Q&A for PDAD&C 28/11/2011
Memo
To: Members of PDAD&C
From: David Palmer, Vice-President, Advancement
Gillian Morrison, Assistant Vice-President, Divisional Relations and Campaigns
Date: 28 November 2011
Subject: Common questions and answers regarding the
Campaign for the University of Toronto
Dear Colleagues,
As the public phase of the campaign unfolds, we thought the attached FAQ might be helpful in preparing you for questions that you may encounter from colleagues and friends of the University regarding the Campaign. We welcome your feedback on the questions and suggested responses below.
Common Questions and Suggested Answers
1. Why is the University of Toronto launching a fundraising campaign?
It will be obvious that we face an environment in which other forms of funding are tightly constrained, and in which the resources of our major international peers are often many times that of the University of Toronto. A comprehensive fundraising campaign is therefore a key vehicle for pursuing new funding opportunities.
Campaigns galvanize and deepen engagement of our alumni. They also stimulate growth
in donation revenues, accelerate decisions, and lift the sights of philanthropic supporters. It is precisely because the economic outlook is uncertain that we need to be more active in making our case for philanthropic support.
The effects of a successful Campaign are myriad and meaningful. The funds raised will make measurable enhancements to student life and learning; support advances in basic and applied research across all of the University’s strong academic divisions and departments; support university-wide initiatives that address today’s most pressing global challenges; and help prepare students for leadership as global citizens in an increasingly complex and borderless worlds.
2. How will the Campaign support students and faculty?
Our students are among the primary beneficiaries of the campaign; their experience at U of T will be enhanced directly or indirectly by all donations made to the University, whether those donations are directed to student financial assistance, faculty support, new facilities and buildings, academic programs or research. Access and opportunities for students regardless of background, and improvements to student life and learning, are featured priorities in the campaign.
Similarly, maintaining and enhancing the strength of our faculty cohort across all
disciplines is one of our highest priorities. The Campaign will seek funding to provide positions for young and mid-career faculty members through “Rising Star” funds. We will continue to seek funds for endowed chairs and professorships, which are important tools in our efforts to attract and retain the world-class faculty members. The campaign also features many priorities that support the work of our faculty, in basic and applied research, in the development of new teaching programs, and in the creation of new multidisciplinary initiatives.
3. How were the fundraising priorities for the Campaign established?
All fundraising for the University is done in the service to approved academic priorities.
Fundraising priorities arise from the academic priorities of the University’s diverse faculties, colleges and campuses. Academic priorities and the fundraising prioritiesassociated with them arise through their regular academic planning cycles.
The University’s academic divisions submit their list of campaign funding priorities to the Provost, the chief academic officer of the University, for review and approval. The
University’s Governing Council reviewed and approved the campaign’s overall funding
priorities at its meeting of October 27, 2011.
The identified priorities will drive fundraising efforts centrally and by each U of T campus, faculty and division.
4. What is the theme of the University’s campaign?
In the spring and summer of 2010, University Advancement staff began consulting with academic units and administrative divisions associated with student life to understand their academic priorities. From those consultations and continued dialogue, some common narrative strains arose, which led to the creation of a framework for the Campaign’s case for support. This framework organizes the campaign’s priorities into two broad pillars: preparing global citizens and meeting global challenges.
The campaign’s case for support is intended to convey the impact of the University’s research and teaching mission, of the many funding priorities of its strong academic divisions, and of its international community of faculty, staff, students, and alumni, on society broadly.
Our case for support organizes the academic priorities into broad areas supporting the student experience (under access and opportunity, student life and learning, and global fluency) and supporting our research and teaching mission (under knowledge and meaning, invention and innovation, and building healthy, sustainable, and successful societies).
The campaign expresses a shared belief in the role that our University community can and will play in helping shape a better future for this and subsequent generations. This ambition is what draws such brilliant and talented people to the University of Toronto, and why we have chosen “Boundless” as the theme of the campaign:
o For what it says about the limitless potential and aspirations of our international
community of students, alumni, and donors;
o For the impact of our faculty’s teaching and research mission, extending its reach
across the boundaries of knowledge, disciplines, nations, and cultures;
o And for its sense of openness, optimism, and inclusiveness—a global perspective
shared by our community, rooted in and reflecting the world’s most successfully
diverse urban region
Worth repeating from our recent memo to PDAD&C: In announcing and promoting the
campaign to our broad alumni community and general public, we have given pride of
place to the stories of faculty, students, and particularly of our alumni—stories that illustrate the impact of our research and teaching mission in shaping the experience of students, in pursuit of fundamental and applied inquiry, and in addressing today’s most pressing issues. The campaign case for support, its website, outdoor banners, and other supporting materials, feature these stories prominently as the primary means for delivering the campaign’s key messages. And as with the previous Great Minds campaign, our promotion of this new campaign will roll out in multiple phases, allowing for broad coverage of all our constituencies.
5. Who are the donors to the Campaign?
The vast majority of donations has always come—and will continue to come—from our
alumni and other individuals. On average, approximately 70 per cent of donations come
from individuals (56 per cent from individual alumni, and 14 per cent from other
individuals), 14 per cent from corporations, and 16 per cent from foundations, in any
given year.
Gifts from individuals, foundations and other organizations and corporations are counted toward the Campaign total. Government grants and matching funds from government are not counted toward the Campaign total.
6. What is the timeframe for the Campaign?
This Campaign, like our previous campaigns and others across North America, has been divided into two phases: the quiet phase and the public phase.
The Campaign’s quiet phase began with the appointment of Prof. David Naylor as
president of the University of Toronto in mid-2005.
The objective of the quiet phase was to raise approximately 50 per cent of the Campaign goal of $2 billion prior to the launch of the public phase. We have achieved that objective and will now raise $1 billion over an additional five years to complete the Campaign.
7. How will current economic volatility affect the University’s ability to raise funds?
Campaigns operate over periods of years and often encounter both bull and bear markets as they proceed. The University’s last campaign raised $1 billion despite the large market downturn that ensued when the dot-com bubble burst in 2001.
Investment in education is a continuing top priority for many donors, regardless of
economic conditions. Philanthropic support for education is among the best long-term
investments in building healthy, sustainable, successful societies.
Annual giving from our alumni and friends has been unaffected by the challenging
economic times in recent years. Major gifts are more susceptible to shifting economic
landscapes; yet we have continued to receive landmark gifts from major benefactors
during this time, raising almost half of the $2 billion goal.
8. How much is the University spending on fundraising?
U of T’s average cost per dollar raised over the past six fiscal years (2005-06 to 2010-11) was 14 cents. This represents more than a seven-fold return on the University’s investment in fundraising.
The Canada Revenue Agency’s Guidelines to Charities on Fundraising has published a
CRA review threshold of 35 cents per dollar raised. U of T’s projected cost per dollar is less than half the CRA review threshold. It is also at the low end of accepted industry ranges of 15 to 25 cents per dollar raised for major comprehensive fundraising programs such as this one.
The University spends less than 1% of its annual operating budget on fundraising costs.
Every philanthropic dollar received goes entirely to the donor’s project or purpose of choice in accordance with the University’s approved priorities. Fundraising costs are born by the University’s base operating budget.
9. What steps have the University taken to protect its academic integrity and values?
Fundraising is done only in service to the academic priorities of the University, and only for priorities that have been determined by U of T’s academic divisions and departments and approved by the Provost’s office.
All gift agreements are subject to the policies and guidelines established by the University. The University of Toronto has been a leader in setting the standard for best practices in this regard; its policies are open and transparent, and readily available on the websites of the Provost’s Office and Governing Council.
The following clause appears in every major gift agreement signed by the University:
o “AND WHEREAS the parties affirm their mutual commitment to the University’s
Statement of Institutional Purpose which includes a commitment to foster an
academic community in which the learning and scholarship of every member may
flourish, with vigilant protection for the rights of freedom of speech, academic
freedom and freedom of research as described in the University’s Statement on
Freedom of Speech and in article 5 of the Memorandum of Agreement between the
University of Toronto and the University of Toronto Faculty Association”
Other guidelines and policies commonly cited in gift agreements are included to provide further protection of the rights and freedoms of the institution. These include, among others, policies on naming, on management of endowed funds, on the process for establishing financial awards, on the process for establishing faculty appointments, on capital projects, and on the role of advisory bodies.
The University of Toronto established guidelines on donations 15 years ago. The
guidelines include the statement that “the University values and will protect its integrity, autonomy and academic freedom, and does not accept gifts when a condition of such acceptance would compromise these fundamental principles.”
The guidelines also state that “the University’s solicitation of gifts is informed by and consistent with academic priorities established by appropriate University processes. Undesignated gifts must be used for such purposes as the University judges will best advance its mission and academic priorities. Designated gifts are used expressly for the purpose for which they are given, which must be consistent with the University’s mission and academic priorities.”
10. How is the use of donations tracked?
The University of Toronto has a sophisticated internal auditing process to ensure that money raised is expended as outlined in the agreements with donors.
Gift agreements ensure clarity and transparency in our relationships with our donors. Through these agreements, our donors generously pledge their own resources to fund our academic ambitions; in return the University agrees to spend the money as specified in the agreement.
The University has a robust stewardship program that provides annual reports to donors on the use of funds and on their impact.
11. Can donors be confident that their gifts will be managed prudently?
In a recent letter to the University community, David Palmer spoke to recent changes to our management of endowments, the new President’s Investment Advisory Committee (IAC), and new options for investment. That letter is attached for your reference.
__________________________________
Dear friends,
It has been a summer marked by European debt trouble, a weakened U.S. economy, and
ongoing volatility in global markets. Canada’s economy and its securities markets have also been affected by these forces. However, at least on a comparative basis, Canada has fared well in these turbulent times. I hope the same has been true for each of you.
Amidst such economic uncertainty, I felt it timely to report on the steps we are taking to protect and steward the financial contributions of our donors. I also write with an update on a new fund we are creating at U of T—one that operates in a manner similar to endowments, but with an enhanced annual payout over a 10- to 20- year period.
Investment Management at U of T
As you may recall, shortly after the stock market crash in 2008/09, President David Naylor commissioned a wide-ranging review of the University of Toronto’s Asset Management (UTAM) group. The review examined the University’s investment policies, structures and strategies, and considered whether changes were needed to protect and optimize the investment performance of our endowment and pension funds.
The review was ably led by our Chancellor Emeritus, the Hon. Henry N.R. Jackman as Chair, and past-governor Larry Wasser as Vice-Chair, and drew heavily on the talents and commitment of an outstanding group of volunteers, several with substantial experience in investment and pension management. The review recommended closer integration of the management and governance of our investments with the University’s administration, stronger risk management, and new accountability mechanisms.
Several important changes have since been implemented.
The first was a new and streamlined corporate governance structure that more closely
integrated UTAM with the University’s leadership. UTAM now reports into a board comprising the President of the University, the Vice-President Business Affairs, the University’s CFO, UTAM’s CEO, and a representative of the University of Toronto Faculty Association. This board deals primarily with basic corporate governance and budget issues.
A second change was the creation of a President’s Investment Advisory Committee (IAC), with the mandate to advise the Office of the President on investment strategies. The IAC provides expert independent advice and counsel on matters such as investment guidelines, target returns, risk management, asset allocation, and strategy execution. Particular foci have been: defining a reference portfolio against which UTAM's performance can be measured, setting the degrees of freedom for UTAM in implementing an investment strategy, and offering input on reasonable target returns and related risk tolerances.
Third, the UTAM group, under CEO William Moriarty, has been simplifying the University’s holdings, reducing expenses, ensuring appropriate levels of liquidity, and implementing a stronger system for risk management.
Fourth, and finally, there has been separation of the approval processes for the pension plan and endowed funds. A new Pension Committee, with strong representation from employee groups, now reviews important pension-related decisions. The Business Board of Governing Council continues to review and approve endowment-related decisions. In both cases, the IAC is available to provide arm’s length input to improve decision-making.
The President and I both want to acknowledge publicly and thank our dedicated IAC members. We are exceedingly fortunate to have this group of volunteers providing expert counsel to the University on how best to manage our endowment and pension funds for the long term. All members are accomplished business leaders and investment professionals. Capsule biographies follow; fuller biographies are available on-line through the Governing Council website at http://www.governingcouncil.utoronto.ca/AssetFactory.aspx?did=7299.
University of Toronto President’s Investment Advisory Committee
Geoffrey Matus, IAC chair and former University governor, is President, Mandukwe Inc. and co- Founder and Director, Tricon Capital Group. Mr. Matus has more than 30 years of business experience in construction, manufacturing, real estate, and asset management. Among other directorships, he is Chair of Cidel Financial, a multinational financial services organization.
Brent Belzberg, a governor and alumnus, is Founding and Senior Managing Partner of TorQuest, a Toronto-based private equity investing firm. A respected veteran in the financial services industry, Mr Belzberg serves as a Director of CIBC and a number of other companies.
David Denison, an alumnus, is President and CEO, the Canada Pension Plan (CPP) Investment Board. CPPIB manages over $125 billion on behalf of 17 million Canadians. He is a 30-year veteran of the financial services sector with wide experience in varied executive roles.
Martin Hubbes, an alumnus, is Executive Vice-President and Chief Investment Officer, AGF Investments Inc. Mr. Hubbes is also lead portfolio manager for AGF’s Canadian assets. He has wide international experience, and a strong focus on risk management.
Heather Hunter is Head of Canadian Equities, Invesco Worldwide Institutional. Her impressive career spans more than 30 years in financial services, including executive positions with Confederation Life Insurance, Trimark, and the Ontario Teachers' Pension Plan Board.
Brian Lawson, an alumnus, is Senior Managing Partner and Chief Financial Officer, Brookield Asset Management Inc. Brookfield currently holds over $100 billion in diverse assets. As CFO, Mr. Lawson is responsible for financial reporting, corporate finance and risk management.
Robert Luba, President, Luba Financial, has more than 50 years of experience in the financial industry. Former President of Crown Life Insurance and Royal Bank Investment Management, Mr. Luba is currently Chairman of Invesco Trimark Mutual Funds.
Craig Rimer, CEO, Cidel Financial Group, is also chair of Toronto Capital Markets, a Torontobased investment counselor specializing in global equities. Mr. Rimer was previously with CIBC World Market’s Financial Products division and the Bankers Trust.
Christopher Wansbrough, alumnus and honorary graduate, is chair, Rogers Telecommunications Ltd, and was a director of the Rogers operating company for 28 years. Mr. Wansbrough has more than 50 years experience in financial services, including terms as president of National Trust (1977–86) and chair of OMERS Realty (1989–97).
New Donor-Designated Gift Option at U of T: Enhanced Payout Fund
In addition to ensuring the long-term health of our endowments, we have also developed a new fund that provides donors with more flexibility to support philanthropic goals over a medium-term horizon of 10 to 20 years. With its introduction, effective October 1, 2011, U of T will have three forms of gift designation, according to whether the donors wish to have a longterm, medium-term, or immediate impact with their giving.
Long Term: Endowment Fund
Endowments remain our traditional long-term, multi-generational form of support, intended to support beneficiaries in perpetuity. They therefore have conservative annual distributions that fluctuate within a narrow corridor (generally close to 4% of the fund’s market value). Endowments are invested for the long-term by UTAM, using a mix of public and private equities, fixed income, and other vehicles intended to sustain a 4% real rate of return, net of fees, so that the purchasing power of our endowments may keep pace with inflation over time.
Medium Term: Enhanced Payout Fund
The Enhanced Payout Fund, available as of October 1, 2011, is a new fund designation at U of T, intended for donors who wish to see higher annual distributions from their gift over a mediumterm, perhaps single generational period. The Enhanced Payout Fund will have a fixed annual distribution of 7.5% of the original gift capital, and will be invested by UTAM in public equities and fixed income vehicles, intended to sustain the fund over a 10- to 20-year horizon, or longer, as capital markets and actual investment returns allow. With its higher annual distributions, the Enhanced Payout Fund has the potential for annual impact beyond that which an Endowment would normally be able to support. However, unlike an Endowment, the Enhanced Payout Fund is not intended to be permanent, and will likely decline over time, depending on investment returns. The Enhanced Payout Fund may be appealing to donors of scholarships, fellowships, program funding, lectureships, or other needs.
Immediate Term: Expendable Fund Expendable gifts are given with the expectation that funds will be spent on immediate needs, such as to launch a new scholarship, support a conference, or advance a building project. For the weeks or months prior to their expenditure, expendable gifts are generally held by the University in a segregated account that has minimal volatility and allows for the preservation of capital until the funds are needed for spending.
I believe these three options should provide our donors with more flexibility and varied time horizons to realize their philanthropic aspirations. The donor funds will be invested and managed accountably, transparently and efficiently under the oversight of our Investment Advisory Committee and the President’s Office and with the approval of the University’s Business Board.
Last, I would be remiss not to express my thanks, on behalf of the broader University of Toronto community, for the continued generous support of so many benefactors. Through the decades, philanthropy has played a transformative role at the University of Toronto, and has given our faculty and students a critical “margin of excellence” that has sustained our standing as one of the world’s great universities.
Best regards,
David Palmer
Vice President - Advancement
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