A Montreal-based marketing firm is connected to a group of companies that sell their products for charity using commissioned sellers in retail stores.
The practice is not illegal, but frowned upon by charity experts, a CBC investigation has found.
There's also little oversight of the private companies involved and they don't have to report how much money flows to charities.
Local firm, Les Promotions Synérgie, sold products and donated a portion of the proceeds to the Missing Children's Network, a major charity. But the latter severed the relationship in 2011 after customers complained about having to buy products from the company as a way of donating to the network.
A 2010 annual report for the Missing Children’s Network shows it received a donation from Les Promotions Synérgie.
The charity turned down an interview with CBC.
A former Synérgie employee said sales reps would set up booths inside large retail stores, shopping malls or gas stations. Their opening pitches would involve name-dropping charities the company was working with, then providing an explanation about the product being sold.
“I never said that I worked for a third-party company unless [customers] asked me who I worked for,” Billy Malamud-St-Pierre said.
Malamud-St-Pierre said he was employed at Les Promotions Synérgie for about a year between 2013 and 2014. In May of last year, he set off to Halifax with a co-worker to help open a sales office there called Impact Industries, before quitting the job and returning to Montreal.
He estimated charities would receive very little of sales percentages, between five to ten per cent.
“A rep would make 32 per cent,” he said, and most of the rest would be split between the local sales team, an assistant manager and the company’s manager.
CBC Montreal Investigates attempted to reach Les Promotions Synérgie for an interview, but our phone calls weren’t returned.
In a statement sent to CBC Halifax on March 11, the owner of Impact Industries, Les Promotions Synérgie's Halifax counterpart, said his company is not a fundraising company and his salespeople are not fundraisers.
The statement, signed by owner Richard Soucy, said Impact Industries is "a sales and marketing company that chooses to give 10% of our product sales to the charities we develop corporate sponsorship agreements with.
"We respect the decision of others if they prefer to handle matters in a different way than we do."
Experts warned charities should avoid scenarios involving private and commission-based marketers.
“It really incentivizes some practices that aren’t for the benefit of the charity sector, ” said Mark Blumberg, a Toronto lawyer who specializes in registered charities.
Operations across Canada
CBC obtained a document from an Ontario-based company called Eagle Eye Events, which lists a number of firms with different names across the country including Les Promotions Synérgie.
It ranks Synérgie among the top 10 for sales during one week in December 2014. It's not clear how much money the charity drives brought in.
The document also names a Sherbrooke, Quebec based company, Énergie Inc.
But it may become tougher to reach sales objectives across Canada. As a result of the CBC investigation, Walmart, Sobeys, and Loblaws all said they would be cracking down and reminding staff to restrict store space to non-profits.
Meanwhile, at least one charity that has received money from Les Promotions Synérgie in Montreal did not seem fazed by the story.
Ontario-based Breast Cancer Society of Canada mentions Promotions Synérgie donated somewhere between 5-thousand and 25-thousand dollars in its 2014 annual report.
"If any consumer has concerns about the charitable claims linked to the sale of a product we recommend that they do not purchase the product," a statement from the charity said.
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