Front Burner - WE Charity’s rise to prominence and unexpected fall

Episode Date: September 14, 2020

Back in 1995, a 12-year-old in Thornhill, Ontario, was so moved by a newspaper story about the death of a boy in Pakistan who fought against child labour, that he created a charity called Free the Children. Craig Kielburger, along with his brother Mark, went on to create a mass movement of youth activism. But 25 years later, and following a political controversy related to a student volunteer grant program, the Kielburgers announced they were stepping down and closing the Canadian arm of WE Charity. Today, Marie-Danielle Smith and Jason Markusoff of Maclean’s magazine report on the stratospheric rise – and the unexpected fall – of WE.

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hello, I'm Josh Bloch. Let me take you back. It's 1995, and a 12-year-old in Thornhill, Ontario, picks up the paper. He's looking for the funnies, but something on the front page catches his eye.

A boy in Pakistan has been killed. The boy had dedicated himself to combating child labor after being a child laborer himself. Reading that story from the other side of the world, a young Craig Kilberger decides he will pick up the fight. He will, as the charity he starts soon after will be called, Free the Children. It is a youth group dedicated to the elimination of child labor and the exploitation of children.

Who will help the children if we don't? That was 25 years ago, and Craig Kilberger and his brother Mark have come a long, long way since. Last week, the pair announced they were shuttering the Canadian arm of We Charity, and the two brothers will be stepping down. We made a very simple but important promise to ourselves, that every decision would be made through the lens of what's best for children, putting children even ahead of this organization. Today,

Murray Daniel Smith and Jason Markosoff of Maclean's Magazine on the stratospheric rise and the unexpected fall of We Charity. This is Frontburner. Hello to you both. Hello. Hello. Okay, Marie Daniel, we've told the famous origin story, but I want to ask you about the first time that Craig

Kilburger really breaks into the public eye. How does this kid come to meet with then Prime Minister Jean Chrétien? Yeah, so it's January 1996, and Craig has just turned 13, and he's on his first trip to South Asia. Can you ask him his age? How's he ever gone to school? While he's on the trip, Jean-Claude Saint is also traveling in India. So he pulls together this press conference with traveling reporters, and he sits side by side with some Indian school children

who are talking about the issue of child labour. And that's the issue that kind of got him going in the first place. So what do you want him to say to Prime Minister Rao? Basically, I want him at least to raise the issue. Forget being the Prime Minister for a second. Just simply as a Canadian, it's his moral responsibility to do this. So he holds this press conference, demands the Prime Minister's time. Have you tried to reach the Prime Minister?

Yes. To meet him? I have faxed and written to the Prime Minister requesting to meet with him. Unfortunately, he said his schedule was too booked. And five days later, he gets it. He gets 15 minutes with the Prime Minister. And it's a huge deal.

It's not every 13-year-old that gets invited to meet with the Prime Minister. Less likely still that it happens in a hotel in Islamabad to a boy from Thornhill, Ontario. But Craig Kilberger comes out of that meeting with some irreverence. He is described by a travelling Maclean's reporter at the time as having the poised assurance of a veteran performer. And he basically says that the Prime Minister is a bit too vague on this issue. His promises haven't convinced him.

And it's the first time that he comes up against power and sort of challenges it. And this is a huge moment in their burgeoning movement. And in these early days of Free the Children, when Craig and his brother Mark are still just children themselves, what is this organization all about? What do they stand for? And what are they doing, Jason?

This was the 90s, keep in mind. When Gen X and teen apathy and plugging out was all the rage, here were these teenage brothers who were passionate, earnest. And there's something very compelling to the media and the general public about this earnest, articulate, poised young person raising these issues and raising these alarm bells. And my question is, are all children created equal? And if child labour is wrong for a white, middle-class child in North

America, then why is it any different for a girl in Thailand or a boy in Brazil? Right. I mean, Jason, he had this remarkable star power from such a young age that he's able to, you know, have a meeting with and hold court with Jean Chrétien. What is it, do you think, about him that drew people to him? This young, earnest excitement that they were taking steps to get organized, taking steps to act, not just making it one press conference, but making it their lives' passion, developing this charity, later developing trips,

getting on Oprah, getting on 60 Minutes. Why you? Why not? If everyone in the world could say, why me, then nothing ever would be accomplished. They were not satisfied with just one or two quick sound bites or attentions. They were working on this, developing this, and a steadiness and a steadfastness. You just don't see many adults do, let alone teenagers. And again, when it's young people, people's attentions are drawn to them so much more.

Marie-Danielle, his star power also lands him on the front cover of the popular Canadian magazine, which is now long gone, but Saturday Night magazine. And the cover calls him the most powerful kid in the world. But Craig doesn't seem to like this story, does he? No. So pretty early on, he has some clear ideas about how he wants to be seen by the public and by the media. So that magazine piece was quite critical. Its tone was critical. It described him as a precocious pubescent. It describes him asking the journalist to take certain anecdotes out of the story because they didn't convey the image that he wanted to. So it sort of sets the stage for this combative relationship with media that we end up seeing

come to a head this year. He sues the magazine at the time and after a few years got a settlement from them, partly because the article had sort of alleged that his parents were financially benefiting from the charity at that time. It wasn't yet a registered entity, so he strongly denied that, but he also just took issue with this overall tone. It's not clear that the magazine ever fully backed down, though. The then-editor Ken White had been quoted in the Globe and Mail saying that they settled because it just had become really expensive and time consuming to continue fighting the lawsuit. So, Marie-Danielle, we've talked about how in the early days, the organization was really focused on this issue of child labor.

But then over time, the mission of the charity begins to expand. Tell me a bit about what other causes the Killburgers start to take on. Yeah, so Jason mentioned Craig ends up on the Oprah Winfrey show. And that's in 1999. And it becomes clear at that point that you're veering away just from child labor. At that point, they're also talking about building schools abroad. So they get into education. Oprah signs up to build a number of schools with the charity.

In the same year, his older brother, Mark Kielberger, sets up a for-profit arm. It's called Leaders Today. And they offer basically what are volunteerism trips. So kids will go backpacking in countries like Thailand and Kenya. They do some volunteering, do some leadership training, and come back. And we talked to kids who had gone on those trips, and they don't remember hearing about child labor at the time. It just turned into this sort of bigger cause of international development. You also start to see a shift when they start with this very grassroots activism where it's kids helping kids. It's very earnest. They stay away from corporate partners.

They have this sort of skepticism about globalization. Children in dangerous glass factories. Past factories, children making the mini products which we import into Canada and use every day without considering their source. In Craig's first book, which came out that very same year in 1999, he talks about how commercialization seems to have ruined the capital of Thailand, Bangkok. And he praises Mother Teresa for living simply and all this. But as they grow up, as the Kielberger brothers grow up and the movement grows up, then they start to sort of shift into this bigger mission and vaguer mission and one that tends to attract the kinds of politicians and corporations that they used to be critical of. Right. I mean, I understand at one point they even have a Free the Children

RBC virtual visa debit card. I would encourage individuals to get this card because it creates so much change. They have all kinds of products that are associated with this for-profit side, which I think Jason can talk more about. Well, yeah, Jason, tell me about how big does that for-profit side of the organization get? It gets very, very large. We weren't able to get firm revenue numbers out of them, but we knew this was a multi-million dollar a year powerhouse of an organization. This was something that started with some of these volunteerism trips from this for-profit

armed leaders today. And then in 2005, they branched out with a Me Too We Style brand of ethically produced eco-sustainable clothing, which at the time, you know, in the early 2000s, those were big, big buzzwords. And what they stated this was, was a way of making a stable source of revenue for charity if donations were going to be on the wane. Here was a way they could produce for-profit products and pledge to give half the profits to charity. And they would do that over the years with all these different products. They expanded books, speakers bureau, bracelets made overseas, so many different licensing brands. They even had a very short-lived attempt to start a music label, although that didn't get off the ground very far. They just had one of their own staffers producing a couple of guitar singer-songwriter albums. But over the years, they say they've rendered $20 million to the charity over time in services and money.

While that sounds like a lot, it's actually only about 5% of what the charity brought in over that time, so it's not a ton. It's actually only about 5% of what the charity brought in over that time, so it's not a ton. But certainly, through all these products, they created this overarching, all-consuming brand of Wii, of MitaWii. And it really helped people create this lifestyle image that you can not only give to Wii and go on the trips, but you can consume them full-time. And the WE Charity itself, in 2019, brought in $66 million in revenue. Part of that, as you mentioned, is coming from the for-profit side. It's a significant amount of money. I mean, what can the Kielburgers point to as making good on their charitable goals?

They started out very much as an activist organization fighting child labor. Then they moved into international development and that became a very large international effort they had. They started creating these things called We Villages where they would build schools and health care and even a hospital in one case in Kenya. They built a college overseas. They would build water systems and apparently they were very good at doing water systems. And so they did these in very many in several countries Ecuador, Kenya. They would also sell these volunteerism trips to bring people to show them these and one of the ideas for these trips was to ideally inspire some people to donate even more money.

After the experiences I've had on this Me to We trip, it will motivate me to do everything that I can for children at home and all over the world. But over time, that even became a lesser part. The international development became a lesser part of what we was doing. They really broke into schools in a huge way, reaching millions of students with their free curriculum. They had these different curriculum programs, leveraging the fact that there were these mandates from school boards all across the country

to create public service and volunteerism. We came in with this curriculum. And they would offer this curriculum, these programs, to school boards, free of charge, underwritten by sponsors and donors. And that became a major operation for it. In fact, that's the lifeblood of what they're doing in the States. And what they're doing in the States, while we don't really look at it much in Canada,

has been huge. Part of this work they're doing domestically, both in Canada and the U.S., kind of culminated with these massive We Day events. These are these highly produced rock concerts where they have celebrities and politicians. You have tens of thousands of kids sort of piling into stadiums, cheering and screaming and wearing Wii paraphernalia. Whoa, whoa, whoa, whoa. Wii Day, are you ready to make a difference? Well done. The first Wii Day was held in 2007, and they were still being held right up until the pandemic basically, you know, killed the idea of holding stadium sized events. But can you tell me a little bit about what are these WE Days? What were they about? Yeah, so WE Days sort of became an idea

in the early 2000s at a time when some of the staff were still in this sort of activist mentality, and a bit skeptical about the idea of using these kind of stadium rally-style events to reward volunteers. They were wondering why this big emphasis on sponsors would kind of fit in with their early ideals. And a big shout-out to our co-title sponsors and supporters, Virgin Atlantic and Virgin Holidays. Can you make some noise for them?

They made WE Day possible. And we're there since the first year with all of our partners who are gathered right here. Can you give all these amazing adults who believe in young people a big round of applause? But it became just such a huge part of the organization. And what WE Day essentially is, is a celebration or a reward for participants in WE schools. So those educational programs that Jason was talking about. At the end of the year, having, you know, done some service work, gotten engaged with that curriculum, done some volunteering, they get to go to this big star-studded event. And you end up with people

like, you know, famous actors like Idris Elba was there at one of the last We Days in the World before the pandemic in London, UK. I want you to turn to the person right next to you, whether you know them or not, and turn to them and say, you are important. Do it, do it. And you end up with people like Justin Trudeau. You don't have to wait until one of you in this room, and I know at least one of you is out there, becomes prime minister to make a difference.

Who, you know, has been speaking at WE Days since before he was even an MP. So it's this kind of star-studded celebrity draw, I think, that then gets more kids interested in participating. And it's this kind of cycle where they really grow their charity work and their reach into school systems in Canada, in the U.S., in the U.K. And Marie-Danielle, how would you describe the core philosophy of WE, like their vision of the world and their view of social change as expressed through those we day events? I think that the overall concept is that it should feel good to do good. And that small acts of kindness or small decisions like maybe choosing to buy a shirt that you know was was made ethically because it comes from we, little

actions that you know are good for the world will make you feel better too. So we have somebody talking to us in our piece about how this is part of the happiness movement of sort of the early 2000s and getting into the last few years where you want kids to feel fulfilled and the idea that their fulfillment can come from acts of service and relationships with this particular charity and how it sort of helps them to lead lives that are more rewarding. If I could jump in for a second. One of the catchphrases of the Kill Burgers movement became, live we.

And part of that is this philosophy expressed in some of their books and Me to We literature that don't live me, don't live but yourself, live but we, live but us. But it also became this all-encompassing brand identity where you sell

their We bracelets to fundraise to go on Wii trips, and then talk about them to Wii schools, and buy Wii books, and talk about Wii. And it became this, for these impressionable teenagers, encouraging, preaching this lifestyle that revolved around their charity and their for-profit arm. It's so interesting, because as you pointed out in your article, you have this 13-year-old kid who criticizes the prime minister for his vagueness around child labor,

and then flash forward two decades, and you have the same Craig Kilburger now standing shoulder to shoulder with the prime minister, a different prime minister, but also making vague comments. And here's something amazing. Not only did our new prime minister of Canada introduce one of the youngest cabinets in the history of our country, but also he will be serving as the minister of youth.

It speaks to what they evolved into when they started out, when you had him being quite critical of Prime Minister Chrétien. They were, you know, in part an activist awareness-raising organization that was, you know, confrontational with businesses sometimes and with politicians. As they evolved from child labor activism to international development to just being about empowerment, they became something that any politician would be delighted to stand up and talk about. Politicians from all stripes, premiers like Christy Clark in B.C. Now, WE Day is about what you can do if you get together and decide to make a difference. Scott Moe in Saskatchewan, Rachel Notley in Alberta, Dalton McGinty in Ontario, they all love to stand next to Fred Kielberger at WE Days or other events because they just became synonymous with earnest youth trying to do good and be empowered.

And that's the same reason that corporations who may have been resistant would later become excited to be just part of this, you know, attach to this organization that was just preaching empowerment, goodness of all things. In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. Hi, it's Ramit Sethi here.

You may have seen my money show on Netflix. I've been talking about money for 20 years. I've talked to millions of people and I have some startling numbers to share with you. Did you know that of the people I speak to, Okay. That's not a typo. 50%. That's because money is confusing. In my new book and podcast, Money for Couples, I help you and your partner create a financial vision together. To listen to this podcast, just search for Money for Cups. Okay, and then obviously things change for them. The pandemic happens, first of all,

and like so many charitable organizations, we really struggled to run its operations during a pandemic. Me Too We says they downsized from 135 full-time employees to just six. And the We Charities laid off 203 staff members in the early days of the pandemic. And that was all before the scandal surrounding the administration of a federal student grant program, which, of course, as we know, created a massive political scandal that saw the resignation of a former finance minister, Bill Morneau, and an ethics investigation as well. I wish that in hindsight we had done things differently. I think that it would have been more appropriate for me to recuse myself from that decision.

Marie-Danielle, remind us what happened. So the pandemic already was making things difficult for the organization in April. They've lost staff. And it's in this context that the government is looking for someone to administer a grant program. But the ministry under Trudeau and the public service come to a decision that we, Charity, would be well-placed to administer a grant program worth $500 million. So that $500 million would go towards giving students basically financial rewards for volunteering. And then there'd be another $43 million

that the charity could use to cover its costs. If you're a college or university student, or if you just graduated and you decide to volunteer this summer, you could get a grant of between $1,000 and $5,000. But of course, when Prime Minister Justin Trudeau goes to announce this, it's not lost on anyone that he himself has been pretty deeply involved with this organization for a long time. It also emerges, and people remember that his wife is doing a podcast with WE, and she's

been speaking at events too. His mother and brother have both been paid to speak at WE events, and they've had their expenses covered, and it's worth hundreds of thousands of dollars. and with the Morneau family, because Bill Morneau, the finance minister who would later resign, has a daughter who works at the organization, and he and his family have gone on trips to see WE projects abroad. So this is a lot, it's a lot of close connection, and, you know, when Prime Minister Justin Trudeau first came to power, this was a boon for the WE charity, and it was great for them, but now that close relationship kind of put them into hot water.

Mark and Craig Kielberger appeared before the House of Commons Finance Committee to answer questions. Frankly, I wish it wasn't a sole source contract. I wish we could have competed with others. That was not ours to decide. There are days that we just, we wish that we had never answered the phone on April 19th. And since that scandal, both the for-profit and the charitable arm have been criticized for how they're structured. I mean, there's been a lot of scrutiny about how the organization runs, particularly around where one ends and where the other begins. This is something that CTV's Lisa Laflamme asked the Killbrokers about last week.

How have they explained this? You know, they say that the Canadian Revenue Agency stifles charities from being creative. There's a crisis going on in this country that we're at a 30-year low in the percentage of Canadians giving to charity. And we can innovate to help support that. They've said this is, we've had lawyers go over this, we've had this vetted, we can show you proof that we've sent all this money from the profit arm to the charity. It's actually all very transparent.

It's online. All of the financial statements to the charity are online. All of the, you know, when people say complex entities, it's actually not. There's only two entities. But there are a lot of other questions that get raised for other reasons. One is that the financial state business themselves show that over the years, the WE Charity has spent millions of dollars on Me2WE products, on books and clothing and speakers.

There was question about the real estate holdings. There's a lot of questions. speakers. There was question about the real estate holdings. There's a lot of questions. You know, that scrutiny definitely bothered these brothers in this organization that it was not used to such scrutiny. And in fact, the We Charity operations in Canada have now shut down. That's right. We Charity, the pandemic might have wiped them out as it is, but certainly the reputational damage really hammered them. They lost or severed ties with a lot of their major sponsors, both in the UK, where they had also expanded, and in Canada. Marie-Danielle, how have the Kielburgers responded to your reporting on the story of the rise

and fall of WE? I mean, they've been skeptical, I think, about media attention all year, right? As much as the pandemic was problematic for the organization, what they really blame for the demise of their Canadian operations is the political scandal, but more importantly, misinformation in the political scandal. 25 years of incredible passion, incredible impact. And then politics took over. And yes, of course, we were naive in the process, but this is not how it should be.

And so much that was lost in Ottawa, as the governments and the opposition parties have their say, I think we've forgotten all about the kids. And notably, you know, they're shutting down the WE Days and WE Schools in Canada, but they say that the assets held by WE Charity Canada and the real estate held by WE Charity Canada, in part, is going towards an endowment fund that would sustain international projects.

By taking this action, establishing the endowment, we can protect those projects that have already been established over the past 25 years. For how long, though? For generations to come. Jason, the Kill Burgers are bonafide celebrities. I mean, their charity, as you have described it at its peak, was just this absolute behemoth. They packed stadiums full of adoring schoolchildren, and they attracted everyone from Oprah to the Dalai Lama to Idris Elba to the prime minister. Now that they're stepping aside

from We Charity, what do you think is next for them? You know, they've said it's going to take six to 12 months for them to wind down their Canadian operations. Who knows what's going to happen with further investigations. Not all the scrutiny is dying down with their announcement that they're going to fold tent. People are going to be seeing if they're actually going to be phasing out. They're still young. So they're in their 40s. I would be surprised if this was the last we've ever heard of the Kielberger brothers.

We'll probably wind up hearing them in some other capacity somewhere down the road. Well, we will continue to track this story as well. Thank you so much both for speaking with me today. Thank you. It was my pleasure. After we recorded this episode, FrontBurner reached out to WeCharity for comment and received a statement. It reads in part, quote, the percentage of Canadians who donate to charity is at a 30-year low. Often charities are forced to compete through expensive fundraising tactics. Me2We was created to help

provide a reliable and consistent source of funding for WeCharity, providing over $20 million in cash and cost offsetting in-kind financial support. This amount represents millions of dollars more than WeCharity purchased discounted products or scholarship trips from WeToWe. The statement continues that, quote, owning real estate is smart fiscal planning for the charity. Owning versus leasing property saves approximately $1.2 million per year. Real estate also provides financial security for WeCharity, which does not have a formal endowment. At this difficult time, WeCharity is able to sell the real estate to establish an endowment fund to sustain the Global Humanitarian Programs and Canadian Education Program. Canadian Education Program. When it comes to acquisition, we should also be clear that no funds from restricted program funds, no monies from youth fundraising, nor funds that would have

otherwise been used for youth service programs have ever been used to purchase property for We Charity or any other We-related entity. That's all for now. I'm Josh Bloch. Thanks for listening to FrontBurner.