Canadian university endowment funds skyrocket
Pauline Tam
CanWest News Service
Friday, October 26, 2007
The value of Canadian university endowment funds has reached an all-time high, surpassing $10 billion, according to a new survey.
The latest figures from the Canadian Association of University Business Officers show the country's ivory tower has come of age as a fundraising and investing force, generating average annual assets worth $1 billion.
At December 2006, the net value of all endowments grew to $10.4 billion - a 55-per-cent increase from 2002, when they were valued $6.7 billion.
The stunning pace of growth suggests universities have become powerhouse investors as well as big-time fundraisers.
The U.S. is home to some of the world's largest educational funds, including Harvard University's endowment, which has recently been valued at $35 billion U.S.
Endowments are created when universities invest the donations they receive. As the principle grows in value, the investment income is spent, creating a perpetual stream of revenue.
According to the Canadian study, which tracks 69 universities, the growth in endowments since 2002 has been driven by stepped-up efforts to raise money ($2.3 billion) and improvements in investment returns ($3.4 billion).
As a result, $2 billion have been handed out to professors and students across the country. Typically, the lion's share supports research and teaching positions that attract and retain top faculty. They also fund scholarships and bursaries that lure top students.
A smaller portion goes toward the construction and outfitting of new classrooms and labs.
The study puts the typical value of an endowment at $151 million. In practice, however, the endowed wealth of universities varies greatly.
According to a recent survey by Standard and Poor's, a debt-rating agency, fundraising and investing is still dominated by a handful of universities.
The survey, which provides a snapshot of the richest education funds, reveals that the country's eight largest schools account for nearly $5 billion, or half the total value of all university endowments.
Unlike the results reported by the universities, S&P puts a value on endowments based on the amount of money that has been invested, rather than pledges that have yet to be received. As a result, the S&P valuations are lower than those produced by the universities.
According to S&P, Queen's University leads the pack in the per-capita value of its endowment.
For every full-time student enrolled at the school, the university has endowed wealth worth nearly $32,000, or a total of $460 million.
McGill University is second with a per-student endowment worth $28,692, or $801 million.
That's followed by the University of Toronto ($27,055 per student, or $1.6 billion in total endowment), the University of B.C. ($26,471, or $751 million) and McMaster University ($20,289, or $389 million).
After that, the value of endowments drops precipitously. The University of Western Ontario trails a distant sixth with a per-student fund worth $9,562, or $267 million. The University of Guelph ($9,363 per student, or $150 million) and York University ($6,687, or $246 million) round out the list.
David Mitchell, vice-principal of advancement at Queen's University, says endowments give schools an edge in establishing a reputation and providing students with a quality education.
"It really shows that some universities have concentrated on building independent streams of revenue that will support students and academic quality," says Mitchell. "We all know that government funding, as a percentage of total spending by universities, has really declined over the last generation."
Others are reluctant to draw a direct link between endowed wealth and education quality.
Ross Finnie, a University of Ottawa economist and higher education specialist, says at best, endowments allow universities to free up more dollars for discretionary spending. "It probably increases the amount of money a university has overall and so it just goes into general spending," says Finnie.
Indeed, despite their wealth, Canadian universities are also carrying record-high debt loads.
A recent study by the Dominion Bond Rating Service has found 13 Canadian universities collectively owe Bay Street more than $3 billion in long-term loans.
Most of the money has gone to fund ambitious renovation and construction projects, and some has been used to refinance existing bank debt -- a trend that disturbs some observers. Mitchell says the money raised for endowments are not used to pay down debts. Instead, universities rely on operating revenues for debt servicing.
Ottawa Citizen
© CanWest News Service 2007
CanWest News Service
Friday, October 26, 2007
The value of Canadian university endowment funds has reached an all-time high, surpassing $10 billion, according to a new survey.
The latest figures from the Canadian Association of University Business Officers show the country's ivory tower has come of age as a fundraising and investing force, generating average annual assets worth $1 billion.
At December 2006, the net value of all endowments grew to $10.4 billion - a 55-per-cent increase from 2002, when they were valued $6.7 billion.
The stunning pace of growth suggests universities have become powerhouse investors as well as big-time fundraisers.
The U.S. is home to some of the world's largest educational funds, including Harvard University's endowment, which has recently been valued at $35 billion U.S.
Endowments are created when universities invest the donations they receive. As the principle grows in value, the investment income is spent, creating a perpetual stream of revenue.
According to the Canadian study, which tracks 69 universities, the growth in endowments since 2002 has been driven by stepped-up efforts to raise money ($2.3 billion) and improvements in investment returns ($3.4 billion).
As a result, $2 billion have been handed out to professors and students across the country. Typically, the lion's share supports research and teaching positions that attract and retain top faculty. They also fund scholarships and bursaries that lure top students.
A smaller portion goes toward the construction and outfitting of new classrooms and labs.
The study puts the typical value of an endowment at $151 million. In practice, however, the endowed wealth of universities varies greatly.
According to a recent survey by Standard and Poor's, a debt-rating agency, fundraising and investing is still dominated by a handful of universities.
The survey, which provides a snapshot of the richest education funds, reveals that the country's eight largest schools account for nearly $5 billion, or half the total value of all university endowments.
Unlike the results reported by the universities, S&P puts a value on endowments based on the amount of money that has been invested, rather than pledges that have yet to be received. As a result, the S&P valuations are lower than those produced by the universities.
According to S&P, Queen's University leads the pack in the per-capita value of its endowment.
For every full-time student enrolled at the school, the university has endowed wealth worth nearly $32,000, or a total of $460 million.
McGill University is second with a per-student endowment worth $28,692, or $801 million.
That's followed by the University of Toronto ($27,055 per student, or $1.6 billion in total endowment), the University of B.C. ($26,471, or $751 million) and McMaster University ($20,289, or $389 million).
After that, the value of endowments drops precipitously. The University of Western Ontario trails a distant sixth with a per-student fund worth $9,562, or $267 million. The University of Guelph ($9,363 per student, or $150 million) and York University ($6,687, or $246 million) round out the list.
David Mitchell, vice-principal of advancement at Queen's University, says endowments give schools an edge in establishing a reputation and providing students with a quality education.
"It really shows that some universities have concentrated on building independent streams of revenue that will support students and academic quality," says Mitchell. "We all know that government funding, as a percentage of total spending by universities, has really declined over the last generation."
Others are reluctant to draw a direct link between endowed wealth and education quality.
Ross Finnie, a University of Ottawa economist and higher education specialist, says at best, endowments allow universities to free up more dollars for discretionary spending. "It probably increases the amount of money a university has overall and so it just goes into general spending," says Finnie.
Indeed, despite their wealth, Canadian universities are also carrying record-high debt loads.
A recent study by the Dominion Bond Rating Service has found 13 Canadian universities collectively owe Bay Street more than $3 billion in long-term loans.
Most of the money has gone to fund ambitious renovation and construction projects, and some has been used to refinance existing bank debt -- a trend that disturbs some observers. Mitchell says the money raised for endowments are not used to pay down debts. Instead, universities rely on operating revenues for debt servicing.
Ottawa Citizen
© CanWest News Service 2007
Labels: university finance
posted by CUPE Local 1356 @ Monday, February 04, 2008
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