Archive for Erica Alini
The university’s war on the automobile
The new political cause on campus? More parking, please.
Photo courtesy of Kevin Krejci on Flickr
From the 21st Maclean’s University Rankings issue. Get your copy from newsstands now.
Watching Tommy Douglass on YouTube, one can’t help but recall Matthew Broderick’s legendary rendering of a spoiled but highly resourceful high school student in Ferris Bueller’s Day Off. Douglass, a fourth-year University of Regina student, has a boyish face and a sleek businessman’s attitude. And he’s on a mission: to redress his school’s parking woes. “Until now, I’ve never had a single complaint. I like my school . . . it’s ideal,” he says in one of several videos he’s used to draw attention to the issue. But, he adds, “we are seriously, seriously messing up parking.”
Against the backdrop of his student bedroom—complete with a laundry basket and a picture of a blond bikini babe tacked to the wall—he shows viewers two of three $65 tickets he recently received for parking in a staff lot. “I am not going to pay a single ticket,” he says defiantly. He’d gladly pay for one of the school’s parking permits, he adds, but the school has already run out.
Generation spend
Today’s youth are set to become bigger consumers than the boomers
“If I want something I want it, no matter what,” says Kezia, one of the protagonists of a new Slice TV series Princess, where Til Debt Do Us Part host Gail Vaz-Oxlade tries to put young, female serial shoppers through personal finance rehab. A makeup artist who normally makes “probably” around $30,000 a year, Kezia would shed up to $355 a month on her hairdo, and eat out “probably” four times a week. “I don’t ever look at my credit card statements,” the pretty (dyed) blond says, gazing dreamingly at the camera. “As soon as they come, I throw them away.”
Twenty-five-year-old Kezia belongs to a new species of consumer whose capacity to spend will surpass that of the boomers sometime in the next decade. Variously referred to as Generation Y or Generation Next, they are loosely defined as the age group going from kids in their early teens to young adults. In the U.S., eight- to 24-year-olds are expected to spend $224 billion of their projected $348 billion annual income, according to Harris Interactive, a market research and consulting firm. Yet the percentage of those who have no savings at all is over 50 per cent. The stats in Canada are equally troubling. For young adults, the proportion between the ages of 25 and 34 who say they are impulsive spenders and can’t save is 30 per cent, a figure very similar to the 31 per cent found among the so-called Generation X (or 35- to 49-year-olds), according to a recent study by the Royal Bank of Canada.
The recession was supposed to teach some important lessons about saving and living frugally, but Generation Y seems poised to fall into similar spending habits that left their parents with crippling debt. Whereas the financial crisis raised the national savings rate in the U.S. from a low of less than two per cent in 2007 to over eight per cent in mid-2009 (it is now at around five per cent), in Canada it edged up from 2.8 per cent on average three years ago to a still very modest 4.4 per cent overall this year. Despite this small effort to repair household balance sheets, four in 10 Canadians say they struggle to put a nickel in the piggy bank, according to RBC. It’s an unsettling trend for those preaching financial good sense.
How then to raise a breed of conscientious spenders and good savers (if not by example)? Part of the answer, say experts, is coming from financial institutions trying to stage a digital catch-up to the marketing industry that has so effectively targeted young spenders. Most savings products, says Dilip Soman at the University of Toronto’s Rotman School of Management, have “supremely boring advertising.” On the other end of the spectrum of the battle for young wallets, however, are marketing firms with a sophisticated arsenal of advertising tools. Their methods range from social networking sites like Facebook and Twitter to guerrilla-style campaigns that use the power of peer pressure to encourage spending. (In one campaign for Neutrogena, for example, 4,000 high school girls were recruited to work as “brand evangelizers,” pitching the product to classmates and friends in exchange for prizes including concert tickets.)
Simple financial behaviours like saving, or making rational decisions about limited resources, must be embedded in a language young people understand—the same language that speaks to them about PlayStations and Coach bags, say experts. A group of U.S. researchers has had good results, for instance, by having young people interact with digital, retirement-age avatars of themselves as they make hypothetical savings decisions. In one case study, the expression on the avatars’ faces would display a smile or an unhappy grimace depending on the positive or negative impact of the savings decisions on the participants’ future financial situation. In all cases, the study says, participants who interacted with their aged avatars showed a greater propensity to forgo the instant pleasure of spending for the delayed pleasure of having and using savings in the future.
Another way to go about this is finding “smart ways of leveraging social networking,” says Alessandro Previtero at the University of Western Ontario’s Richard Ivey School of Business. He says young people might find it easier to set and reach financial targets if they use something like StickK.com, a website designed by a team at Yale that helps people achieve their goals (from losing weight to quitting smoking) by, among other things, getting their friends involved. Much like friends on Facebook, supporters on StickK.com receive regular updates on status changes—in this case, a person’s progress toward the stated goal. If constructive use of peer pressure helps people shed their extra pounds or their pack of cigarettes, it could also help them save, says Previtero.
And whether the lesson comes from social networking or old-fashioned parenting, teaching youngsters how to set financial goals is key, says Patricia Domingo, an investment retirement planner at RBC. She recalls setting up a savings account and a guaranteed investment certificate for a 15-year-old who made $8,000 designing and selling a website. The parents, she said, sat him face to face with the family financial adviser so he’d be forced to think about what he should do with the money.
Other healthy practices, says Greg Holohan, an investment executive at ScotiaMcLeod, include openly discussing family income, utility bills and even investment strategies with the kids; encouraging them to use their allowance or summer job money to pay for some of their needs; and refusing to pay for everything. A good strategy, he says, might also be to tell the young ones that they have to pay for part of their college and university costs, but then reward them afterwards by paying them back and giving them a tidy sum to start with as they enter the job market.
Deborah Beedie, an account executive in Dundas, Ont., thinks she got it right. “Our kids can probably tell you how much we make, what we have in terms of investments and what bills come up when,” she says of sons Michael, 20, and Scott, 14. Whenever Scott gets his weekly allowance of $14 (one dollar per every year since he was born), he has to decide how much to put in one of three jars labelled “savings,” “spending” and “other.” Michael, a junior at Dalhousie University, had tuition, books and rent paid for, but must use summer job money to sustain his social life and contribute to food expenses. Apparently, he now has the grocery store mapped out according to product pricing and won’t even go near the middle of the alley where, he says, the more expensive stuff is on display.
Whether it’s trying to protect your kid from slick online marketing or the corner street dealer, says Beedie, all you can do is “have a value system that you can transmit”—leave the kids autonomy but know what they’re up to, and hope for the best.
The Rhodes and the big ask
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.”
