Charities worry about loss of trust, donations in wake of WE deal controversy

Charities worry about loss of trust, donations in wake of WE deal controversy

Charities worry about loss of trust, donations in wake of WE deal controversy

OTTAWA — The pandemic has not been easy on a key source of revenue for Habit for Humanity — its social enterprise known as the ReStore.

The brick-and-mortar operations, like others in the country, closed during pandemic-related lockdowns, cutting into revenues at the same time that traditional donations dropped in line with the economic decline.

Already concerned about the pandemic’s effect on donations, the sector faces a new concern: that controversy around the WE organization and its since-aborted deal with the Liberal government will erode trust in charities and the use of social enterprises many rely on to fund services.

Imagine Canada, a charity that promotes the work of the sector, estimates revenues have dropped by about one-third during the COVID-19 pandemic, as economic uncertainty and high unemployment made households cut discretionary spending.

The pandemic has only accelerated a years-long trend for many groups that have sought alternative revenue streams through the sale of goods and services.

Bruce MacDonald, Imagine Canada’s chief executive, said about 48 per cent of charity revenues in Canada come from this earned income.

Revenues from anything not directly related to the charity’s work would have to flow through a separate arm like a social enterprise similar to the ReStore.

“Sometimes charities set up other entities and those can be for-profit, they can be not-for-profit, so they can actually stay within the rules to earn that money,” MacDonald said.

Those separate entities aren’t usually subject to the same transparency rules as the charities themselves, he said.

In 2016, the Liberals allowed charities and amateur athletic associations to have limited involvement in a for-profit business without losing their charitable status.

Two years later, a government-struck advisory board pushed the Liberals go further to promote the use of social enterprises with a series of recommendations that included making changes to the tax code to define when proceeds were promoting a charity’s causes, and when they were advancing private interests.

The most recent figures from Habitat for Humanity showed that in 2019, the ReStores contributed almost $6.8 million to the charity. Revenues from the stores cover all operational costs in many cases, and help fund building homes and wraparound services to families learning to manage home ownership.

“This is terrible if people think there’s a problem with social enterprise because it’s the only way that we are able to achieve greater impact and some stability of financing,” Julia Deans, chief executive of Habitat for Humanity Canada, said in an interview.

There were 110 ReStores pre-pandemic. Two didn’t survive the lockdowns — one in Dartmouth, N.S. and the other near Victoria, B.C.

During four hours of testimony before the House of Commons finance committee last week, WE co-founders Craig and Marc Kielburger noted they started ME to WE social enterprise to not run afoul of Canada Revenue Agency rules. They told the committee under oath that 100 per cent of profits went back to the charitable side.

MacDonald said the WE organization’s complicated structure with multiple foundations and arms isn’t representative of the sector.

He said there is concern that donors will pull back on giving money, or volunteers their time, due to a lack of trust in how their efforts are used as more questionable details about the WE organization emerge.

“And let’s face it, trust in our sector is paramount,” MacDonald said.

Another worry is that governments will hesitate to partner with charities over political concerns. Ontario that announced last week it will not renew a contract for WE to operate a program in schools after questions about its structure and operations.

Habitat for Humanity is looking ahead to more changes to the ReStore, which sells extra material from build sites or unwanted inventory from suppliers, including more curbside service and e-commerce opportunities spurred in response to the lockdowns.

“We’re all focused on where we live because we spend so much time there and there’s a bigger interest in thrift shopping because we’re all being much more economical,” Deans said.

“So this is actually a good moment for ReStores to be there to meet community needs and to help out.”

This report by The Canadian Press was first published Aug. 3, 2020.

Jordan Press, The Canadian Press

Note to readers: This is a corrected story. A previous version incorrectly spelled the name of Bruce MacDonald.

charity

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Asymptomatic testing will now be available for "priority groups" who are most likely to spread the COVID-19 virus to vulnerable or at-risk populations. File photo by THE CANADIAN PRESS
Alberta identifies 1,516 new COVID-19 cases on Sunday

Central zone has 1,849 active cases

Image/ Metro Creative Connection
County of Wetaskiwin responds to Alberta Energy Regulator’s decision on Directive 067.

On April 7, 2021 the Alberta Energy Regular (AER) announced a new edition of Directive 067.

A damaged unicorn statue is shown in a field outside of Delia, Alta. in this undated handout photo. It’s not often police can report that a unicorn has been found, but it was the truth Saturday when RCMP said a stolen, stainless-steel statue of the mythical beast had been located in a field not far from where he’d been taken. THE CANADIAN PRESS/HO, RCMP *MANDATORY CREDIT*
Mounties get their unicorn; stolen statue of mythical beast found in Alberta field

Police are still looking for suspects, and have called in their forensics experts to help

There were six additional deaths across Alberta reported over the past 24 hours, bringing the death toll to 1,926 since the beginning of the pandemic. (File photo)
Deputy Prime Minister and Minister of Finance Chrystia Freeland responds to a question during Question Period in the House of Commons Tuesday December 8, 2020 in Ottawa. The stage is set for arguably the most important federal budget in recent memory, as the Liberal government prepares to unveil its plan for Canada’s post-pandemic recovery even as a third wave of COVID-19 rages across the country. THE CANADIAN PRESS/Adrian Wyld
Election reticence expected to temper political battle over federal budget

Opposition parties have laid out their own demands in the weeks leading up to the budget

Each spring, the Okanagan Fest-of-Ale is held in Penticton. This year, as a result of the COVID-19 pandemic, the festival will not be held. However, beer is still available. How much do you know about this beverage? (pxfuel.com)
QUIZ: How much do you really know about beer?

Put your knowledge to the test with this short quiz

Pall Bearers carrying the coffin of the Duke of Edinburgh, followed by the Prince of Wales, left and Princess Anne, right, into St George’s Chapel for his funeral, at Windsor Castle, in Windsor, England, Saturday April 17, 2021. (Danny Lawson/Pool via AP)
Trudeau announces $200K donation to Duke of Edinburgh award as Prince Philip laid to rest

A tribute to the late prince’s ‘remarkable life and his selfless service,’ the Prime Minister said Saturday

A vial of some of the first 500,000 AstraZeneca COVID-19 vaccine doses that Canada secured. THE CANADIAN PRESS/Carlos Osorio
Canada’s 2nd blood clot confirmed in Alberta after AstraZeneca vaccine

The male patient, who is in his 60s, is said to be recovering

The funeral of Britain’s Prince Philip in Windsor, England, on Saturday, April 17, 2021. Philip died April 9 at the age of 99. (Kirsty Wigglesworth/AP)
PHOTOS: Prince Philip laid to rest Saturday as sombre queen sits alone

The entire royal procession and funeral took place out of public view within the grounds of Windsor Castle

Prime Minister Justin Trudeau looks on as Deputy Prime Minister and Finance Minister Chrystia Freeland responds to a question during a news conference on Parliament Hill in Ottawa, Tuesday, Aug. 18, 2020. THE CANADIAN PRESS/Adrian Wyld
Expectations high as Trudeau Liberals get ready to unveil first pandemic budget

The Liberals will look to thread an economic needle with Monday’s budget

Doses of the Moderna COVID‑19 vaccine in a freezer trailer, to be transported to Canada during the COVID-19 pandemic. THE CANADIAN PRESS/Nathan Denette
Pfizer to increase vaccine deliveries in Canada as Moderna supply slashed

Moderna plans to ship 650,000 doses of its vaccine to Canada by the end of the month, instead of the expected 1.2 million

Most Read