Committee
Consult the user guide
For assistance, please contact us
Consult the user guide
For assistance, please contact us
Add search criteria
Results: 1 - 60 of 150000
View Wayne Easter Profile
Lib. (PE)
I call the meeting to order.
Welcome to meeting number 49 of the House of Commons Standing Committee on Finance. Today's meeting is taking place, as has become the custom, by video conference. The proceedings are being webcast and will be made available via the House of Commons website.
This meeting is scheduled to last for two hours. It was originally planned to be three. An amended notice of meeting has been published.
Our witnesses today are from Charity Intelligence Canada. Kate Bahen is the managing director and Greg Thomson is the director of research.
Ms. Bahen and Mr. Thomson, welcome to the meeting by video conference. Thank you for agreeing to appear. I know that you had very short notice, and I apologize for that on behalf of the committee.
You have a total of 10 minutes for your opening presentation. Then we'll go to members for questions.
Welcome. The floor is yours.
Greg Thomson
View Greg Thomson Profile
Greg Thomson
2020-08-06 11:10
Thank you.
Good morning. My name is Greg Thomson. I am the director of research for Charity Intelligence. 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 such specific giving areas as the environment, cancer and homelessness. This year some 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 upon informed citizens, the fundamental health of philanthropy rests on well-informed donors. Our own research supports this case. In our surveys of donors who have used our website, 77% say that Charity Intelligence reports have improved their confidence in giving to charities, and have inspired these donors to give 32% more money to charities. It’s within this context that Ci presents to the finance committee today.
Since 2011 Ci has analyzed and reported on WE Charity. WE Charity Canada is a big piece, but only one piece, of what we now know is a highly complex international network of WE-related entities. Starting in 2014, Ci rated WE Charity with our highest four-star rating based on transparency, reporting and overhead spending. WE Charity ticked all of the boxes and performed well relative to other Canadian charities.
In September 2019 Ci analyzed WE Charity’s demonstrated impact, the measurable returns from its programs, and found WE Charity’s impact to be “fair”. Fair is below average. This reduced Ci’s rating on WE Charity to three stars.
Our major limitation as analysts is that we are only as effective as the data is reliable. We are analysts, not auditors.
Ci’s August 2019 report on WE Charity flagged the following material information: a breach of financial covenants on its $13.7 million in bank debt that its bank has waived for the second year in a row; and the related party transactions with 8% of donations to WE Charity going to ME to WE, the private business controlled by Marc and Craig Kielburger, to purchase goods and services. In August 2019 an outside party shared with us public records about WE Charity’s real estate transactions. These transactions were not disclosed as related party transactions in WE Charity’s audited financial statements. Given this lack of disclosure, we reviewed WE Charity’s auditor, who has a solid reputation for tax and business. However, the auditor’s website advertised only one charity client: WE Charity. In our database, no other charity used this auditor.
This contrasts with WE Charity hiring the most prestigious law firms and its stated commitment to the highest financial transparency. We questioned why WE Charity has not hired leading international auditors to prepare their financial statements, despite being one of Canada’s largest charities with global operations. On learning of the resignation and replacement of WE Charity’s directors in March of this year, we arranged a 30-minute video call with WE Charity’s chief operating officer. Subsequently, we learned through the media that one of the newly appointed directors had resigned. We were not assured by WE Charity’s comments or statement. On July 17, 2020, Ci issued its strongest alert, a donor advisory.
With more news coming to our notice, and after looking at other WE entities, we released our list of 10 questions, primarily as follows. Was the cabinet aware that the CSSG was contracted through WE Charity Foundation, a new and separate foundation with no employees or assets, rather than WE Charity? Why are the Kielburgers not directors of any of the WE charities but take the title “co-founders”, which allows them to avoid fiduciary responsibility and evade disclosure? Why has neither WE Charity Foundation in Canada or ME to WE Foundation in the U.S. disclosed in their regulatory filings the non-arm's-length relationships of their three directors? Why does WE need such a complex organizational structure with multiple single-purpose entities to do its work? This is highly unusual for charities, even amongst Canada’s largest international aid charities.
WE Charity is an outlier. Normal metrics for assessing charities do not adequately reflect its suitability for donors. It is not similar to the vast majority of other Canadian charities. We have flagged these issues because the more donors understand about the entirety of the WE network, the better informed they will be and the better able to give intelligently.
With that, I'll hand the floor to Kate Bahen, managing director.
View Wayne Easter Profile
Lib. (PE)
Ms. Bahen, before you start, I would like to give members the lineup for the questions afterward.
We will start with Mr. Poilievre and then go to Mr. Sorbara, Mr. Fortin and Mr. Julian.
The floor is yours, Kate.
Kate Bahen
View Kate Bahen Profile
Kate Bahen
2020-08-06 11:15
Thank you, sir.
Good morning. My name is Kate Bahen. As managing director of Charity Intelligence, I prepared the two most recent updates on WE Charity, which were on August 28, 2019, and July 10, 2020.
Before answering your questions, I would like to speak to some of the issues that have been raised during your proceedings and on social media about Charity Intelligence and the motives behind our reporting. Let me address these in order.
Yes, Charity Intelligence is a small charity. Our annual revenues of $435,000 support a team of three full-time staff, supported by exceptional university summer students. This April we hired another charity impact analyst, so our full-time roster increased by 33%, to four. Charity Intelligence's team answers Canadians' questions about giving, and we update our popular website. Despite our small size, we have demonstrated a significant impact on Canada's charitable giving.
Yes, Charity Intelligence lost its charitable status for one day, in September 2012, because I was late in filing the annual return. I am solely to blame for falling behind in this essential paperwork. It was a hard lesson, learned well. Ci has filed before the deadline in the last eight years.
As to the motivation for our work, it is simply to give Canadian donors the best independent and objective advice we are capable of. Charity Intelligence is not partisan. I do not know the political affiliations of our staff. These matters simply do not come up in our research and analysis of charities. I find partisanship toxic. As you may notice from my accent, like many new Canadians I came from away to Canada. I am deeply indebted to this amazing country. To some, partisanship may be a sport or a game, but as a child I saw the Troubles, I learned of the Orangemen's march and I heard the bombs. I want no part of that ever again.
All of that brings me to the Canada summer service grant. This is a sorry mess. There is one simple solution to help charities at this time of critical need that I would like to bring to your attention for consideration. One leg of the three-pronged CSSG initiative was to help Canadian charities through student volunteers. For many charities, volunteers can be essential in program delivery, but with the COVID shutdown, front-line charities need money. Our biggest concern is about individual giving. Imagine Canada estimates that individual giving will drop by between $4.2 billion and $6.2 billion this year. For context, last year giving was approximately $17 billion.
One quick way to address this gap is for our government to increase the disbursement quota of charity foundations and endowments. The disbursement quota is a little-known charity regulation. It sets the minimum amount foundations must distribute of their assets to charities each year. Canada's disbursement quota is 3.5%, the lowest disbursement quota in the world. In the U.S., foundations are required to pay out 5% each year, with people calling for it to be raised to 10% for the COVID response. Over the last 15 years, Canadian foundations have averaged investment returns well above 8%. Today the investments at private foundations, community foundations, public foundations and endowments exceed $100 billion.
This quota can be changed to 5% by the stroke of our finance minister's pen. It can be just temporary, just enough to help charities through this pandemic. The change between the current 3.5% and 5% may seem small, a 1.5% difference, but mathematically it's a 43% increase, which would result in an additional $700 million more flowing from foundations to charities this year. The money that foundations hold is already tax-receipted.
This change wouldn't cost the government any additional revenue but would meaningfully support thousands of front-line charities. More information on this initiative is available at Give5.ca.
Thank you.
View Wayne Easter Profile
Lib. (PE)
Thank you both very much for your remarks.
Thank you for that suggestion, Ms. Bahen. We'll make note of that.
There's a change in the lineup of initial speakers. We'll start with Mr. Morantz.
I see you're on there now, Mr. Poilievre. Do you want to start, or Mr. Morantz? Who's on?
View Marty Morantz Profile
CPC (MB)
I'll be taking the first round, Mr. Chair.
View Wayne Easter Profile
Lib. (PE)
View Pierre Poilievre Profile
CPC (ON)
There was a thunderstorm here, Mr. Chair.
View Wayne Easter Profile
Lib. (PE)
Ah, okay. It's usually you blocking me out, Pierre, not the other way around.
Go ahead, Marty. The floor is yours. You have six minutes.
View Marty Morantz Profile
CPC (MB)
Thank you, Mr. Chair.
I want to thank you both, Ms. Bahen and Mr. Thomson, for being here today. Your work on this matter has been exemplary.
I note that, as such a small organization, you were able to do so much due diligence on this charity, compared to the vast resources of the federal government. They seem to have been unable to discover any of the red flags that you've been able to uncover.
One question I have is, how easy would it have been for the federal government to find the information, particularly in the context of the Prime Minister saying that on May 8 he actually pushed back, which should be taken to mean that he wanted extensive due diligence done on this?
Why is it that the federal government either didn't have this information or chose to ignore it?
Kate Bahen
View Kate Bahen Profile
Kate Bahen
2020-08-06 11:22
I think WE Charity is very sophisticated. I believe—and I've asked others who have greater expertise—that if you go through its regulatory filings, it ticks all the boxes. At Charity Intelligence, in our analysis, we use different data. We use audited financial statements, which we find, for our purposes, to have greater detail. We also look at the government filings, the T3010As, but in the audited financial statements there is much more disclosure about the balance sheet, the loans and the bank covenants. I think regulators now in Canada, the U.K. and the U.S., I hope, are really going through the filings of all these multiple WE entities.
View Marty Morantz Profile
CPC (MB)
In terms of the public service doing due diligence on this, would it have been as easy for them to acquire the information that you acquired if they had chosen to?
Kate Bahen
View Kate Bahen Profile
Kate Bahen
2020-08-06 11:24
I'm not sure which charity they were doing the due diligence on. Was it WE Charity, or was it WE Charity Foundation? If you look for WE Charity Foundation, it doesn't have a website. It doesn't have financial statements, and it doesn't even have a T3010A. If the government was doing due diligence on the shell foundation, there would be no information. On WE Charity, yes, there was information on its website.
View Marty Morantz Profile
CPC (MB)
That's what I'm wondering; they would have been able to uncover most of the information, if not all of the information, that you, as a small organization with limited resources, were able to uncover. Is that accurate?
Kate Bahen
View Kate Bahen Profile
Kate Bahen
2020-08-06 11:24
I think it also helps if you have familiarity with financial statements.
View Marty Morantz Profile
CPC (MB)
I'm sure they have people who do.
I was going through your website, and there are literally dozens of charitable organizations across Canada that have your four-star rating. I noted just a couple, the David Suzuki Foundation and Doctors Without Borders.
What is it about WE that caused you to give it only a three-star rating?
Greg Thomson
View Greg Thomson Profile
Greg Thomson
2020-08-06 11:25
WE Charity had a four-star rating, until we analyzed what is called its “demonstrated impact”. Demonstrated impact takes a look at the charity programs and looks for data showing that the charity has actually made a difference in the lives of the folks it's working with.
When we looked at WE Charity, as we looked at the data that it provided, we could only come up with a rating of “fair”, which is below average, on WE Charity's demonstrated impact, which then reduces its star rating from four to three.
View Marty Morantz Profile
CPC (MB)
Then it would have been a simple matter for those in government doing due diligence on WE Charity, to be specific about that one, to simply go to your website and for a $20 subscription find out that they have a three-star rating. Would that be accurate?
Greg Thomson
View Greg Thomson Profile
Greg Thomson
2020-08-06 11:26
We would love for every government agency to go to our website and take a look at any charity that they are interested in looking at. Certainly it would be very easy.
View Marty Morantz Profile
CPC (MB)
It just seems awfully concerning that all these red flags that you have uncovered were ignored: the board resigning, the bank covenants that you mentioned, the lack of fiduciary responsibility around the Kielburger brothers not being on the board. It just seems to stretch credulity that the federal government, during their due diligence, wouldn't also have had this information available, given their vast resources.
One of the things I wanted to ask was this. During the Kielburgers' testimony, they attempted to discredit your organization, talking about the charitable licence and about the small nature of your organization, with only two individuals working for the organization. Why do you think that they would have gone after your organization to discredit you under these circumstances?
Kate Bahen
View Kate Bahen Profile
Kate Bahen
2020-08-06 11:27
Can I just correct one thing about the board of directors? That was not public information, and it only came out on Twitter that the board had resigned in June, so we were not aware of that material information. It was not posted on WE Charity's website.
I understand that we get under the skin of many charities, and we have frequent conversations with other charities. On this issue we have been a go-to for the media to share and talk about due diligence and our interpretation of bank covenants, which is different from WE Charity's position.
View Marty Morantz Profile
CPC (MB)
When you saw them do that, to attempt to discredit your organization, did you impute any motive to them for doing that? Why did you think they did that?
Kate Bahen
View Kate Bahen Profile
Kate Bahen
2020-08-06 11:28
Greg can answer.
Greg Thomson
View Greg Thomson Profile
Greg Thomson
2020-08-06 11:28
We would not want to impute any motive on why they would do that. We've seen them do that before, but....
View Marty Morantz Profile
CPC (MB)
Have they ever contacted your organization directly?
Kate Bahen
View Kate Bahen Profile
Kate Bahen
2020-08-06 11:28
Yes, we've been in contact regularly with WE Charity management at least once a year, multiple times during the year on the impact side, going back and forth and getting information.
With WE Charity, when the government grant was announced, we were trying get the order to financial statements. There were multiple emails. They were provided by the CFO on July 8. We analyzed them and we had questions and we got in contact. We said that whenever you have a moment, and we know it's extremely busy, there are a couple of clarifications for understanding management discussion and analysis.
We had discussions with the chief operating officer. We set up two video calls that went on for 30 minutes, sharing our concerns and sharing our recommendations on how to shore up donor support. That's our normal process with charities.
View Wayne Easter Profile
Lib. (PE)
Marty, we're well over the time, but if you're on a line of questions, I'll let you complete them.
View Marty Morantz Profile
CPC (MB)
No, I guess I'll just finish by saying that given the vast resources of the federal government, it seems to stretch credulity, as I said, that they wouldn't have been able to find this information.
My one last question is—
View Wayne Easter Profile
Lib. (PE)
Before you ask that, I will have to tell both witnesses that the interpreters are having a little difficulty hearing you, so please speak into the mike and speak a little louder if you could. Neither of you has a headset, so it's just for their benefit.
Marty, this is your last question.
View Marty Morantz Profile
CPC (MB)
Just to clarify this and to put it in simple terms, how easy would it have been for those doing their due diligence within the public service to uncover the same information that you've been able to discover?
Kate Bahen
View Kate Bahen Profile
Kate Bahen
2020-08-06 11:30
In 2019 the audited financial statements were posted on the WE Charity website, and we believe that due diligence starts with the audited financial statements. It would be clicking, receiving those documents, and reading through them.
View Wayne Easter Profile
Lib. (PE)
Thank you all.
We'll turn to Mr. Sorbara. He'll be followed by Mr. Fortin for around six minutes. We have lots of time today.
Go ahead, Mr. Sorbara.
View Francesco Sorbara Profile
Lib. (ON)
Thank you, Mr. Chair.
It's great to see everyone today.
The first comment I'd like to make is that we have undertaken this study on the motion that was passed. The intent of the motion that was passed was to examine the programs that have been put in place to assist Canadians. We should remind ourselves, during this most extraordinary and unique time in Canada and in the world's history, with a pandemic afoot, to look at programs that have benefited Canadians: the Canada emergency response benefit, which over eight million Canadians have utilized; the Canada emergency business account, which nearly a million businesses have utilized; the Canada emergency wage subsidy, which is helping almost three million Canadian workers maintain attachment and helping their employers build a bridge to a full recovery; and the rent assistance program.
I think that was the intent of the motion and of the report that will be delivered by, I believe, March of next year. We're spending time analyzing an organization, and I don't think that was the intent of the motion that was put in place by the finance committee. I want to put that on record, because I think it's important that we understand why we're here. We are here, but we also need to remind ourselves of what was the original intent of the motion. We get these great biweekly reports—we have the ninth report, which was delivered July 23, 2020—on where the government is spending money to help Canadians. We are spending money so that Canadians don't have to take on debt on a personal basis. I think that's the right thing to do. I'm an economist by training. I think our response has been second to none. It has been top-notch in assisting Canadians. We've seen it in our economic data that's come out. It's been quite constructive.
Moving on to Charity Intelligence, Ms. Bahen, I'm a former sell-side debt analyst. I was a ratings analyst. I worked in corporate finance and investment banking in New York City for a number of years. You were a sell-side equity analyst, I believe. I appreciate the work you are doing at Charity Intelligence. It's important, but it's also a double-edged sword, because when you make a wrong call, you can actually hurt a charity significantly. I don't know who's doing the due diligence on Charity Intelligence on your calls. You have had to apologize in the past when you've made that wrong call and when the damage is, I would say, done.
You indicated that you look at partisanship in a certain manner. I look at partisanship as a debate about ideas. I do want it on record that I believe one of your co-workers, one of the members of your team, is a long-time donor to the Conservative Party of Canada. I do want to put that on record. Substantial sums in donations have been made over the years. That should go on record. There's nothing wrong with that. Canadians have a right to donate to the political parties of their choosing. But we should get that on record, because your work is very important.
One thing that is very concerning to me is a letter by MP McLean. I wanted to get your opinion here. Do you think it's appropriate for political parties and governments to use CRA to audit charities for political purposes? We do know that letter would be...and that mandate to have the minister do that would be in violation of section 241 of the Income Tax Act. Do you think it's right for MPs to say, “We need to audit them”?
We know that under the Conservative government, Prime Minister Harper criticized the Supreme Court of Canada. We know that they muzzled scientists. None of that—
View Wayne Easter Profile
Lib. (PE)
We're going to have to stay on point here, Mr. Sorbara.
View Francesco Sorbara Profile
Lib. (ON)
Absolutely.
Ms. Bahen, do you think it's appropriate for government, for political parties, to mandate audits of charities?
Kate Bahen
View Kate Bahen Profile
Kate Bahen
2020-08-06 11:35
Mr. Sorbara, please call me Kate.
View Francesco Sorbara Profile
Lib. (ON)
Kate: thank you.
Kate Bahen
View Kate Bahen Profile
Kate Bahen
2020-08-06 11:35
I'd love to answer that question, but could I just ask, when did we make a call wrong, in your reference—
View Francesco Sorbara Profile
Lib. (ON)
It's called the Truth North Youth Foundation, I believe—when I was doing my due diligence.
Kate Bahen
View Kate Bahen Profile
Kate Bahen
2020-08-06 11:35
Our research report stands. There were 28 charges of error on our part. We went through extensive legal on that. The error was in my very rude comment on a radio show calling them a swear word. I apologized for that and I paid for that mistake, but there was absolutely nothing in our research or our analysis or our star rating of the True North Youth Foundation in Winnipeg.
No, I hope politicians don't use the CRA [Technical difficulty—Editor]
View Francesco Sorbara Profile
Lib. (ON)
Sorry, Mr. Chair—
View Wayne Easter Profile
Lib. (PE)
We're losing you, Kate, for some reason.
Just step back for a minute.
Where we started to lose you was when you said, “I hope the CRA”. If you could go back to that point, where you came through kind of bubbly, go ahead if you can.
Kate Bahen
View Kate Bahen Profile
Kate Bahen
2020-08-06 11:36
Sorry, my [Inaudible--Editor] laptop.
I hope the CRA is not used as an attack dog.
View Francesco Sorbara Profile
Lib. (ON)
Thank you for being so direct on that because—
Kate Bahen
View Kate Bahen Profile
Kate Bahen
2020-08-06 11:36
Blame [Inaudible--Editor] if my connection is unstable.
View Francesco Sorbara Profile
Lib. (ON)
Greg, would you like to say something?
Greg Thomson
View Greg Thomson Profile
Greg Thomson
2020-08-06 11:37
No, but per Kate's point, we would hope that the CRA is not used to go after charities. Nonetheless, the CRA's charity directorate does need to be there to make sure that charities are following the guidelines and are doing what they're supposed to be doing.
View Francesco Sorbara Profile
Lib. (ON)
I asked because it concerned me considerably to see a letter written by a member of Parliament that would violate a section of the Income Tax Act. It hearkens back to very dark days under the prior Conservative government, where the CRA was, I don't want to say directed, but where we saw court cases—I think one went up to the Supreme Court if my memory serves me correctly—from charities being, I'm going to use the words, under attack by a prior government.
We also saw this the other day by Mr. Poilievre when he criticized the actions of the Bank of Canada, directly or indirectly, which is an independent agency. I think that's very important to note. Therefore, I am very happy with your answer.
View Wayne Easter Profile
Lib. (PE)
You'll get time for one more question, Mr. Sorbara.
View Francesco Sorbara Profile
Lib. (ON)
In your work at Charity Intelligence, where's the accountability for Charity Intelligence? I go back to the point where you were a buy-side analyst—I was a sell-side analyst, as most of us were—and I wonder about the due diligence in what Charity Intelligence does. You only have two or three people working there as your staff. There are a lot of charities in Canada and many people will go your site to get your views.
Where's the due diligence on your side on the quality of the research you're putting out? As a sell-side analyst, you put a buy, hold or sell recommendation and put a price target on it. You do it for equities, bonds, or derivatives, and so forth. However, your point of view is very tricky and requires a level of due diligence that's even higher than just reading financial statements on a quarterly basis or going to an investor presentation.
Greg Thomson
View Greg Thomson Profile
Greg Thomson
2020-08-06 11:39
We talk to charities continually and ask them for their feedback. We get their response to what we post publicly and we discuss any issues that we have with our work. We believe that we're being as accountable as we possibly can.
View Francesco Sorbara Profile
Lib. (ON)
Thank you.
Thank you, Mr. Chair.
View Wayne Easter Profile
Lib. (PE)
Thank you.
We'll move along to Mr. Fortin and then go to Mr. Julian after that.
Mr. Fortin, the floor is yours.
As a reminder to Kate and Greg, speak fairly clearly and as closely to your mikes as you can.
Mr. Fortin.
View Rhéal Fortin Profile
BQ (QC)
Thank you, Mr. Chair.
Ms. Bahen, Mr. Thomson, I am glad to see you here today.
Ms. Bahen, you just mentioned that proper due diligence should have started with a study of the 2019 financial reports, which are available on WE Charity's website.
What important information about the matter before us would we have been able to find there?
Kate Bahen
View Kate Bahen Profile
Kate Bahen
2020-08-06 11:40
Sorry. I didn't hear the interpretation.
I believe, Mr. Fortin, your question was about what information did we see in the audited financial statements.
View Rhéal Fortin Profile
BQ (QC)
I know what information is available in the financial reports.
My question is about what information the due diligence could have discovered and that might have been relevant in the matter before us.
View Wayne Easter Profile
Lib. (PE)
Kate, I'm not sure whether you're on the English stream.
If you look down at the bottom of your Zoom screen, it will say “participants”, and there's a little circle there. Make sure you're on the English stream and then the French interpretation will come through properly.
Go ahead.
Kate Bahen
View Kate Bahen Profile
Kate Bahen
2020-08-06 11:41
Greg, do you want to respond?
Greg Thomson
View Greg Thomson Profile
Greg Thomson
2020-08-06 11:41
Yes.
First, I would say that the due diligence should have started with WE Charity Foundation. The fact that the contract wasn't made with WE Charity, but with an organization with no employees and no assets, should certainly have raised a lot of questions and discussion, first of all. But looking at WE Charity specifically, the donor advisory we had with regard to the bank covenant was very clear from the audited financial statements, and anybody with financial statement knowledge would be able to go through and see what we saw when looking at their debt levels and how they were structuring themselves.
Results: 1 - 60 of 150000 | Page: 1 of 2500

1
2
3
4
5
6
7
8
9
10
>
>|
Show both languages
Refine Your Search
Export As: XML CSV RSS

For more data options, please see Open Data