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The uneasy ties between Canada�s universities and wealthy business magnates

by Theresa TedescoFinancial Post

After almost three years of negotiation and internecine battles, a private think-tank established and chaired by Jim Balsillie has signed a $60-million deal with York University in Toronto to create a school of international law.

Through the Centre for International Governance Innovation (CIGI), the co-founder of BlackBerry smartphone maker Research In Motion Ltd. has committed to donate $30-million to create 10 research chairs and 20 graduate scholarships over the next 10 years.

In return, Mr. Balsillie�s private, not-for-profit organization has secured a voice to influence, and veto, staffing and curriculum at the school.

The collaboration, which includes $30-million from the Ontario government, has raised eyebrows in the academic community. The Canadian Association of University Teachers (CAUT) has �condemned� the agreement, saying it �opposed any collaboration that allows third-parties a voice in hiring or academic decision-making.�

The union representing 66,000 post-secondary academic staff and professionals is concerned that the deal struck by York could set a precedent.

�Are these things uncomfortable to talk about? You bet,� said Jim Turk, CAUT�s executive director. �It�s the most important issue faculties are dealing with right now.�

The union is currently scrutinizing existing research partnerships between universities and the private sector to examine whether they compromise their independence and integrity.

�I do think the landscape has changed and I think it is a good discussion for us to have,� says Deborah MacLatchy, vice-president academic and provost at Wilfrid Laurier University in Waterloo, Ont.

As financial pressures force governments to cut back, university funding has taken a big hit. The shortfall has forced post-secondary institutions in Canada to look to the private sector to help make up the slack and in doing so, they have become heavily involved in the business of fundraising. In some cases, donors now appear � at least on paper � to have more power to influence areas that have always been the exclusive domain of universities. And almost all of the joint collaborations involve significant amounts of taxpayers� money.


Centre for Intenational Governance Innovation. CIGI was founded in 2001 by Jim Balsillie, then co-CEO of Research In Motion.

Thousands of private individual and corporate donations are pledged to universities every year with no strings attached. These passive endowments allow people to be generous to their alma maters, while leaving the school to decide what to do with the money.

In some cases, donors have been acknowledged with plaques or have auditoriums and entire buildings named after them. In fact, Canada is littered with schools named after donors who have pledged millions, including the Joseph L. Rotman School of Management at the University of Toronto, the Michael G. DeGroote School of Medicine at McMaster University in Hamilton, Ont., the Clayton H. Riddell Faculty of Environment, Earth, and Resources at the University of Manitoba, The K.C. Irving Chemistry Centre at the University of Prince Edward Island, and the Wayne & William White Engineering Design Centre at the University of British Columbia.

However, as universities have become more desperate to secure greater sums of funding, they are moving beyond passive pledges by reaching out to individuals and corporations and entering joint collaborations that in some cases intersect areas of curriculum and faculty staffing � even who can enter a building through the front entrance � at the academic institution. In all, there are about 15 to 20 of these partnerships in place at Canadian universities.

�There is fierce competition among the universities and the donors are more demanding because they know the universities are desperate for money,� said Linda McQuaig, journalist and commentator.

As academic institutions increasingly move beyond simple donor relationships into much more complicated collaborations, the challenge is building proper governance structures that allow the schools to accept money from outside sources while at the same time protecting their autonomy and integrity.

�Different universities will draw the line differently. What concerned me while I was there was that the country overall had not had this conversation so that principles and guidelines are agreed to,� explained Ramesh Thakur, a distinguished international academic, former United Nations advisor and vice-rector at the UN university. �In the absence of such a conversation, inevitably some universities will fall victim to the seductions of money being offered.�

For their part, universities say they are confident the bright line between accepting a donor�s money and their opinions doesn�t have to be blurred to secure critical private-sector dollars.

�As long as the two key principles of autonomy and independent thinking are respected, a major gift can transform an institution,� said Louis de Mello, vice-president external relations at the University of Ottawa. �Integrity is critical to our long-term success.�

The University of Ottawa had begun negotiations with CIGI in 2009 about establishing research chairs in international law studies but pulled out after deciding it �was not to the benefit� of the school, Mr. de Mello said.

�There obviously are tensions,� says Fred Kuntz, a vice-president of CIGI, Mr. Balsillie�s think-tank. �Academic freedom is as important a value to a think-tank as it is to a university. In order to ensure that everyone feels good about the collaboration, there have to be firewalls built in.�

Still, how each party defines these protections is at the heart of the growing debate. For example, most universities have strict policies that limit donors� influence over the use of their gifts. Typically, donors have little official input into choosing the person who fills a chair they have funded because the power of university faculty and officials to choose professors without outside interference is considered a hallmark of academic freedom.

For that reason, the controversial deal between York University and CIGI has raised the ire of some in academic circles. According to the recently completed agreement, a five-member steering committee comprised of two members from Mr. Balsillie�s think-tank, two from York and the executive director of the program will establish the 10 research chairs. Among the committee�s responsibilities, �establishing the specific financial terms and expectations for each of the chairs, including their research plans and research support.� And all decisions made by the committee require unanimous approval.

By virtue of its two representatives on the steering committee and the necessity of unanimous decisions, the teachers� association, CAUT, argues that CIGI has veto power over the budget, strategic research directions and designation of programs of the Balsillie School.

Opposition from Osgoode Law School faculty at York forced the university to relocate the program to other faculties. It also negotiated a protocol with CIGI outlining the specific duties of each party.

Critics aren�t satisfied, saying it�s as much about perception as it is practice. CAUT�s Mr. Turk called the protocol, which he claims is not a formal legal document, �a very bad attempt to do damage control.�

Furthermore, they are concerned about a provision in the 10-page agreement that allows Mr. Balsillie to halt future pledges � and even ask for the return of funds already donated � if CIGI isn�t satisfied with the way York lives up to its obligations.

A similar feature exists in the University of Toronto�s joint partnership with Peter Munk, chairman and founder of Barrick Gold Corp., the largest gold-mining company in the world. The Munk School of Global Affairs was established in 2009 with a $35-million donation from the mining magnate. According to the 12-page agreement, Mr. Munk�s donations will be paid in tranches over 10 years and will be subject to the Munk family�s approval.

In return for the $35-million, the university must create a school in the �top tier of the world�s leading schools of international studies,� at a heritage building that permits only senior faculty and visitors to enter through its front doors. The university has committed to providing the Munk family a detailed written progress report annually, including all relevant financial information. The school�s director, selected by the university, will be required to report to a board appointed by Mr. Munk to �discuss the programs, activities and initiatives of the school in greater detail.� The Munk family can withhold future pledges if the objectives aren�t met.

Under the terms of the deal, all aspects of the program, curriculum and research remain under the �sole authority� of the University of Toronto.

Tony Avelar/Bloomberg

Jim Balsillie, co-founder of BlackBerry smartphone maker Research In Motion Ltd., has signed a $60-million deal with York University in Toronto to create a school of international law.

Nonetheless, the deal rankles the CAUT.

�A third party, a donor, an interest group, has no business involved in discussions about academic affairs within the university,� Mr. Turk said. �There is no place for that if a university is to have integrity.�

From their seat at the table, donors don�t view their participation as micromanaging their money. For them it�s about accountability � not control.

�I think the donors have a concern about whether the money they�re donating is being used for its intended purpose,� explained CIGI�s Mr. Kuntz. �Are the right people being attracted to the research chairs being created?�

Almost all of these joint arrangements include tens of millions in taxpayers� dollars. CIGI�s deal with York was made possible because the Ontario government tossed in $30-million, half of the total estimated cost. Mr. Balsillie founded CIGI in 2002 with $20-million, and $10-million from RIM co-founder Mike Lazaridis. The following year, Ottawa matched the $30-million with an endowment grant. That was followed in 2007 by a $17-million grant from the Ontario government, which was matched by Mr. Balsillie.

The City of Waterloo leased land to CIGI for $1 a year. And in 2009, Ottawa and Queen�s Park each pledged $25-million for the building and infrastructure associated with creating the Balsillie Centre of Excellence, which was matched by the former co-CEO of RIM.

According to CIGI�s agreements with its university partners, �the parties acknowledge that the donor is making the donation for the public good and derives no benefit personally from the donation,� even though Mr. Balsillie receives charitable receipts for his contributions.

�Jim Balsillie is able to leverage public funds to help him advance his own agenda,� says Ms. McQuaig, who wrote the book The Trouble with Billionaires. Not only that, she argues, the deals allow the businessman to take advantage of the reputations of York, Waterloo and Laurier universities to give �him credibility for ideas that would otherwise look self-serving.�

Officials at the University of Ottawa, which walked away from discussions with Mr. Balsillie to set up the school of international law now at York, disagree with that assessment.

�Big donors get excited by big visions. Universities have to come up with bold strategic plans to transform the school,� said Mr. de Mello. �They�re not interested in having their money used to maintain the status quo. Academic freedom is not as much an issue. The dealbreakers are about vision and the tension around speed of execution.�

David Welch, formerly of the Munk School and now director at the Balsillie School of International Affairs in Waterloo, Ont., says the scrutiny should be welcomed. �The sensitivity about these issues is not a bad thing because it forces the universities to get it right. We�re forced to do better because people are paying more attention.�

Even in the U.S., which has a longer tradition of private-sector collaborations with academia, a similar discussion is underway. Alarm bells sounded last year when Charles G. Koch, a conservative businessman, pledged $1.5-million to the Florida State University and in return he is allowed to screen and sign off on any hires for a new economics program �promoting political economy and free enterprise.� Mr. Koch co-founded the Cato Institute, a right-wing policymaking think tank.

In 2008, banking executive John Allison donated millions of dollars to 25 U.S. colleges and universities to establish programs, including a course on �The Moral Foundations of Capitalism,� dedicated to the study of Ayn Rand�s books and economic philosophy. As part of the controversial 10-year deal, students are required to read Atlas Shrugged and Adam Smith�s The Wealth of Nations.

As Canadian universities become more responsive to market forces, �this has forced too many to accept donations without due diligence and, sometimes, even bend to donor directives,� observes Prof. Thakur, who is now director, Centre for Nuclear Non-proliferation and Disarmament at the Asia-Pacific College of Diplomacy in Australia.

In fact, he says, he lost his job as the inaugural director at the Balsillie School of International Affairs in Waterloo for that very reason. The Balsillie school is a joint research collaboration established in 2007 with a $33-million donation by Mr. Balsillie between the University of Waterloo, Laurier and Mr. Balsillie�s think-tank CIGI, where he is also chairman.

Handout/Australian National University

Ramesh Thakur was fired as a director at the Balsillie School of International Affairs in Waterloo.

CAUT investigated Prof. Thakur�s firing and released a scathing report about the lack of governance structure at the Balsillie School. According to the 78-page report in 2010, Prof. Thakur was �unfairly treated� in the months leading up to his dismissal. Part of the problem, according to Prof. Len Findley, who conducted the independent review, was �a regrettable failure to educate the principal donor behind both CIGI and BSIA, Jim Balsillie, as to a donor�s proper role in enabling the work of a school� to conduct its research and teaching.

�In sum, this is a story about the down side of autonomy, the dark side of philanthropy, and the fact that no amount of money, whether public or private, can guarantee academic excellence unless academic principles and values are well understood and protected,� declared the report.

CIGI and the two universities dismissed the union�s findings. Still, they have since hammered out a �squeaky clean� governance structure that was unanimously approved by the boards of governors of all three parties and the universities� senates.

�We have spent close to two years discussing an appropriate governance structure with all three partners and we came out with a deeper understanding of what each of the partners� expectations were and what each was bringing to the table,� said Laurier�s Dr. MacLatchy.

Indeed, Canadians should expect more of these collaborative deals with private individuals and corporations will be inked by post-secondary institutions across the country.

As the funding arms of universities grapple with the practical considerations of trying to fill the funding void left by governments, the faculties required to execute on the deals are becoming increasingly skeptical of the price of doing business in this new arena. Expect a wrenching cultural adjustment that could take years to sort out.


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