The Ontario government says it won't be continuing its relationship with the WE Charity.
The Ministry of Education says it has been told not to renew its contract with WE, and to investigate its expenditures on the organization.
"Hard working people in this province deserve to know that their money is delivering value," ministry spokesperson Alexandra Adamo said in a statement.
The charity received $250,000 from the province in June for its WE Schools Programming as a part of the Mental Health Initiatives for Ontario Students plan.
The province described it as a year-long program to "nurture empathy and compassion in students and increase student outcomes in academic engagement, workplace readiness, and citizenship."
WE Charity has been caught in a controversy since the federal government chose it to run a $900-million student grant program.
Shortly after the sole-source contract was given to WE, the Liberals came under fire from opposition parties over an alleged conflict of interest due to WE's close relationship with Prime Minister Justin Trudeau and his family.
Neither Trudeau nor Finance Minister Bill Morneau — who also has family ties to WE — recused themselves from cabinet discussions on awarding the contract. Opposition politicians have accused the Liberals of playing favourites.
Trudeau and his mother, Margaret, have appeared at a number of WE Day events, while Trudeau's wife, Sophie Grégoire Trudeau, hosts a podcast for the group called WE Well-being.
Initially, WE Charity said members of the Trudeau family were not paid for appearing at WE events, although Grégoire Trudeau had been reimbursed for travel expenses.
On July 9, it emerged that Trudeau's mother, Margaret, was paid approximately $250,000 for speaking at 28 events, while his brother, Alexandre, spoke at eight events and received about $32,000.
Ethics commission probe
The federal ethics commissioner is investigating the WE contract. Commissioner Mario Dion said he will be investigating Trudeau under subsection 6(1) of the Conflict of Interest and Ethics Act, which prohibits public office holders from making decisions that further their own private interests or the interests of another person.
Trudeau also is being investigated under sections seven and 21 of the act, which deal with giving someone preferential treatment and failing to recuse oneself from any matter that would present a conflict of interest.
In testimony before MPs on Tuesday, WE co-founder Marc Kielburger said Margaret, Alexandre and Gregoire Trudeau were also reimbursed more than $200,000 in expenses for appearances at WE events.
Several sponsors have cut ties with the WE brand, including Royal Bank of Canada, Loblaw Companies Ltd., Good Life Fitness and Virgin Atlantic Airways, although WE called the moves a mutual agreement.