Agreement between WE and federal government set aside only $500 million for student grants: documents

Documents shared with the Commons finance committee today suggest that although the Canada Student Service Grant program was allocated a $900 million budget, officials had drawn up a plan with the WE Charity Foundation to spend only a portion of that amount.

According to the text of the contribution agreement signed June 23 between Youth Minister Bardish Chagger's office and the WE Charity Foundation, up to $500 million could have paid out in the form of grants to students across three cohorts of potential volunteers, while $43.53 million would have been allocated to the WE Charity Foundation for administering the program.

Up to $8.75 million of that $43.53 million was eligible to be shared among the partnering charities and non-profit organizations that supervised the volunteers. Originally, the government disclosed only that $5 million was available to those partnering non-profits — but the documents provided to the committee show an additional $3.75 million was available, depending on how many students were placed.

On July 3, operational responsibility for the volunteer grant scheme was turned over to Employment and Social Development Canada officials after WE Charity announced it was pulling out of its partnership to administer the program. This decision, which was first announced by the WE organization, was described by Chagger's office that day as "mutual."

WE's involvement in the student service grant program has since blown up into a major scandal for the government. Both Prime Minister Justin Trudeau and Finance Minister Bill Morneau are under investigation by the office of federal Ethics Commissioner Mario Dion over their failure to recuse themselves from cabinet discussions of the program, given the close ties between their families and WE Charity.

CBC News has reported that the program appears to be in limbo, leaving both student volunteers and the organizations they'd hoped to be helping wondering what happens next. 

The most recent COVID-19 program spending update prepared July 23 by Finance Minister Morneau's department for the House of Commons standing committee on finance continues to state the budget for the volunteer grant scheme as $900 million. 

In an interview on Monday with CBC's Power & Politics, Chagger acknowledged WE could have been paid more than $43.5 million if the program actually had ended up costing the full $900 million allocated to it. 

"I'd be leaning on the public service to have those negotiations and see what would be needed," the minister said. 

Chagger also admitted the government has not ruled out scrapping the program entirely. 

Kielburger email disclosed

The documents shared with the committee also include the email WE Charity founder Craig Kielburger sent to Employment and Social Development Canada official Rachel Wernick on April 22 — the day Trudeau first announced publicly the creation of a volunteer grant to reward students' community service during the COVID-19 pandemic.

The email supports earlier committee testimony regarding a proposal the WE organization made earlier in April to Small Business Minister Mary Ng to create a social entrepreneurship program for youth. This proposal, which the WE organization now says arose from a conversation between Ng and Kielburger on April 7, was subsequently shared with Chagger and Morneau.

Kielburger's email to Wernick pitches two options that "WE Charity can turn-key to launch this summer with hundreds of support staff ready to deliver" — a 12-month social entrepreneurship program for 8,000 youth (which built on an April 9 concept paper that's subsequently been shared with the committee and posted online by WE), and a three-month youth summer service program for 20,000 youth, for which students would be compensated with a stipend for their post-secondary studies.

In their committee testimony, Wernick and other government officials said it was difficult to find a partner that was capable of quickly delivering a large program for students during the pandemic.

After Wernick's July 16 appearance, the WE organization said it was incorrect to conflate the testimony about the unsolicited April 9 proposal with its eventual partnership to deliver the CSSG; the earlier pitch, it says, was "distinct and clearly unrelated."

The entrepreneurship pitch "was never adopted, because the government went in a different direction, and subsequently reached out to WE Charity to submit a different proposal, along the lines of its proposed CSSG," it said.

In a message to CBC News Monday, WE's public relations department said that on April 19, Wernick requested a proposal on the topic of youth service — and so on April 22 it provided both its original proposal and the second one for a bursary program, as requested.

Wernick told the committee that these were separate proposals, but when WE provided the new proposal to her "it had adapted that one, which had been developed over some time, to adapt to the new parameters set out by the government in the announcement."

"Although both programs involve young people, they are distinct programs and not iterations or evolutions," WE told CBC News on Monday.

Three 'cohorts' of volunteers

The documents describe the student volunteer scheme unfolding in two parts: a 'core' program consisting of the first 40,000 student volunteers, and a 'supplementary' program which could include up to 60,000 more volunteers.

The $500 million grant disbursement for which the WE Charity Foundation could have been responsible is based on 100,000 students each earning the maximum grant possible: $5,000 for 500 hours of volunteer service. The documents state that this service must be completed by Sept. 15 — but other information provided by the government about this grant has stated that students have until the end of October to accumulate as many hours as possible.

The core program is described as being based on two cohorts of 20,000 students each. Payment to the WE organization for administering this program was tied to these cohorts: $19.5 million for design, implementation and delivery for the first 20,000 student placements — while partnering with a minimum of 50 not-for-profit organizations — and $13.53 million for the second cohort.

Up to 10,000 volunteer student placements in the core program would have been made available "by WE directly ... to the extent that sufficient volunteer service opportunities cannot be offered through not-for-profit partners."

CBC News reported earlier this month on some of the positions designed by WE for this purpose, which included activities like designing social media campaigns, mentoring others as "COVID-19 safe ambassadors" in their communities, making masks, tutoring children or creating exercise videos for seniors or kids trapped inside during the pandemic.

The costs for the second cohort were assumed to be lower because the program would already be up and running.

Not-for-profit partners were eligible for up to $5 million of the funding for the first cohort, and up to $3.75 million for the second.

For each cohort, $300,000 was set aside to support making the program accessible to "vulnerable" populations. The documents shared with the committee do not define the student populations the government considers vulnerable.

For each cohort, the WE organization would have been permitted to charge $1.15 million as an eligible expense for verifying student hours and disbursing the grant money.

The balance of the funding for each cohort was available to WE to cover the cost of setting up and delivering the program.

The government says that at the time the program was transferred back into government hands, 35,000 applications had been received for the first cohort of 20,000 positions. The program had not transitioned into the second cohort phase, which would have triggered the second cohort funding for WE Charity Foundation.

'Onboarding, training and coaching'

The first 40,000 students would have received not only volunteer service opportunities but skills training, designed and delivered as part of the WE program. It's not clear whether this training, which WE developed with partners from the LinkedIn Learning platform, will continue now that the government is administering the grant. Online training modules could have been counted toward up to 25 of the students' volunteer hours. 

The contribution agreement describes WE's role in the core program as including "on-boarding, training, coaching" for up to 40,000 student volunteers. Increasing "skills development" for the participating students is listed as one of the agreement's objectives.

The second, "supplementary" program would not have included this kind of value-added experience.

In return for a $10.5 million administration fee, the WE Charity Foundation was contracted to facilitate up to 60,000 postings for other volunteer positions at not-for-profits using its 'I Want to Help' platform. It was not responsible for recruiting for these positions, as it would have been for the service opportunities in the core program, however.

The contribution agreement was signed on June 23 by Chagger on behalf of the federal government, and by president of the WE Charity Foundation Scott Baker and WE organization chief of financial operations Victor Li. (Li initially was scheduled to appear in the same 90-minute block as Craig Kielburger and his brother Marc on Tuesday but, at the request of the Conservatives, committee members agreed Monday to have Li appear on a different day later in the week.)

Notwithstanding the date it was signed, the agreement says it took effect May 5. It lays out work that the WE organization was supposed to be delivering prior to the public announcement of WE Charity's involvement on June 25.

WE Charity's public relations department annotated the agreement and circulated it Monday afternoon.

In the WE version of the document, it said the May 5 date "reflects when WE began working and incurring eligible expenditures to design the program, build the program infrastructure such as backend technology, recruit not-for-profit partners, create bilingual training materials, and prepare to deliver the program."

"Because of the speed with which the program needed to be launched and delivered, WE acted in good faith to undertake these actions before this agreement had been finalized and signed," it said.

In these annotated notes, it also said that all of the government funding will be repaid in full.

While the original government announcement said "WE Charity" was its partner to deliver the volunteer grant, the contract — as Global News first reported last week — was with a separate charitable entity within the WE organization, the WE Charity Foundation. The WE organization says this was done "to protect the pre-existing charitable assets of WE Charity from liabilities."

However, the contribution agreement allows for eligible expenses to be charged by other parts of the WE organization.

"WE Charity Foundation may enter into agreements with WE Charity, WEllbeing Foundation and/or ME to WE Foundation of Canada to subcontract duties and responsibilities of WE Charity Foundation," the annotated notes said. "It was intended to do so, so that staff, expertise and assets of those entities could be utilized to help implement the project, if necessary."

Sophie Grégoire Trudeau worked on a podcast for the WE organization earlier this year. WE told CBC News this podcast would not be an eligible expense.