Major corporate sponsors are starting to distance themselves from WE Charity amid an ongoing controversy over a deal to run a $900-million student volunteer program.
Virgin Atlantic Airways said it is suspending its sponsorship of the embattled organization and the Royal Bank of Canada confirmed it is reviewing its relationship.
The move comes as Prime Minister Justin Trudeau and Finance Minister Bill Morneau face ethics probes after failing to recuse themselves from discussions about a $912-million contract — since aborted — to WE.
Virgin Atlantic Airways, whose website refers to WE as its "main charity partner," said it has halted payments after contributing more than $10 million to the organization since 2010, when it launched its partnership with the group run by brothers Craig and Marc Kielburger.
“We are in contact with WE Charity and whilst investigations continue, we have temporarily paused our donations to them," the company said in an email.
RBC is also taking a second look at its close ties to the group.
"We are reassessing the programs we've been delivering with WE to support young Canadians over the past several years," said spokeswoman Gillian McArdle.
"Foundational to all our relationships, RBC expects our partners to conduct their business in accordance with our values, policies and practices."
The bank has strong ties to WE. In 2012 the charity, then known as Free the Children, announced a multimillion-dollar partnership with RBC that saw the financial institution come on board as a "national co-title sponsor" of We Day events across the country.
RBC chief executive David McKay served as a co-chairman of the organization's signature event in Toronto last year.
Trudeau and Morneau have apologized for not declaring possible conflicts because of their familial ties to the organization — Trudeau because of speaking fees paid to his brother, mother and wife, and Morneau because one of his daughters is nearing the end of a one-year contract in an administrative role.
Morneau also said Wednesday he had just repaid WE Charity more than $41,000 for expenses the group covered for trips his family took to Kenya and Ecuador in 2017 to see some of its humanitarian work.
WE sought to frame the corporate flight as the product of a political battle in Ottawa in which it found itself unduly caught up.
"Unfortunately, the charity has now been drawn into a divisive political environment," WE said in an email.
"WE Charity is grateful to every philanthropic partner who has enabled our impact helping youth over the past 25-years," the charity said.
"Our corporate partners' 25-plus year commitment helping youth serve Canada should be celebrated, rather than expose them to undue criticism."
The ongoing scandal has raised questions about Toronto-based WE Charity's internal culture and leadership style as well as the flow of cash between the organization and the for-profit ME to WE "social enterprise," which was founded by the Kielburger brothers.
The retreat by sponsors stems from fears around brand association, said Dirk Matten, Hewlett-Packard chair in corporate social responsibility at the Schulich School of Business.
"They don’t want to be associated with a charity that has the whiff of corruption," Matten said.
Companies increasingly view charitable partnerships as an investment to build social capital.
"They want to see a return. They want a social income. And if I put money into an organization that tampers with a politician — why would I do that? That’s not the outcome I want to see," Matten said. "If I were a business leader, I would cut all the ties."
Matten, who said he taught Craig Kielburger in a course for Schulich's executive MBA program in 2009, said he feels let down on both a personal and public level.
"They know how the cookie crumbles. They know how to financially run a situation. I remember Craig being in my class on business and sustainability and having a go at me that I wasn’t radical enough, that I wasn’t pushing the ethical line too hard. And now this? I’m very, very disappointed."
Craig and Marc Kielburger are slated to appear before the House of Commons finance committee on Tuesday.
Canada's conflict of interest law prohibits ministers or their families from accepting paid travel, a lesson the government learned when Trudeau was found afoul of the rule for his family's 2016 vacation to the Aga Khan's private island.
Student groups have asked the Liberals to push the program money — initially slated to pay students grants of up to $5,000 based on the hours they volunteers — into other supports, saying it's too late in the summer for young people to make the most of the program and earn enough to pay for schooling costs in the fall.
Employment and Social Development Canada, which oversees the program, said in a statement Thursday that officials are "working diligently to develop a transition plan, including looking at options on how best to proceed."
— with files from Jordan Press
This report by The Canadian Press was first published July 24, 2020.
Companies in this story: (TSX:RY)
Christopher Reynolds, The Canadian Press
