Colleagues, thank you very much for being here. It's good to see all of you virtually. I hope you've been having a good summer.
Today's meeting will only last approximately 90 minutes. We had originally scheduled the President of the Treasury Board to be with us today, but he informed us a few days ago that he was unavailable for today's meeting, so I have scheduled him for next Thursday for the full two hours.
Today's meeting will be somewhat truncated. We have a couple of witnesses, but I do not believe we will need the entire 90 minutes. We'll probably go through one complete round of questions with our witnesses and then I'll take about five minutes at the end of the meeting for some very brief committee business. Hopefully that meets the approval of everyone on this committee.
To our witnesses, you've probably received these instructions before but in case you have not, when you are speaking, please make sure that if you're speaking in English you are on the English channel. For those witnesses who may want to alternate between English and French, I suggest that if you start a statement or answer a question in one of the two official languages, complete your statement, question or answer in that official language. Please do not switch back and forth between French and English, because that causes problems for our technicians. I also ask that you speak slowly and clearly so that our interpreters can hear your statements and we are able to give proper interpretation.
Angela, I do not have, at this point, the speaking order of our witnesses. I wonder if you could introduce our three witnesses. My understanding is that each one of them will have a brief, five-minute opening statement. If you can inform me which of our witnesses is first, I will introduce that witness and then we'll commence.
Colleagues, we'll have our normal rounds of questioning, which will be six minutes for the first round, five minutes for the second round and then two and a half minutes for the last round.
Angela, who is our first witness?
Thank you very much. Good afternoon.
My name is Greg Thomson. I'm the director of research for Charity Intelligence Canada. Charity Intelligence is itself a charity, one that analyzes Canadian charities to help donors be informed and give intelligently. Our website hosts free reports on more than 780 Canadian charities, and provides insight into specific giving areas, such as the environment, cancer and homelessness. Last year, 314,000 Canadian donors used our website for information on Canadian charities, reading over 1.3 million charity reports. We estimate that our research helped inform and influence $95 million in Canadian charitable giving last year alone.
Just as democracy depends on informed citizens, the fundamental health of philanthropy rests on well-informed donors. Our own research supports this case. In surveys of donors who have used our resources, 77% said that Charity Intelligence reports have improved their confidence in giving to charities and have inspired these donors to give 32% more money to charities.
Over the past few weeks, a significant amount of information has been reported about WE Charity. CI has focused our analysis and remarks on WE's financial position, how it spends its money, the results it achieves and its governance issues. We report fairly and consistently based on our analysis of hundreds of Canadian charities. We do not let unsubstantiated allegations impact our ratings, as we strive to remove subjectivity and report on objective measures.
At Charity Intelligence we are analysts, not auditors. As well, we are analysts of charities, not government programs. Our specialty is looking at how charities spend money and what impact their programs achieve. It's within this context that CI presents to the Standing Committee on Government Operations and Estimates today.
With that, I'll pass it over to Kate Bahen.
Hi. I'm sorry, but I'm having technical difficulties here. My computer has a glitch, so I will have to do my opening comments from scratch.
My name is Kate Bahen. I'm a managing director at Charity Intelligence. I did the updates on WE Charity's report in August of 2019 and more recently in this July of 2020. I'm happy to take your questions about that.
I would like to use these moments to talk to you about what is going on in the charity sector. One of the greatest concerns is how charities are so negatively impacted by COVID-19. Imagine Canada estimates that individual giving to charities will be down by between $4 billion to $6 billion. For context, in 2019, individual giving was about $17 billion.
On top of this, we have the WE situation that is in the headlines every day and is really shaking donor confidence in giving to charities. The impact of this, we won't know.
I appreciate that part of the Canada summer students grant initiative was to help charities and that students would be volunteering and giving their time to help front-line charities at this time. For many charities, volunteers are an incredibly important part of program delivery, but what charities really need now is cash. We're in August, and so far there has been so little response to the needs of Canadian charities.
There is one simple thing that we at Charity Intelligence believe could significantly help Canadian charities, and that's called the disbursement quota. The disbursement quota is a little-known factor about how much foundations, community foundations and endowments are required to give of their assets to charities each year.
Currently, Canada's disbursement quota is 3.5%. Canada has the lowest disbursement quota in the world. In the U.S., the disbursement quota is 5% and there are calls right now in the U.S. for raising that disbursement quota to 10% for the COVID pandemic.
If Canadian foundations, endowments and community foundations were to increase the disbursement quota from 3.5% to 5%, we estimate that there would be an additional $700 million going to charities this year. It is completely at our 's discretion. It is written within the CRA regulations that the finance minister can change the disbursement quota by the stroke of his pen, and I ask all of you, from all parties, to go back to caucus and talk to your parties about what we can do to help Canadian charities for the COVID pandemic. I ask you to seriously consider raising Canada's disbursement quota to 5%—at least—for the COVID pandemic.
Thanks for the invitation to appear in front of you today and for giving me the opportunity to make this statement.
I'm not specifically sure why I was asked to appear, but I'll share with you some of my background in the charity sector.
I've worked for 35 years in the sector, starting with an eight-year stint as a counsellor in a shelter for abused women. During the past 25 years, I've worked as a consultant to over 100 charities, advising them on fundraising and governance, impact and relevance, accountability and transparency. For the past 10 years, I've written widely about the charity sector. My 2017 book was called Cap in Hand, and my forthcoming book, Disconnect: Charity's role in the Age of Inequality is due out on November 15. I'm currently the editor of The Charity Report, an independent news source for the charity sector.
I have three main points to cover in my statement specifically related to the government's partnership with WE.
The first is the question of whether WE was the only group with the capacity to execute the CSSG. I believe that this conclusion is not an unreasonable one. The government had already had some success in getting COVID relief delivered through partnerships with charities. In April, it gave $100 million to five national food security charities for emergency food relief. Shortly after, three national charities were tapped to channel $350 million to vulnerable communities through the emergency community support fund.
However, students, as a group, are a difficult cohort to reach. WE had student engagement, youth engagement, as its mission, with connections to 15,000 schools across the country. I believe that, at the time, that would have been seen as a plus as post-secondary students, particularly in racialized neighbourhoods, remain connected with their high schools.
The organization was also able to showcase its reach. Young people filled sports stadiums in 15 cities around the globe for annual WE Days. WE ambassadors were A-listers from the world of entertainment, politics, civil society and the corporate world. They were supported by everybody who mattered. Board members of WE included senior bank executives from Scotiabank and RBC, sophisticated people with long resumés.
Additionally, WE's finances, governance and unique structure were independently and favourably reviewed by two of the most well-known law firms in the country, Torys LLP and Miller Thompson, as well as by former Supreme Court Justice Peter Cory.
All three founders of the organization had been awarded the Order of Canada. Additionally, Craig Kielburger had received 13 honorary degrees and doctorates. Marc Kielburger was selected by the World Economic Forum as one of the 250 global leaders. Roxanne Joyal, a Rhodes scholar, clerked for the Supreme Court of Canada and also received an honorary doctorate.
In 2018, the charity had 380 full-time staff and a budget of about $48 million. To anybody from the outside evaluating WE, its qualifications would appear to have been unique and unassailable. In fact, the organization was able to generate 35,000 applications from across the country in nine days—35,000 young people whose stories have been lost now and whose hopes are on hold.
The second point that I want to make is around the idea that charities don't spend money on speakers or entertainment for fundraising events. Nothing could be further from the truth. While charities try to get speakers and entertainment—or anything they can—donated for an event, entertainment is typically part of an event budget.
In 2002, the Hadassah-WIZO children's charity paid former U.S. president Bill Clinton $100,000 to speak at a sold-out fundraising dinner in Toronto. Also, the late socialite and philanthropist Anna Maria de Souza most certainly paid the 70 Brazilian dancers she flew in from Rio de Janeiro for the iconic Brazilian Ball in Toronto, which at its peak in 2010 raised $7 million in one evening and which, according to Toronto Life magazine, “Everyone who was anyone in the world of politics, business or media attended.”
The reason charities pay for speakers and entertainment is that there's a lot at stake. The days of the lemonade stand are over. Every year in Canada charities raise more than $20 billion from fundraising activities, and they spend several billion dollars in order to accomplish that.
Yet, even with that amount of money, all three levels of government are still the primary source of funds for charity. In 2017, governments supplied 70% of the $280 billion that flowed to the charity sector, which leads me to my third and final point.
The charity sector is the primary means through which government executes health care and social service priorities. The sector employs two million people on a full-time basis and two million people on a part-time basis. Every day, millions of people rely on the services provided by charity, and as a consequence of the COVID pandemic, more people are becoming reliant on charity, not fewer.
In a world full of uncertainty, Canadians are suffering through the worst crisis in modern history. Their lives have been turned upside down. Many don't know how they're going to manage. The anxiety is making some Canadians sick. Others are becoming hopeless about the future. The situation is dire.
At the same time, the people who have been elected to help Canadians, through the good times and the bad, some of whom are now serving as the loyal opposition, have created a crisis of their own by transforming the weaknesses of one charity into a vehicle for an intractable partisan battle that is currently taking up the agenda of three parliamentary committees, including this one.
The charity sector is flawed and needs to work on many problems, such as better governance, inequity, and systemic racism, yet the increasingly partisan behaviour coming out of the House of Commons is like that of a herd of bulls in a china shop, destroying everything in its path as it reaches for the most expensive piece of china on the top shelf, presumably a snap election that could potentially defeat the current government.
You've invited me here to speak to you. My recommendation to you now is that you snap out of it, because the broken glass on the floor of that china shop is the collateral damage being inflicted on the charity sector, its employees, and the growing number of people the sector is trying to serve. As a citizen and someone who has worked all of her professional life to address the needs of the most vulnerable people in society, I cannot overstate how deeply disturbing I find this agenda.
I'm happy to take your questions.
Perhaps I can finish and then you can comment. You can refute it or not.
Debt is changing. WE has been in breach of the bank covenants on its debt for two years, in 2018 and 2019, and through the auditor, says the bank had waived these covenants. ME to WE's app, their past app, was a failure and it's no longer available. It potentially was sold to the WE Charity for a dollar. I saw the question about where that loss went. Six board members of the WE board resigned in March, including their board chair. They were replaced by four new directors, one of whom has since resigned. The new chair is essentially a former high school teacher, so I'm unsure about where the professionally qualified independent board of directors is. ME to WE for-profit is supposed to generate funds for WE Charity, but it appears that funds are flowing in the opposite direction without proper or transparent disclosure. KRP LLP, as has been noted, is the only auditor WE has ever had. It is the only charity, as I believe you've claimed publicly, that KRP audits.
I'll now break that down, you can respond, and we can go from there, because I only have four minutes left. First, would you care to comment on the real estate holdings and the debt?
Greg, do you mind if I take this one?
Mr. Greg Thomson: Go ahead.
Ms. Kate Bahen: This is my passion. We've been championing for financial transparency since the very beginning, and we still face this battle. This summer alone, we have over 100 requests for information, with the charities directorate. We're looking at some of Canada's largest charities with $5 million to $10 million in donations, which still refuse to put their audited financial statements up on their website. We have to go through that process of filing with the CRA, and it will take eight to nine months before we get that relevant information.
WE Charity was financially transparent. It had its audited financial statements on its website. We need to push for more financial transparency, but I also believe that people who have a fiduciary responsibility in writing cheques with other people's money need to do their homework, and the audited financial statements were right there on the website.
I appreciate that the vast majority of giving is marketing and branding and who's doing the ask, but at the end of the day, we are just such believers in due diligence. I hope all donors start reading the fine print.
Thank you, Mr. Chair, and thank you to the witnesses.
Ms. Picco, you talked about the elites, such as Telus and everyone supporting WE. Telus, Royal Bank, and all those people, when they found out what the situation was, dropped their sponsorship and support of WE. I don't think it's a great example to say, “Well, because these guys made a mistake, that's wonderful. The government made a mistake as well.”
I want to follow up as well on Mr. Green's comment, and the answer back, about the obligation for WE to be open about some of those financial issues. It's actually, believe it or not, the Treasury Board Secretariat. It's right in its framework. It's not as much on WE to bring forward all the faults around its financial problems. It's actually part of Treasury Board's mandate to have asked these questions.
For Ms. Bahen and Mr. Thomson, is there any further research that you've done since your last appearance that perhaps you want to bring to light?
Is that a question for me?
Actually, at the time, it didn't seem to me to be an unreasonable conclusion: at that time, in this process, prior to all of this other stuff coming out about WE. Actually, WE has also operated its WE Days in Montreal, in Théâtre St-Denis, for the last few years. It has rallies, and so on, in Montreal. Looking at the facts at that time, it didn't make as little sense as it does now.
A lot has been brought to the table. I don't recall any other charity in Canada that's been put under the microscope more than this particular charity, other than the Canadian Red Cross during the tainted blood scandal. We learn a lot about charities when we put one under the microscope.
This charity, I think, was—
Mr. MacKinnon, thank you for your commentary. As you know, as your chair, I pay very close attention to the testimony given and to the questions asked. I have always insisted that all committee members treat all of our witnesses with the utmost respect, and that, of course, is reciprocal.
I know that the questions, in some cases, were very pointed, but I did not find anyone on this committee—in my opinion, at least, Mr. MacKinnon—to be badgering a witness. I find that the witnesses are well prepared and extremely knowledgeable and, quite frankly, can handle themselves without your assistance. That's, again, only my opinion.
The reality is that we are completely out of time. Regardless of whether we want this discussion to go forward or not, we are out of time. However, given the fact that Mr. Green has posed a number of scenarios that witnesses did not have an opportunity to respond to, I would ask that they do so in writing.
I see your hand up, Mr. Green. We'll go to your final point.
Sure. I'll read it again for you, Francis.
That all documents requested in the orders adopted by the committee on Friday, May 29, and Friday, June 19, 2020, be posted on the committee’s web page as soon as possible after they are received.
I would ask Angela to conduct the vote on that motion.
(Motion agreed to: yeas 10; nays 0)
The Chair: Colleagues, the last point is to remind you that at our next meeting, which is a week from today, next Thursday, we will have the President of the Treasury Board and his officials for two hours. Originally, as some of you may recall, we had the Treasury Board Secretariat president and officials scheduled for today. As I mentioned at the outset of this meeting, the president was unavailable, and rather than have only officials without the president's appearance, I made an arbitrary decision to call the Treasury Board next week, because that's when he said he would be available.
This means, however, that we will have to reschedule a meeting time for PSPC officials to appear on the subject of WE Charity. I will not deal with that now. We'll wait and take a few minutes at the end of next Thursday's meeting to decide whether or not this committee wishes PSPC to appear at a later date, and what that date may be.
With that, colleagues, seeing no other interventions and no other hands raised, I wish you all a good week—