CharityWatch analyzed WE Charity's 2020 audited financial statements and IRS Form 990 tax filing for its U.S.-based legal entity (tax ID #16-1533544). CharityWatch is unable to rate WE Charity at this time in consideration of concerns raised about the charity by various media outlets related to the organization's governance, transparency, and accounting of claimed program accomplishments. These concerns may impact the reliability of WE Charity's financial reporting for purposes of determining how efficiently and effectively it uses donors' contributions.
Concerns Raised By Journalists:
According to an investigation conducted by journalists at the CBC program, The Fifth Estate: "WE Charity told a [Canadian] parliamentary ethics committee it had built hundreds of schools in Kenya with donors' money, but an unhappy donor told MPs [members of Parliament] he felt defrauded because another donor funded the same school he was told he had paid for."
"Recent news: WE Charity announces closure: September 9, 2020. Co-founders Craig and Marc Kielburger announce WE Charity’s Canadian operations will close down, with net proceeds from the asset sales transferred to a new foundation as an endowment for WE Charity’s programs in Kenya, Ecuador and China. At this time, the closure is only WE Charity’s Canadian operations not affecting WE Charity US, WE Charity UK, ME to WE social enterprise, or other WE entities." "DONOR ADVISORY: July 17, 2020, WE Charity has a nearly completely new board. Six of last year’s directors were replaced with four new directors, with Greg Rogers as the new board chair. In June 2020, one new director resigned."
"On June 25, 2020 for the COVID-19 pandemic response, the Canadian government awarded a $912m [million] contract to WE Charity to recruit, manage, and fund student volunteers. On July 3, WE Charity withdrew from this contract." Additional articles and media may be viewed here.
CharityWatch's Findings: In addition to WE Charity’s affiliation with other nonprofit organizations in the U.S. and elsewhere, WE Charity is also associated with the for-profit B Corporation, ME to WE Social Enterprises, Inc., through which WE’s co-founders receive employment income, according to an "independent assessment of certain topics related to WE Charity and ME to WE Social Enterprises, Inc.," dated May 23, 2019, posted on we.org. The financial statements of B Corporations are not a matter of public record. For this reason, CharityWatch is unable to verify the accuracy of the reported employment income amounts.
Charities are, however, required to report transactions among their related organizations on IRS Form 990, Schedule R, Related Organizations and Unrelated Partnerships, of their annual tax filing if they respond "Yes" to the following question: "Was the organization related to any tax-exempt or taxable entity? If 'Yes,' complete Schedule R, Part II, III, or IV, and Part V, line 1" (IRS Form 990, Part IV, line 34). WE Charity responded "No" to this question on its fiscal year 2020 and 2019 tax filings.
For purposes of Form 990, Schedule R, the IRS defines a related organization as "[a]n organization, including a nonprofit organization, a stock corporation, a partnership or limited liability company (LLC), a trust, and a governmental unit or other governmental entity...[that] stands, at any time during the tax year, in one or more of the following relationships to the filing organization (among others, as detailed at irs.gov):
- Parent – An organization that controls the filing organization.
- Subsidiary – An organization controlled by the filing organization.
- Brother/Sister – An organization controlled by the same person or persons that control the filing organization.
- Supporting Organization – An organization that carries out its exempt purpose by supporting other exempt organizations, usually other public charities, within the IRS's definitions of Type I, Type II, or Type III.
Whether or not transactions among WE Charity's related organizations meet the IRS's definitions of "control" and "related organizations" for the purposes of Form 990, Schedule R, it is clear that significant transactions did occur among them. WE Charity's audited financial statements for fiscal years 2020 and 2019 each report significant related party transactions between WE Charity and Me to We Foundation. The U.S. tax filings of WE Charity (tax ID #16-1533544) and ME to WE Foundation (tax ID #27-3338929) for fiscal years 2020 and 2019 analyzed by CharityWatch do not include a Form 990, Schedule R. On this schedule, charities are required to report the nature and amounts of certain financial transactions with related organizations, including transactions with related for-profit companies, if any.
WE Charity’s fiscal 2020 audited financial statements (Note 11, Related Party Transactions) disclose that the U.S. entity of WE Charity made payments to WE Charity – Canada in fiscal 2020 that amounted to $15,744,490. This $15.7 million is allocated to WE Charity’s program services expenses, at approximately $6.3 million and $9.4 million to international projects and domestic projects, respectively, according to the audited Statement of Functional Expenses. Other than the general descriptions of its international and domestic program services provided in audit Note 9 (Program Services), no additional details are reported about how the $15.7 million was expended.
WE Charity’s fiscal 2019 audited financial statements (Note 11, Related Party Transactions) disclose that the U.S. entity of WE Charity made payments to WE Charity – Canada in fiscal 2019 that amounted to $18,789,912. The $18.8 million is allocated to WE Charity’s program services expenses, at approximately $8.0 million and $10.8 million to international projects and domestic projects, respectively, according to the audited Statement of Functional Expenses. Other than the general descriptions of its international and domestic program services provided in audit Note 9 (Program Services), no additional details are reported about how the $18.8 million was expended.
"?" Rating of WE Charity by CharityWatch:
CharityWatch has assigned WE Charity a "?" rating for its fiscal year ended 8/31/2020 due to the above-cited concerns related to its governance, transparency, and accounting of program accomplishments. If additional information becomes available in the future that would allow us to provide a meaningful rating of WE Charity, we will update our information as we are able to assess that information. |