WE Charity scales back operations

WE Charity is scaling back its operations, making dozens of layoffs in Canada and the United Kingdom, while also looking to sell some of its real estate holdings in Toronto.

The charity has been embroiled in a political controversy since the Trudeau government chose it to run a now-abandoned student-volunteer program.

WE Charity says its financial position has been greatly affected by the COVID-19 pandemic and "recent events," prompting a need to shift programming and reduce staff.

At its global headquarters in Toronto, 16 full-time employees will be laid off and another 51 employees working on fixed-term contracts with the charity won't have them renewed when they expire at the end of the month.

WE Charity's U.K. operations will be centralized in Canada, which means 19 full-time and contract employees in London will be laid off.

"These were not easy decisions to make," WE Charity executive director Dalal Al-Waheidi said in a statement.

"We have a very hard-working and dedicated team in North America and the U.K. and over 100 staff leading our international development work overseas. We are grateful and thankful for the contribution they have made around the world."

These changes come after months of intense public scrutiny of WE Charity, its affiliated for-profit organization, ME to WE, as well as the family ties between the WE organization and Prime Minister Justin Trudeau and Finance Minister Bill Morneau.

The federal ethics commissioner is investigating whether Trudeau and Morneau violated the Conflict of Interest Act over the Liberal government's decision to hand the administration of the Canada Student Services Grant program to WE Charity.

Both the prime minister and finance minister have apologized for failing to recuse themselves when cabinet approved the recommended agreement.

Last month, WE Charity voluntarily suspended all of its Canadian corporate and school board partnerships after many announced they were cutting ties with the organization.

The charity has also cancelled all "WE Day" activities for the foreseeable future and is shifting its WE Schools learning programs to a digital-only format.

Al-Waheidi said the resulting hit to the charity's financials, coupled with the effects of the pandemic, has prompted a need for a new and "refocused" vision.

The changes and staffing reductions mean office space for the organization will also need to be reduced, she said.

The charity plans to keep its headquarters, known as the Global Learning Centre, on Queen Street in Toronto, but other real estate holdings will be assessed by the organization to determine which ones could be sold.

This includes a number of buildings on a block near Moss Park in Toronto acquired by the charity as part of a 25th anniversary plan to create a "campus for good," that would provide free space for youth-led not-for-profits and social enterprises.

"Unfortunately, we are no longer advancing this project," Al-Waheidi said.

"We believe now more than ever in the importance of the work that WE Charity is focused on and have confidence that by streamlining our operations in this way, and renewing our focus on international development, we will find a path forward."

Last month, WE announced it had launched a formal review of its organization led by the external firm Korn Ferry, aimed at simplifying its program offerings and making governance and structural changes.

It said this included "evaluating the future of ME to WE, with the goal of a clearer separation of the social enterprise from the charitable entities."

The organization, co-founded by brothers Craig and Marc Kielburger, is also conducting a workplace review with the assistance of law firm McCarthy Tetrault LLP.

Later Thursday, Al-Waheidi and Scott Baker, chief operations officer at WE Charity, will appear before the House of Commons finance committee. It has been probing the government's decision to award WE the sole-sourced contract to administer the Canada Student Services Grant.

The government had budgeted $912 million for the program, which was supposed to encourage students to sign up for volunteer work related to the COVID-19 pandemic. The agreement to have WE Charity administer the program was for $543 million.

WE Charity was to be paid up to $43.5 million under the agreement, which stipulated that the organization could not make money on the deal.

WE backed out of the deal on July 3, citing the controversy dogging the program, but not before government had paid the organization $30 million for its services.

WE Charity says it is in the process of returning all of the funds. It has already returned $22 million, but is now waiting for Ottawa to be able to take the rest.

"WE Charity has repeatedly communicated to ESDC (Employment, Social Development Canada) the desire to return the remaining funds as soon as the government is able to accept the transfer."