As the WE scandal goes from bad to worse, even WE founders Craig and Marc Kielburger have admitted the need for serious change. As WE’s corporate sponsors flee for the exit, the drumbeat of demands for change intensifies. WE has a big hill to climb.
Having spent a few years in corporate governance and communications myself, I know how stressful such situations can be. In such times, senior managers need clear advice and easy-to-understand templates for both reforms and communication with stakeholders. In that spirit, may I propose that WE’s senior leadership adopt the motto of “simplicity, clarity, accreditation and scrutiny”?
Simplicity in corporate structures is a generally a good thing. If things are simple, then everyone – managers, board members, employees, volunteers, owners, regulators, and donors – can see what is going on and who is responsible. Intentionally or unintentionally, complicated corporate structures make it hard to do that.
Charity Intelligence Canada describes WE’s organizational structure as “complex” and “unusual”; Vanmala Subramanian of the Financial Post calls it “extremely complicated”. The core entities are WE Charity and ME to WE Social Enterprises Inc. But that is only the beginning. Then there is the ME to WE Foundation, the WEllbeing Foundation (aka WE Well-being Foundation), and the WE Charity Foundation of Canada which it turns out was to be the real recipient of the $912 contribution agreement to run the Canada Student Service Grant (CSSG), though had it had “never previously operated nor held any funds for any purpose, and was created in part to manage legal liability”. The WEllbeing and WE Charity Foundations share the same Toronto address (339 Queen Street East) as WE Charity, while ME to WE Foundation and ME to WE Social Enterprises also share a common address, 145 Berkley Street. And then there is the imagine1day charity, housed at WE Charity’s Vancouver office. Furthermore, according to Vice News, “ME to WE… is actually owned by a holding company, and it, in turn, owns five subsidiaries that run various aspects of its business”. Simple this is not.
Clarity is another virtue in healthy organizations that seek to promote the public good. WE’s own communications are a case in point. Press releases are usually issued on a letterhead that simply says “WE”, without specifying which WE organization is talking, though the Kielburger brothers sometimes insist on how separate and distinct various WE entities are. WE has publicly criticized analysts who get minor details of this complicated corporate structure wrong. For instance, WE insists that the WE Charity Foundation “does not hold, nor has it ever held real estate”, while omitting to mention that the ME to WE Foundation’s 2018 audited financial statements said that it owned over $1.6 million worth of “land” and “buildings”.
WE has admitted that they “need to do a better job of explaining to the wider public the idea of a social enterprise… (and) to ensure that ME to WE Social Enterprise operations are clearer and simpler”. But to a student of corporate governance, it seems odd that this announcement about the ME to WE Social Enterprises Inc. appears on the website of the WE Charity and is labelled as a “Message from WE Charity”. That “Message from WE Charity” is not signed by either the Chair of its Board of Directors, or by its Executive Director, as would be expected in most organizations. Nor did the announcement come from ME to WE’s Executive Director. It came instead from WE Charity’s “Founders” and “Ambassadors”, Craig and Marc Kielburger.
This lack of clarity about who does what in WE only deepens when one considers that WE Charity and ME to WE Social Enterprise share the same Chief Financial Officer. CFOs have a fiduciary duty to the organization that employs them. What then happens if the interests of the charity and the social enterprise diverge? Where do the CFO’s loyalties lie? ME to WE assures us that the “unique partnership” between WE Charity and ME to WE is all above board, though this researcher could not find any rulebook or guidelines on either organization’s website for dealing with such a conflict of interest. Perhaps a search button on the website might help? I could not find that, either. In both its governance and in its corporate communications, WE is not clear about who does what.
A lot of this unusual practice might be cleared up if all WE charitable entities sought accreditation of its governance, perhaps Imagine Canada’s Standards Program. To get accredited, charities must pass “a rigorous accreditation process that examines… good governance, accountability and transparency”. But are WE up to it? Even if WE’s charitable arms did pass such a test (individually and collectively), there is the question of their links to a privately held for-profit corporation, ME to WE Social Enterprises Inc., that does not publish its financial statements.
So, the ultimate guarantor must be outside scrutiny. It is good that WE Charity’s website includes a section on “Evaluation and transparency” and that WE has hired outside evaluators to have a look. But to my knowledge, WE has not invited independent, outside researchers who are not paid by WE to look into its business. Fairly or unfairly, WE has a reputation for its aggressive approach to managing critical coverage in the media. WE has even posted a legal notice to a media outlet on its own website. In my experience, correcting facts and managing reputation is best managed by the press office, and by allowing outside scrutiny. Sending legal notices is usually considered the nuclear option. Such a practice has likely had a chill effect on outside scrutiny. Until now. Academic researchers want to have a look inside WE. Will WE let them in?