News | Quebec university endowments shrink

Administrators claim universities are protected from drastic losses

Quebec universities are already hundreds of millions of dollars in debt, and with recent drops in North American stock markets, their endowments are also taking major hits.

University endowments are composed of donations, sometimes for specific purposes, other times for the institution as a whole. These donations are usually invested in the stock market.

François Roy, McGill Vice Principal (Administration and Finance), declined an interview, but in an email statement released to Canadian University Press he wrote that McGill is facing a 20 per cent drop in the value of their holdings since June 1, 2008.

This represents a loss of over $185-million, according to the latest available figures of McGill’s endowment performance, which show the University had $928-million in endowments and accounts in 2007.

“The McGill Endowment is not immune to what is happening in the market,” wrote Roy. “These are difficult times, as unusual volatility and uncertainty characterize the financial markets.”

Roy added that McGill’s investment portfolio is “well-diversified,” and he expects that the University’s situation “compares favourably” to those of other universities.

Judith Woodsworth, president of Concordia University since August 1, said Concordia has investments just like other universities, and “If those are not performing well, then we have to be careful.”

“We’re pretty responsible with investments,” she said.

Concordia administrators did not answer questions before press time concerning the amount of the University’s endowment, details about its investments, or how potential loses would affect students.

But the poor state of the economy might prove to be a positive force for universities, Woodsworth said.

“People tend to go back to school, and enrollment goes up,” she said.

The Globe and Mail reported in early November that the total value of Canadian university endowments was close to $11-billion, and that on average, universities invest more than half of their endowments and pension funds in financial markets.

Paul Gauthier, an economist at TD Bank Financial Group, said it is fair to assume that university investments are fairly conservative and low risk. In the short term, however, the financial crisis might cause universities to lose some financial autonomy as they increase their dependence on pubic funds.

McGill’s capital campaign, a project launched last year to solicit private donations, is half way to reaching its $750-million fundraising goal.

Gauthier said it’s likely that universities will become more conservative in their approach to funding, “maybe trying to look at cost-reduction measures,” he said. “But you have to assume on a normal basis they’re always looking at those.”

– with files from Terrine Friday