Guest post by Heather Simpson, S4G: Strategies for Good
I must admit that I have been fixated by the coverage of Me to We. I will refer to Me to We throughout this post as I feel Me to We – the for-profit social enterprise– is the dominant entity and it is important to make that clear.
I actually listened to all four hours of the Kielburgers House of Commons finance committee testimony (and before you question my sanity, I was doing other things like walking the dog), and there is a lot to say about the facts and the potential aftermath of this moment. I’m not looking to rehash what has already been said by others, but it has indeed been a while since the Canadian charitable sector has seen such coverage in popular media, and it is definitely a first for social enterprise to be in this kind of spotlight.
And what a sad coming out party this has been for Canada’s social enterprise community- we are seeing the Me to We coverage tainted by scandal rather than noting the organization’s mismanagement of the mechanism and talking about the incredible value the social enterprise sector can bring when done well. To be fair, there are a lot of scandalous topics to cover when it comes to Me to We – single sourced contracts, lack of transparency, conflict of interest, inappropriate choice of auditors, what it means to “volunteer” with the organization, and charity ownership of property, to name but a few. While I am not going to speak to it in this post, charity-run social enterprises are going to be tainted by the diminished trust from the public as a result of this scandal – due largely to a general lack of understanding about how the charitable and nonprofit sector operates.
As we have seen, this coverage of the charitable sector in Canada is not flattering – I’ll share some links at the end of this post for some of what I consider to be key articles. But in this post I wanted to share some thoughts on how I hope this scandal can be capitalized upon to positively impact social enterprise in Canada. Years ago (in 2011), I actually met with Me to We to discuss their organizational structure. Me to We was really just starting to gain recognition having been established in 2009. I was working for a charity and had been tasked with exploring options for social enterprise, and found the CRA restrictions that the social enterprise be related to the charitable purpose were preventing the organization’s ability to achieve the scale needed in the social enterprise being explored. Me to We was one of the first, that I was aware of, that had established a separate structure and I felt that Me to We had an interesting model. Though I should point out that opinion was based on an understanding that there were only 3 legal entities all with distinct names and purposes.
That experience of learning about their structure in the early days of their development, coupled with what has been revealed as part of the current scandal, has led me to reflect on what we can all learn about charities and social enterprise. The first issue that I hope will result from the current scandal is that organizations will strive to clearly distinguish – in everything they do – between the activities and structure of the social enterprise versus the charity. When I met with Me to We the charity back in 2011 it was still Free the Children, it didn’t become WE Charity until 2016. Free the Children had strong brand recognition at one point, but eventually it was eclipsed by Me to We. While there may be different theories, I won’t believe anyone who tells me that the name change was anything other than an effort to confuse the general public as to the differences between the two entities (though I’m sure it is described as ‘an effort to streamline the brand’ or something similar by Me to We). For example, the Me to We website has a “Donate” link on its website, and I suspect most don’t notice the subtle change in the logo when you click to the charity site (a more appropriate approach might be to provide a link to WE Charity). Unfortunately, Me to We isn’t the only for-profit social enterprise that tries to blur the lines between the social enterprise and the charity. I hope that the increased scrutiny will discourage this type of behaviour.
Secondly, I would love to see a requirement for increased transparency and accountability for all social enterprises. I believe there needs to be clarity on the financial claims made by social enterprises. For example, if a social enterprise is going to claim that x% of profits go to the charity, then they need to provide financial statements that clearly show this. They should also have to provide disclosures about compensation for key staff and any non-arm’s length relationships. In the case of Me to We, the Kielburgers claim to be receiving salaries of about $125K, but nobody is talking about the fact that there are clear concerns around nepotism, as the Kielberger’s wives also derive income from the organization (as the CEO of ME to WE and the co-founder of We Well-being). If I take this to my most cynical inner core – and considering the revelations about the parents real estate dealings – it appears that Me to We is more of a family business than an accountable, purpose-driven organization.
I recognise that there is a great deal of sensitivity around reporting on compensation. For some reason the general public seems to believe that anyone working in the charitable sector should be doing so for the “mission discount”. I am not a supporter of this belief in a “mission discount” and have long argued that compensation for social enterprise within the charitable sector needs a different and more realistic model. I honestly wouldn’t balk at the Kielburgers taking significant salaries if they disclosed them. The Kielbrugers are so essential to the Me to We brand that it is not untoward to see this happen. To be honest I think it is unfair for social enterprises to continue to ask for entrepreneur level sweat equity on nonprofit wages – I stand by my belief that this is one of the core reasons that many charity-based social enterprises fail to deliver and suffer from high turnover.
Continuing on the theme of transparency and accountability, I can only hope that the folks at BCorp and Charity Intelligence (CI) are looking at their processes to try to understand how an organization that is in so much hot water today, could have been one that earned 4-start (CI), or which was regularly rated among the “Best in the World” (BCorp). The organizational issues that are being made public right now about Me to We are not new. They have existed for a long time– they were just overlooked. On a recent webinar, Kate Bahen (Managing Director at CI) admitted that their algorithm “got it wrong”, and I really struggle to understand how an organization with a Corporate Accountability rating of 0.1 and a Transparency rating of 1.3 can qualify as a Best in the World BCorp. I can’t find anything to explain BCorps rating system, but Me to We was amongst the lowest scores in Canadian BCorps on these two measures. Me to We tied for lowest score on Corporate Accountability (the highest Canadian score was 3.8), and were the second lowest score on transparency (the highest Canadian score was 6.0). The fact of the matter is that you really can’t tell what is going on in an organization just from reading reports and reviewing financial statements and this case just highlights for me the problems with these types of oversight indicators. This is an opportunity for these organizations to develop the internal processes and for the larger sector to develop effective external measures to spot problematic issues, otherwise the entire of the sector will continue to lose credibility.
Finally, and perhaps most importantly, I hope that this Me to We scandal provides the impetus for all of us to work towards a definition, or definitions, of social enterprise that clearly differentiate between nonprofit enterprises and for-profit enterprises. I have never understood the hesitation to make this distinction clear. Both are needed, but I cannot help but feel that nonprofit social enterprises are used to justify the need for supports that ultimately are really only accessible to for-profit social enterprise. Me to We certainly appears to have felt that there was significant benefit in being perceived as a nonprofit, and the nonprofit social enterprise community should hold them – and others (again, unfortunately they aren’t the only for-profit social enterprise operating in this way) – accountable for portraying themselves as such.
The really unfortunate part of all of this for me, is that it is resulting in an erosion of trust of the charitable sector. In this instance, as far as I can tell, the balance of power, lies with Me to We (not the charity). It is the for-profit Me to We in this case leveraging the charity to make themselves seem more benevolent in order to drive their for profit business.
TorStar Oped from Formed ED of Oxfam (August 11, 2020) https://www.thestar.com/opinion/contributors/2020/08/11/collateral-damage-from-we-scandal-leaves-charities-in-peril.html
Imagine Canada Statement (July 21, 2020) https://www.imaginecanada.ca/en/360/statement-Canada-student-service-grant-WE-charity
Charity Intelligence’s Top 10 Questions for the Kielburgers (July 27, 2020) https://www.charityintelligence.ca/research-and-news/ci-views/43-charity-news/662-ci-s-top-10-questions-for-marc-and-craig-kielburger
Mark Blumberg’s Blog Posts https://www.blumbergs.ca/blog/