The WE Charity controversy explained

WE Charity said Wednesday it is winding down its operations in Canada following months in the spotlight over the Trudeau government's controversial decision to have it manage a $900-million student grant program.

Liberals under fire over contract with WE Charity to manage $900M student grant program

WE Charity co-founders Craig, left, and Marc Kielburger, far right, introduce Prime Minister Justin Trudeau and his wife, Sophie Grégoire-Trudeau, at WE Day celebrations in Ottawa in 2015. WE has found itself in the middle of a political scandal over its role in a summer student grants contract. (Adrian Wyld/The Canadian Press)

WE Charity said Wednesday it is winding down its operations in Canada following months in the spotlight over the Trudeau government's controversial decision to have it manage a $900-million student grant program.

With donations to non-profits across the country already stung by the pandemic, the charity said the fallout from the failed contract has made fundraising difficult and the "financial math for the charity's future is clear."

The Liberal government has been in the hot seat since it was announced early in the summer that WE Charity would run the program. How did we get to this point? Here's a breakdown of the controversy.

What was the agreement between the federal government and WE Charity?

On June 25, the federal government announced that WE Charity would administer the Canada student service grant (CSSG), a $912-million program previously promised by Trudeau as part of $9 billion in COVID-19 financial aid for post-secondary students.

The program was to be a way of giving students who couldn't find summer jobs a chance to earn some money while volunteering in "national service" activities related to fighting the pandemic. 

WATCH | Trudeau says he only learned of WE proposal on May 8:

Trudeau says he only learned of WE proposal on May 8

3 years ago
Duration 3:26
In his opening statement Prime Minister JustinTrudeau said he had expected the Canada Service Corps would deliver the Canada Student Service Grant, and first learned on May 8 that WE Charity was being proposed to deliver the program.

WE Charity would have been responsible for connecting tens of thousands of students with volunteer opportunities and issuing grants based on their volunteer work.

How does the Canada student service grant work?

The CSSG connects post-secondary students and recent graduates with volunteering opportunities in exchange for between $1,000 and $5,000, depending on the number of hours worked. 

For every 100 hours worked, a student is eligible for $1,000, which means someone must volunteer 500 hours to receive the full grant.

The program opened June 25 and runs until Oct. 31. Only students and recent graduates 30 years of age and younger can enrol, and they must register no later than Aug. 21 to be eligible to receive the grant. 

Some 35,000 students and recent graduates applied within the first week of the program's launch.

How was WE Charity chosen?

WE Charity was started by human rights advocates Marc and Craig Kielburger in 1995. It is the non-profit arm of WE, which operates educational and social justice programs in Canada and internationally. Me to We is the organization's for-profit social enterprise.

The contract awarded to WE Charity to run the program was set up as a contribution agreement between WE Charity and the government and not through a competitive process. 

WATCH | PM apologizes for handling of WE Charity government contract:

Trudeau apologizes for handling of WE Charity government contract

3 years ago
Duration 3:39
Prime Minister Justin Trudeau admits he should have recused himself from cabinet discussions about WE Charity’s government contract because of his family's ties to the organization.

Youth Minister Bardish Chagger has said that Employment and Social Development Canada (ESDC) recommended a third party administer the grant "given the scope and scale of the program" and the "urgent need to deliver this new program," and that ESDC's recommendation was the third party be WE Charity.

In testimony to the House of Commons finance committee on July 16, Gina Wilson, Chagger's senior associate deputy minister, said that in a partnership agreement like the one it had with the charity, the government sets performance measures and audits the results but "does not direct or dictate how the recipient will carry out the project."

What was the value of the contract?

According to the text of the agreement signed June 23 between Chagger's office and the WE Charity Foundation, $43.53 million would have been allocated to the WE Charity Foundation for administering the CSSG.

Up to $8.75 million of that $43.53 million was eligible to be shared among the partnering charities and non-profit organizations that supervised the volunteers.

Why are Trudeau and his government being criticized for the contract?

Shortly after the Liberal government announced it was awarding the sole-source contract to WE Charity, it came under fire from opposition parties over the Trudeau family's close relationship with the organization.

Neither Trudeau nor then-Finance Minister Bill Morneau — who also has family ties to WE — recused himself from cabinet discussions on awarding the contract. Opposition politicians have accused the Liberal government of playing favourites and choosing to reward the organization.

Finance Minister Bill Morneau rises during question period in the House of Commons on July 20. Morneau is facing criticism for not recusing himself from cabinet discussions about awarding contracts to the WE organization. (Adrian Wyld/The Canadian Press)

How is the Trudeau family associated with WE Charity?

Trudeau and his mother, Margaret, have appeared at a number of WE Day events, while Trudeau's wife, Sophie Grégoire Trudeau, hosts a podcast for the group called WE Well-being.

Initially, WE Charity said members of the Trudeau family were not paid for appearing at WE events, although Grégoire Trudeau had been reimbursed for travel expenses.

On July 9, it emerged that Trudeau's mother, Margaret, was paid approximately $250,000 for speaking at 28 events, while his brother, Alexandre, spoke at eight events and received about $32,000.

In testimony before MPs on July 28, Marc Kielburger said Margaret, Alexandre and Sophie Gregoire Trudeau were also reimbursed more than $200,000 in expenses for appearances at WE events.

WATCH | Conservatives want 2nd ethics probe of Morneau's WE ties:

Conservatives want 2nd ethics probe of Morneau’s WE ties

3 years ago
Duration 1:47
The Conservatives are calling for a second ethics investigation into Finance Minister Bill Morneau over the $41,000 in travel he received from the WE organization in 2017.

Why did then-Finance Minister Bill Morneau also face criticism?

Like Trudeau, Morneau found himself under scrutiny for not recusing himself from cabinet talks about awarding WE Charity the contract. Morneau's daughter, Grace, works at WE in the travel department. His other daughter, Clare, has spoken at WE Day events.

Morneau faced further criticism after he revealed to the House of Commons finance committee on July 22 that WE Charity covered $41,000 in costs for him and his family in 2017 for trips to Ecuador and Kenya to view the organization's humanitarian work. 

Morneau said he didn't realize he hadn't personally repaid WE for the trips, and that he repaid the costs that morning.

Amid the controversy, Morneau announced his resignation as finance minister on Aug. 17, while putting in a bid to be the next secretary general for the Organization for Economic Co-operation and Development (OECD).

He said he was not pushed out of government but that it was time for a new finance minister to carry Canada forward as it continues to battle the economic realities of the pandemic. 

How did the federal ethics commissioner get involved?

The federal ethics commissioner is investigating the WE contract after Conservative and NDP MPs contacted the office raising concerns about the relationship between the charity and the prime minister's family.

Commissioner Mario Dion said he will be investigating Trudeau under subsection 6(1) of the Conflict of Interest and Ethics Act, which prohibits public office holders from making decisions that further their own private interests or the interests of another person.

Trudeau also is being investigated under sections 7 and 21 of the act, which deal with giving someone preferential treatment and failing to recuse oneself from any matter that would present a conflict of interest.

How has the Liberal government responded to the criticism?

Trudeau initially defended the partnership, saying WE was the only group with a countrywide network capable of operating a program on this scale for young people. Other charitable organizations have questioned that assertion.

On July 3, citing the ongoing controversy, WE and the Liberals announced a parting of ways and the federal government took control of the program. 

On July 13, Trudeau apologized for not recusing himself from discussions about WE because of his family's longtime involvement with the organization. Morneau also issued an apology.

In his testimony to the House of Commons finance committee on July 30, Trudeau again apologized, but said he did not place himself in a conflict of interest.

What happened to WE Charity after the contract's cancellation?

WE Charity announced on July 11 it had laid off hundreds of contract workers who were brought in to administer the CSSG. According to the Toronto Star, which first reported the story, the charity laid off 450 workers, while giving 15 others full-time positions.

On July 15, WE Charity issued a statement saying that it had decided to "refocus on [its] mission" by concentrating on international aid. It said it would cancel WE Day events going forward, "reflecting the realities of COVID-19," and launch an organizational review to "streamline the WE organizational structure."

WATCH | 'There are days when we just wish we hadn't answered the phone on April 19': Craig Kielburger:

'There are days when we just wish we hadn't answered the phone on April 19'--Craig Kielburger

3 years ago
Duration 0:39
Craig and Marc Kielburger appeared before the Commons finance committee Tuesday.

On July 28, WE co-founder Craig Kielburger testified to the House of Commons finance committee that the charity agreed to administer the student grant program because it wanted to make a difference — not because it wanted to make a profit off the deal. He refuted rumours that WE Charity was in financial trouble when it agreed to take on the program. 

On Wednesday, the charity announced it is winding down its operations in Canada. In a media statement, WE acknowledged that it found itself in the middle of a political scandal that it was "ill-equipped" to fight.

What is happening with the Canada student service grant now?

In the wake of the controversy, the federal government has abandoned the grant program. Last week the NDP urged the government to redirect the $912 million earmarked for the program to help cash-strapped students pay for tuition.

With files from CBC News and The Canadian Press