Part of a lengthy statement provided to the National Post by WE Charityconfirmed that all of its real estate is currently located “within a single blocknear Regent Park/Moss Park” in Toronto. The charity also owns a buildingadjacent to the WE Global Learning Centre which it says is used for storage,and a three-storey townhouse-style space for “mixed use”, and two other“smaller properties” that are all part of a “redevelopment project” to createfree co-working space to other non-profits in the city.

The statement said the money to buy property came from donors who made“targeted donations” .

“One hundred percent of WE Charity property purchases are fully funded bytargeted donations from long-standing supporters of the charity,” said thestatement. “No restricted program funds, no monies from youth fundraising, norfunds that would have otherwise been used for youth-service programs have

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Over the last five years, the WE international development empire hascumulatively amassed over $50 million in real estate spread across more than10 different commercial properties in Toronto’s east end, purchase prices fromproperty records indicate.

Most of that value comes from the WE Global Learning Centre, the flagshipheadquarters of WE Charity, a sprawling 40,000 square foot restored heritagebuilding at the intersection of Queen Street and Parliament Street that theorganization’s latest financial statements state is worth more than $30 million.

But for the charity’s founding family the real estate holdings extend beyond WECharity. ME to WE Social Enterprises Inc. — the for-profit entity under the WEumbrella, founded in part to fund the operations of WE Charity — and ME to WEFoundation has itself accumulated roughly $12 million worth of commercialproperty in the same Toronto neighbourhood of Cabbagetown, according toproperty records and answers to the Post’s queries provided by WE.

The entities effectively own an entire block of row houses on Queen Street East,adjacent to and opposite the WE Global Learning Centre.

The transactions associated with WE entities acquiring various pieces of propertyare sometimes complex. In one instance, a numbered company registered toFred and Theresa Kielburger, the parents of Marc and Craig, sold a buildingdirectly to the ME to WE Foundation for $2.6 million.

As of August 31, 2019, WE Charity had real estate holdings in the form of landand buildings worth $43 million, audited financial statements show. A decadeago, by contrast, the organization owned just $6 million worth of land andbuildings.

Part of a lengthy statement provided to the National Post by WE Charityconfirmed that all of its real estate is currently located “within a single blocknear Regent Park/Moss Park” in Toronto. The charity also owns a buildingadjacent to the WE Global Learning Centre which it says is used for storage,and a three-storey townhouse-style space for “mixed use”, and two other“smaller properties” that are all part of a “redevelopment project” to createfree co-working space to other non-profits in the city.

The statement said the money to buy property came from donors who made“targeted donations” .

“One hundred percent of WE Charity property purchases are fully funded bytargeted donations from long-standing supporters of the charity,” said thestatement. “No restricted program funds, no monies from youth fundraising, norfunds that would have otherwise been used for youth-service programs have

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ever been used to purchase property for WE Charity or any other WE relatedentity,” the statement added.

In the Regent Park/Moss Park area, WE are high profile.

“The WE folks run this area. There are always young girls and boys wearing WE t-shirts going in and out, stopping for coffee, getting off the streetcar,” said a shopowner in the area, who declined to be named. “They are gentrifying theneighbourhood. I’m not sure if that’s a good thing or a bad thing,” she added.

Questions around the operations of WE Charity and ME to WE began to swirltwo weeks ago, as it emerged that the Liberal government handed out a no-bidcontract worth up to $43.5 million to WE Charity to manage a $912 millionstudent grant program. This while family members of the prime minister hadreceived speaking fees for participating in WE events and a daughter of thefinance minister works for WE.

Last week, WE abruptly released a statement announcing it would be cancellingone of its biggest claims to fame, the celebrity-infused WE Day, in addition toundertaking “governance and structural changes” to “return to its roots”.

One big question mark in understanding the overall operations of the WEorganization is deciphering exactly how much revenue its for-profit entity ME toWE generates, and what assets and liabilities, including real estate, the entity hasto its name. Because ME to WE is a private company it is not obligated to makeits financials public. The Kielburger brothers, according to WE, have a“controlling interest” in the company and are paid roughly $125,000 eachannually in salary.

The relationship between ME to WE and WE Charity is simply that the formerentity gives a minimum of 50 per cent and up to 90 per cent of its “annualprofits” to WE Charity.

“We have no idea whether ME to WE makes $2 million or $20 million. Whether itowns $12 million in real estate or $100 million in real estate through companiesor entities associated with it. Whether the Kielburger brothers have a 51 percent controlling interest or a 90 per cent controlling interest,” said one charitylawyer at a large Bay Street firm the Post spoke to on condition of anonymity,because he was not authorized to publicly comment on WE.

WE confirmed the Kielburgers’ salary, but did not provide additional informationon what their controlling stake was.

WE did not respond to a query on how much in annual revenue ME to WEmakes. Instead, the organization provided the Post with a document from

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ever been used to purchase property for WE Charity or any other WE relatedentity,” the statement added.

In the Regent Park/Moss Park area, WE are high profile.

“The WE folks run this area. There are always young girls and boys wearing WE t-shirts going in and out, stopping for coffee, getting off the streetcar,” said a shopowner in the area, who declined to be named. “They are gentrifying theneighbourhood. I’m not sure if that’s a good thing or a bad thing,” she added.

Questions around the operations of WE Charity and ME to WE began to swirltwo weeks ago, as it emerged that the Liberal government handed out a no-bidcontract worth up to $43.5 million to WE Charity to manage a $912 millionstudent grant program. This while family members of the prime minister hadreceived speaking fees for participating in WE events and a daughter of thefinance minister works for WE.

Last week, WE abruptly released a statement announcing it would be cancellingone of its biggest claims to fame, the celebrity-infused WE Day, in addition toundertaking “governance and structural changes” to “return to its roots”.

One big question mark in understanding the overall operations of the WEorganization is deciphering exactly how much revenue its for-profit entity ME toWE generates, and what assets and liabilities, including real estate, the entity hasto its name. Because ME to WE is a private company it is not obligated to makeits financials public. The Kielburger brothers, according to WE, have a“controlling interest” in the company and are paid roughly $125,000 eachannually in salary.

The relationship between ME to WE and WE Charity is simply that the formerentity gives a minimum of 50 per cent and up to 90 per cent of its “annualprofits” to WE Charity.

“We have no idea whether ME to WE makes $2 million or $20 million. Whether itowns $12 million in real estate or $100 million in real estate through companiesor entities associated with it. Whether the Kielburger brothers have a 51 percent controlling interest or a 90 per cent controlling interest,” said one charitylawyer at a large Bay Street firm the Post spoke to on condition of anonymity,because he was not authorized to publicly comment on WE.

WE confirmed the Kielburgers’ salary, but did not provide additional informationon what their controlling stake was.

WE did not respond to a query on how much in annual revenue ME to WEmakes. Instead, the organization provided the Post with a document from

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December 2018 showing the amount in donations made to WE Charity between2014 and 2018. Each year, ME to WE gave WE Charity 90 per cent of its after taxnet income. For example, in 2018, that amount was $2.1 million.

After tax net income is essentially profit made by a company after all taxes havebeen paid, and earnings deducted from revenue.

“Profits tell you very little about how a company is doing when you don’t knowtheir revenue or expenses,” said the Bay Street charity lawyer.

WE’s non-profit entity — WE Charity — operates like a traditional non-profitorganization, generating revenue through domestic and internationaldonations, in-kind contributions, and government grants. But what isparticularly unique about its balance sheet, according to two lawyersspecializing in charity law, is the extent to which its investments and assetholdings are dominated by real estate.

“I will say that it is not very normal for a charity to have most of your networth tied up in real estate. Again, there’s nothing wrong with a charityowning its own property, as long as they are using it for charitable activities orrelated business activities, but your investments have to be prudent. It is notoverly common for a charity to put most of its money in one kind ofinvestment,” said Mark Blumberg, charity lawyer and partner at BlumbergSegal LLP.

As of Aug. 31, 2019, WE Charity had $62.5 million in assets — $43 million ofthat was in the form of land and buildings, and approximately $9 million was inmarketable securities which are investments that can be easily liquidated. WECharity’s revenue for the 2019 fiscal year was $65.9 million.

Some of the biggest names in international development own either no realestate, or significantly less than WE Charity, Canada Revenue Agency filingsshow.

World Vision Canada, for example, which spent $362 million in charitable workoutside Canada, owns roughly $18 million in land and buildings. PlanInternational Canada Inc., owns no real estate. WE Charity, by contrast, spent$19 million in charitable work outside Canada in 2018, and owns more thandouble that amount in real estate.

WE’s statement noted that other Canadian non-profits and social purposemission organizations own substantially more real estate than WE Charity andME to WE combined citing, for example, The Salvation Army of Canada($98,983,222 of real estate).

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December 2018 showing the amount in donations made to WE Charity between2014 and 2018. Each year, ME to WE gave WE Charity 90 per cent of its after taxnet income. For example, in 2018, that amount was $2.1 million.

After tax net income is essentially profit made by a company after all taxes havebeen paid, and earnings deducted from revenue.

“Profits tell you very little about how a company is doing when you don’t knowtheir revenue or expenses,” said the Bay Street charity lawyer.

WE’s non-profit entity — WE Charity — operates like a traditional non-profitorganization, generating revenue through domestic and internationaldonations, in-kind contributions, and government grants. But what isparticularly unique about its balance sheet, according to two lawyersspecializing in charity law, is the extent to which its investments and assetholdings are dominated by real estate.

“I will say that it is not very normal for a charity to have most of your networth tied up in real estate. Again, there’s nothing wrong with a charityowning its own property, as long as they are using it for charitable activities orrelated business activities, but your investments have to be prudent. It is notoverly common for a charity to put most of its money in one kind ofinvestment,” said Mark Blumberg, charity lawyer and partner at BlumbergSegal LLP.

As of Aug. 31, 2019, WE Charity had $62.5 million in assets — $43 million ofthat was in the form of land and buildings, and approximately $9 million was inmarketable securities which are investments that can be easily liquidated. WECharity’s revenue for the 2019 fiscal year was $65.9 million.

Some of the biggest names in international development own either no realestate, or significantly less than WE Charity, Canada Revenue Agency filingsshow.

World Vision Canada, for example, which spent $362 million in charitable workoutside Canada, owns roughly $18 million in land and buildings. PlanInternational Canada Inc., owns no real estate. WE Charity, by contrast, spent$19 million in charitable work outside Canada in 2018, and owns more thandouble that amount in real estate.

WE’s statement noted that other Canadian non-profits and social purposemission organizations own substantially more real estate than WE Charity andME to WE combined citing, for example, The Salvation Army of Canada($98,983,222 of real estate).

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“If you’re a $3 billion charity, you might have some flexibility in what you can dowith investing. But if you only make say $1 million in a year, you have to becareful to not put most of that one million in one kind of asset,” Blumberg said.

But the decision to centre most of the charity’s investments around real estate isa deliberate one, according to information provided to the Post by WE. Theorganization says that it has avoided substantial office leasing or rental costs bypurchasing real estate, and estimates that the net overall savings of owning itsoffice space versus leasing it comes to $1.2 million annually.

“The smart use of real estate for social impact is central to WE Charity’s modeland is essential to the delivery of high quality and accessible programming whileallowing the charity to operate efficiently and effectively,” the statement said.

Charities are required by Canadian law to have a substantial reserve fund ofassets, to ensure the sustainability of their operations in any kind of unforeseencircumstance. WE Charity has opted for its reserve fund to be in the form of realestate which it says provides approximately “eight to nine months of financialsecurity”.

The lawyers the Post spoke to are of the opinion that this kind of set-up is moretypical for religious institutions like the Catholic Church, or large hospitals thatrequire massive premises, rather than an international developmentorganization.

The Kielberger brothers have long had an indirect relationship to the real estatesector, through their parents, both of whom, in addition to being schoolteachers, were in the business of buying, renovating and selling homes,according to publicly available information on WE’s website.

Property records show that ME to WE Asset Holdings Inc. — which WE Charityand ME to WE chief financial officer Victor Li says is a “non-operating entitywhich holds ME to WE’s assets, including its office in Toronto”— owns threepieces of property on Queen Street East, while ME to WE Foundation, ownsanother three pieces of property on the same street, one of which is used as astorage unit.

In most cases, the property was purchased at an average value of between $2million and $3 million, and then a mortgage for a lesser amount was taken outagainst the property. ME to WE officially has an office at 145 Berkeley Street(also addressed at 319 Queen Street East), and WE says that some of the otherproperties are also used as office space.

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“If you’re a $3 billion charity, you might have some flexibility in what you can dowith investing. But if you only make say $1 million in a year, you have to becareful to not put most of that one million in one kind of asset,” Blumberg said.

But the decision to centre most of the charity’s investments around real estate isa deliberate one, according to information provided to the Post by WE. Theorganization says that it has avoided substantial office leasing or rental costs bypurchasing real estate, and estimates that the net overall savings of owning itsoffice space versus leasing it comes to $1.2 million annually.

“The smart use of real estate for social impact is central to WE Charity’s modeland is essential to the delivery of high quality and accessible programming whileallowing the charity to operate efficiently and effectively,” the statement said.

Charities are required by Canadian law to have a substantial reserve fund ofassets, to ensure the sustainability of their operations in any kind of unforeseencircumstance. WE Charity has opted for its reserve fund to be in the form of realestate which it says provides approximately “eight to nine months of financialsecurity”.

The lawyers the Post spoke to are of the opinion that this kind of set-up is moretypical for religious institutions like the Catholic Church, or large hospitals thatrequire massive premises, rather than an international developmentorganization.

The Kielberger brothers have long had an indirect relationship to the real estatesector, through their parents, both of whom, in addition to being schoolteachers, were in the business of buying, renovating and selling homes,according to publicly available information on WE’s website.

Property records show that ME to WE Asset Holdings Inc. — which WE Charityand ME to WE chief financial officer Victor Li says is a “non-operating entitywhich holds ME to WE’s assets, including its office in Toronto”— owns threepieces of property on Queen Street East, while ME to WE Foundation, ownsanother three pieces of property on the same street, one of which is used as astorage unit.

In most cases, the property was purchased at an average value of between $2million and $3 million, and then a mortgage for a lesser amount was taken outagainst the property. ME to WE officially has an office at 145 Berkeley Street(also addressed at 319 Queen Street East), and WE says that some of the otherproperties are also used as office space.

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The total value of all of these holdings in terms of purchase price — an amountconfirmed by WE — is $11.9 million, but it is still unclear, despite directquestions to WE, if they represent all of the real estate holdings of ME to WE.

One transaction in particular stands out.

On January 25, 2019, a numbered corporation registered to Fred and TheresaKielburger sold a property at 329 Queen Street East to ME to WE Foundation for$2.6 million.

Months after the transaction was completed, ME to WE Foundation took out amortgage on the property for $800,000, property records show.

WE confirmed to the Post that the initial purchase of 329 Queen Street East wasdone by Fred and Theresa Kielburger at the request of the ME to WE Foundation,since the “organization did not have sufficient funds at the time”. Months later,Fred and Theresa Kielburger sold the property to the Foundation at the sameprice at which it was purchased ($2.6 million), and covered the closing costs onbehalf of the Foundation.

“Fred and Theresa Kielburger lost $130,000 on the transaction, as they kindlyelected to cover all related costs, including land transfer taxes,” WE said.

This is not the first time the Kielburger parents have had a relationship withsome part of the WE organization. For 14 years, they let Free the Children, as itwas then known, use two buildings they owned in the Cabbagetownneighbourhood, rent-free, before signing a 10-year lease with the City of Torontorecently to turn one of the two buildings into a women’s shelter.

In addition, back in 2009, they offered the use of 212 Carlton Street — anotherbuilding they owned — rent-free to ME to WE Social Enterprises Inc. In 2011, abuilding nearby, 227 Carlton Street became available to purchase and theKielburger parents bought that building and again, provided it rent-free to ME toWE. It is unclear whether ME to WE still owns these buildings in some way.

An independent assessment commissioned by WE and conducted last May byformer judge Stephen Goudge concluded that there was nothing improper aboutFred and Theresa forming a business relationship with WE Charity by giving themuse of their premises for free. WE’s statement said the parents effectively madean estimated in-kind donation of $5.3 million by providing the premises rent freefor ten years.

Yet another statement by Goudge in November 2019 commented on the 329Queen Street East transaction, and again concluded that there was nothingimproper about the transaction.

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The total value of all of these holdings in terms of purchase price — an amountconfirmed by WE — is $11.9 million, but it is still unclear, despite directquestions to WE, if they represent all of the real estate holdings of ME to WE.

One transaction in particular stands out.

On January 25, 2019, a numbered corporation registered to Fred and TheresaKielburger sold a property at 329 Queen Street East to ME to WE Foundation for$2.6 million.

Months after the transaction was completed, ME to WE Foundation took out amortgage on the property for $800,000, property records show.

WE confirmed to the Post that the initial purchase of 329 Queen Street East wasdone by Fred and Theresa Kielburger at the request of the ME to WE Foundation,since the “organization did not have sufficient funds at the time”. Months later,Fred and Theresa Kielburger sold the property to the Foundation at the sameprice at which it was purchased ($2.6 million), and covered the closing costs onbehalf of the Foundation.

“Fred and Theresa Kielburger lost $130,000 on the transaction, as they kindlyelected to cover all related costs, including land transfer taxes,” WE said.

This is not the first time the Kielburger parents have had a relationship withsome part of the WE organization. For 14 years, they let Free the Children, as itwas then known, use two buildings they owned in the Cabbagetownneighbourhood, rent-free, before signing a 10-year lease with the City of Torontorecently to turn one of the two buildings into a women’s shelter.

In addition, back in 2009, they offered the use of 212 Carlton Street — anotherbuilding they owned — rent-free to ME to WE Social Enterprises Inc. In 2011, abuilding nearby, 227 Carlton Street became available to purchase and theKielburger parents bought that building and again, provided it rent-free to ME toWE. It is unclear whether ME to WE still owns these buildings in some way.

An independent assessment commissioned by WE and conducted last May byformer judge Stephen Goudge concluded that there was nothing improper aboutFred and Theresa forming a business relationship with WE Charity by giving themuse of their premises for free. WE’s statement said the parents effectively madean estimated in-kind donation of $5.3 million by providing the premises rent freefor ten years.

Yet another statement by Goudge in November 2019 commented on the 329Queen Street East transaction, and again concluded that there was nothingimproper about the transaction.

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The Bay Street lawyer who declined to be named said that there is nothingwrong with a numbered corporation registered to the Kielburger parents sellingproperty to the ME to WE Foundation, but transactions with related parties canraise questions. “The problem with entering into a transaction like that is it couldresult in people wondering about the appropriateness of it. Foundations andcharities are often subject to scrutiny. This kind of transaction is not something Iwould recommend.”

In its response to the Post, WE emphasized numerous times that all of WECharity’s investments in real estate come from targeted donations — the GlobalLearning Centre, for instance was funded by Hartley Richardson, president andCEO of James Richardson and Sons, a family-owned corporation from Winnipeginvolved primarily in agriculture, the Richardson Foundation and David Aisenstat,president and CEO of the Keg Steakhouse and Bar.

The organization also got Goudge, the former judge, to assess its real estatepolicy and concluded that “WE Charity’s policy of owning real estate hasprovided a financial and organisational benefit and supports the work of thecharity.”

However, the policy was questioned by one of the lawyers the Post spoke to.

“Ultimately, when you think about any charity raising money, you always haveto ask: how are they using that money? Do they need that much money?” hesaid.

“If a charity keeps fundraising to accumulate assets, whether it is in real estate,or other investments, either they need to spend more on charitable activitiesor just stop fundraising.”24

[Emphasis added]

We request that the CRA investigate WE Charity’s real estate acquisitions to determine whethersuch acquisitions violate the ITA. The forgoing suggests that all of WE Charity’s resources arenot being devoted to “charitable activities carried on by the organization itself” as acquisitionsof real estate appear excessive. Therefore, WE Charity may not be in compliance with section149(1) of the ITA. This would mean it is not in compliance with the requirements for itsregistration and may allow the Minister to revoke its registration pursuant to sections 149.1(2)and 168(1).

24 National Post, “Property brothers: Kielburgers facing scrutiny over WE organization's $50M real estate empire,”July 20, 2020, https://nationalpost.com/news/property-brothers-kielburgers-facing-scrutiny-over-we-organizations-50m-real-estate-empire

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The Bay Street lawyer who declined to be named said that there is nothingwrong with a numbered corporation registered to the Kielburger parents sellingproperty to the ME to WE Foundation, but transactions with related parties canraise questions. “The problem with entering into a transaction like that is it couldresult in people wondering about the appropriateness of it. Foundations andcharities are often subject to scrutiny. This kind of transaction is not something Iwould recommend.”

In its response to the Post, WE emphasized numerous times that all of WECharity’s investments in real estate come from targeted donations — the GlobalLearning Centre, for instance was funded by Hartley Richardson, president andCEO of James Richardson and Sons, a family-owned corporation from Winnipeginvolved primarily in agriculture, the Richardson Foundation and David Aisenstat,president and CEO of the Keg Steakhouse and Bar.

The organization also got Goudge, the former judge, to assess its real estatepolicy and concluded that “WE Charity’s policy of owning real estate hasprovided a financial and organisational benefit and supports the work of thecharity.”

However, the policy was questioned by one of the lawyers the Post spoke to.

“Ultimately, when you think about any charity raising money, you always haveto ask: how are they using that money? Do they need that much money?” hesaid.

“If a charity keeps fundraising to accumulate assets, whether it is in real estate,or other investments, either they need to spend more on charitable activitiesor just stop fundraising.”24

[Emphasis added]

We request that the CRA investigate WE Charity’s real estate acquisitions to determine whethersuch acquisitions violate the ITA. The forgoing suggests that all of WE Charity’s resources arenot being devoted to “charitable activities carried on by the organization itself” as acquisitionsof real estate appear excessive. Therefore, WE Charity may not be in compliance with section149(1) of the ITA. This would mean it is not in compliance with the requirements for itsregistration and may allow the Minister to revoke its registration pursuant to sections 149.1(2)and 168(1).

24 National Post, “Property brothers: Kielburgers facing scrutiny over WE organization's $50M real estate empire,”July 20, 2020, https://nationalpost.com/news/property-brothers-kielburgers-facing-scrutiny-over-we-organizations-50m-real-estate-empire

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4. POLITICAL ACTIVITIES OF WE CHARITY

Lastly, WE Charity has, on several occasions, demonstrated its support for Prime Minister JustinTrudeau and the Liberal government including specific Liberal Cabinet Ministers.

Section 149.1(6.2) provides that an organization that devotes any part of its resources to thedirect or indirect support of, or opposition to, any political party or candidate for public officeshall not be considered to be constituted and operated exclusively for charitable purposes.

In 2017, WE Charity released a video that appears to promote Prime Minister Trudeau and hisLiberal government.

The 30-second advertisement, entitled “WE are Canada,” and devoted exclusively to Trudeau,appears to be linked to the Canada 150 celebrations and shows stylized silhouettes of Trudeauacross backdrops of mountains and farmer’s fields, while Trudeau speaks about young peopleand his intentions to work hard.

The video can be seen here: https://vimeo.com/223164192

The video is a campaign-style advertisement that clearly is meant to (and does) display Trudeauin a positive, inspirational and accessible manner and, as a result, directly supports both himand his government.

Furthermore, several tweets from the verified WE account (@WEMovement) demonstrate thecharity’s support for Trudeau, his government and members of the Liberal Cabinet including thefollowing:

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4. POLITICAL ACTIVITIES OF WE CHARITY

Lastly, WE Charity has, on several occasions, demonstrated its support for Prime Minister JustinTrudeau and the Liberal government including specific Liberal Cabinet Ministers.

Section 149.1(6.2) provides that an organization that devotes any part of its resources to thedirect or indirect support of, or opposition to, any political party or candidate for public officeshall not be considered to be constituted and operated exclusively for charitable purposes.

In 2017, WE Charity released a video that appears to promote Prime Minister Trudeau and hisLiberal government.

The 30-second advertisement, entitled “WE are Canada,” and devoted exclusively to Trudeau,appears to be linked to the Canada 150 celebrations and shows stylized silhouettes of Trudeauacross backdrops of mountains and farmer’s fields, while Trudeau speaks about young peopleand his intentions to work hard.

The video can be seen here: https://vimeo.com/223164192

The video is a campaign-style advertisement that clearly is meant to (and does) display Trudeauin a positive, inspirational and accessible manner and, as a result, directly supports both himand his government.

Furthermore, several tweets from the verified WE account (@WEMovement) demonstrate thecharity’s support for Trudeau, his government and members of the Liberal Cabinet including thefollowing:

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In 2017, ahead of Canada day and the country’s 150th anniversary of Confederation, the charityallowed Trudeau to “take over” its Twitter account and address its hundreds of thousands offollowers.

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In 2017, ahead of Canada day and the country’s 150th anniversary of Confederation, the charityallowed Trudeau to “take over” its Twitter account and address its hundreds of thousands offollowers.

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It is submitted, that individually, and in the aggregate, the above tweets constitute support byWE Charity (both directly and indirectly) of the Liberal Party of Canada, the Liberal Cabinet, andthe Prime Minister, himself.

Therefore, as a result of the aforementioned video and tweets, and pursuant to section149.1(6.2) of the ITA, WE Charity cannot be considered to be constituted and operatedexclusively for charitable purposes.

CONCLUSION

We ask that a review of the charitable status of WE Charity be undertaken. There are reasons tobelieve that WE Charity may be improperly funneling money to ME to WE, which is not aqualified donee under the ITA. Furthermore, WE Charity’s accounting may be inappropriatelyintertwined with the for-profit organization and may be lacking adequate board oversight.Moreover, its “unusual” and, arguably, extreme acquisition of significant real estate assetssuggests that it is carrying on a business that is not a related business of that charity. Lastly,there is evidence that WE Charity has supported Trudeau, his Cabinet and the Liberal Party ofCanada. All of these issues suggest that WE Charity is in contravention of the ITA and should,therefore, have its registration as a charitable organization revoked.

Yours truly,

Jensen Shawa Solomon Duguid Hawkes LLP

ANDREA MACLEAN

ARM:jjs

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It is submitted, that individually, and in the aggregate, the above tweets constitute support byWE Charity (both directly and indirectly) of the Liberal Party of Canada, the Liberal Cabinet, andthe Prime Minister, himself.

Therefore, as a result of the aforementioned video and tweets, and pursuant to section149.1(6.2) of the ITA, WE Charity cannot be considered to be constituted and operatedexclusively for charitable purposes.

CONCLUSION

We ask that a review of the charitable status of WE Charity be undertaken. There are reasons tobelieve that WE Charity may be improperly funneling money to ME to WE, which is not aqualified donee under the ITA. Furthermore, WE Charity’s accounting may be inappropriatelyintertwined with the for-profit organization and may be lacking adequate board oversight.Moreover, its “unusual” and, arguably, extreme acquisition of significant real estate assetssuggests that it is carrying on a business that is not a related business of that charity. Lastly,there is evidence that WE Charity has supported Trudeau, his Cabinet and the Liberal Party ofCanada. All of these issues suggest that WE Charity is in contravention of the ITA and should,therefore, have its registration as a charitable organization revoked.

Yours truly,

Jensen Shawa Solomon Duguid Hawkes LLP

ANDREA MACLEAN

ARM:jjs

Documents

Audit We CRA Letter (1) - d3n8a8pro7vhmx.cloudfront.net