All Posts Tagged With: "endowment"

University to shift resources to “brand” programs

Facing ballooning pension costs and shrinking deficits, Queen’s university is planning to cut 15 per cent from their budget over the next three years. The cuts are announced just as Queen’s completed the first phase of a new athletic centre, which will leave the university with an extra $125 million in debt. Though Queen’s Centre is being partially funded through a new student levy, outside donations have fallen short. Phases two and three have been postponed.

To compensate for its budget woes, university principal Daniel Woolf says he plans to scale down the university’s offerings, and shift available resources towards core areas. As reported in the Globe yesterday:

Most Canadian universities, such as Queen’s, are struggling with financial pressures, caused by factors such as rising pension costs and falling endowment income. Several have implemented cost-cutting measures, ranging from dropping courses and banning small classes to laying off staff.

Longer term, Dr. Woolf, a historian and Queen’s grad, believes the school will have to reshape its academic direction to develop what he calls a “balanced academy.” This would ensure that the university shifts more attention to undergraduate education – what he describes as “our brand.”

He is also preaching selectivity: the need for Queen’s to determine what areas are core to the university, and then focus on them intensely. “You can’t do everything at the same level,” he said.

The administration had requested faculty take a two per cent pay cut, with a promise to split the savings between professors own departments and the school’s operating deficit. Queen’s University Faculty Association members voted 89 per cent against the request last Monday. The union is blaming the administration for mismanaging the budget.

Decision was made to protect what’s left in the school’s endowments

The Victoria Times-Colonist is reporting that investment losses at the University of Victoria have prompted the cancellation of bursary and scholarship payments for 40 per cent of the school’s endowment funds.

The decision was made to protect what’s left of the endowment funds’ principal, in order to ensure that UVic students will be supported over the years to come, says Shannon von Kaldenberg, associate vice-president of alumni and development.

This means that 60 per cent of the nearly 1,000 funds will continue to pay out in the next calendar year, until 2010. The remainder will be reassessed that spring.

The Times-Colonist estimates that hundreds of students will be affected. Last year, the university’s foundation paid out $5.4 million, but the annual return on investments used to pay for those awards have dropped about 18 per cent.

One donor, David Pollock, says he is  “shocked and upset” to learn of the cancelled payouts. His bursary, set up in honour of his grandmother, has dropped from $64,000 to $55,000.  If the university wanted to save capital funds, says Pollock, it shouldn’t have put the money in risky investments.

Tax-free giving plummets about 80 per cent; endowment funds could suffer

The sorry state of stock markets is stoking concerns among Canada’s largest charities that big-ticket, shares-based philanthropy will plummet with the indexes.

Over the last decade, capital gains tax incentives for donated stocks have laid a philanthropist pipeline that has funnelled billions of dollars worth of shares to Canadian charities.

In 2007, Canadian donors gave about $1 billion of common stock to large institutions such as universities and hospitals, said the head of philanthropic advisory services at the Scotia Trust asset management company.

But the tumbling world economy could soon turn the stock contribution surge into a trickle, experts say.

“This year, it’s almost non-existent,” said Scotia Trust’s Malcolm Burrows, who advises philanthropists and charities. “There’s been a significant drop off, I’d say probably about 80 per cent.”

Since 1997, Canada’s wealthy have been taking advantage of tax cuts for donated shares.

In 2006, the Conservative government removed the capital gains tax on stocks donated to public foundations and registered charities. Last year, the government eliminated the capital gains tax on gifts to private foundations.

Donors not only save in taxes, they also collect tax credits.

Burrows said due to the incentives, stock contributions went up 160 per cent between 1996 and 2007. But as well-to-do Canadians shift their focus to more immediate needs, he predicts large institutional charities and endowment funds will sustain heavy blows.

“It’s a basic fact that people give when they feel like they have excess, when they feel secure, and in this environment there’s not much of that,” Burrows said.

“For the most part, Canadians tend to dig deep in down times – they look to community needs. It may be slightly different this year, just because of the depth of the economic situation.”

An umbrella group that represents 1,200 Canadian charities says many charitable organizations across the country have reported a drop in large stock gifts.

In some cases, funding for existing foundations has been put on hold, said Jocelyne Daw, vice-president of marketing and community engagement for Imagine Canada.

“Obviously, people aren’t going to give gifts of shares if their shares are worth half what they once were,” Daw said from her Calgary office. “I don’t think too many people are going to be worrying about capital gains this year.”