Falling markets and rising tuition have the old trust seeking new donations
After spending a lifetime amassing a fortune with questionable means, Cecil Rhodes, a diamond magnate in colonial Africa, left one unquestionably good thing after he died in 1902: a bequest of over £3 million, roughly equivalent to half a billion in today’s dollars, for students from abroad to study at his alma mater, Oxford University. Over 100 years and 7,000 Rhodes Scholars later, though, that money is down to about $186 million. The bequest, reads an April online note by the Rhodes Trust, which administers the scholarship, “needs to be supplemented to secure [our emphasis] and improve the Rhodes Scholarships for the future.” Gifts of the magnitude of $1 million per individual donor were “warmly encouraged.”
The turn to fundraising represents a major shift for the trust, which has traditionally relied on investment to preserve and supplement its capital. Benefactions from the illustrious community of Rhodes alumni, which includes Bill Clinton, Canada’s former governor general Roland Michener, and former PM John Turner, are not new, but shrill calls for donations came only after the trust lost nearly $70 million in the 2008-2009 financial crisis, a drop of around 27 per cent in the net value of its assets.
“We’re drawing money from the principal,” says director of advancement Krista Slade, who is helping to engineer the trust’s fundraising campaign. Though there are no plans to resize the scholarship program, she says, the trust needs to at least double the size of its endowment by the end of the decade to “be competitive.” That means raising a minimum of $160 million by 2020.
It’s an onerous sum to ask of the small Rhodes community, whose living members number around 4,500, many of whom went on to earn middle-range salaries in academia or the public sector. But Slade says the trust is counting on its influential cadre of alumni to help reach out to outside benefactors as well. The scholars’ response has mostly been warm. “I haven’t heard anyone say anything other than, ‘Good, I’ll be very happy to contribute,’ ” says L. Yves Fortier, a lawyer in Montreal and Rhodes Scholar who served as Canada’s ambassador and permanent representative to the United Nations. A Rhodes Scholarship is a life-changing affair, he says, and people are eager to give back. Toronto Centre MP Bob Rae, also a Rhodes Scholar, agrees. The trust’s financial performance “hasn’t been as robust as everybody would have liked,” he says, and “taking the bull by the horns” with a major fundraising effort makes sense.
But for others, the fact that the trust was asking for money was a shock. Now that “they’re trying to raise a buck along with everybody else,” the myth of the “infinitely wealthy” Rhodes Scholarship has been damaged, says scholar Philip Slayton, author of Lawyers Gone Bad and a contributor to Maclean’s. And as scholars dig into their wallets and work their connections to get others to chip in, they are also raising the hard questions. First of all: how did we get here?
The major culprits, according to warden of the Rhodes House Donald Markwell, are volatile markets (where the trust took a beating in the dot-com bust and the global financial crisis), and ballooning university tuitions, which have been rising across the U.K.
Some, though, are questioning the soundness of the trust’s investment strategy. Despite the intellectual firepower behind the trust, says Slayton, maybe it “didn’t do such a good job after all.” And even if losing money was unavoidable, “you’d think they would have rebounded,” at least after the dot-com bust, says scholar and Foreign Affairs magazine senior editor Sasha Polakow-Suransky. (The Rhodes Trust declined a request to see financial reports for the early 2000s; its 2010 annual report is not available yet.)
Others are wondering whether “mandate creep” is also a reason for the red ink. A program for 57 young men in its early days, the scholarship has welcomed 81 students this year and even more in previous years. New commitments included the creation in 2002 of the Mandela Rhodes Foundation for African scholarships. The trust’s pledge to give it $16 million over 10 years sparked divisions among scholars that made headlines.
University of Toronto president David Naylor says he would ask the trust, “show me what the cost is of the new programs and commitments,” although he adds he would probably “put some money in the kettle.”
And even in the tightly knit Rhodes community, money, as it often does, is coming with strings attached. Stepped-up fundraising almost coincided with an organizational reshaping this year that sets a minimum quota of scholar members in, among others, the board of trustees. “If we’re going to tap scholars for money,” former ambassador Fortier says, part of the reasoning was, “we’ll have to give them more voice.”