JENNIFER SU/THE VARSITY

U of T is planning its next major fundraising initiative following the conclusion of the Boundless Campaign, which raised more than $2.6 billion over seven years. The new initiative will be publicly announced within the next five years and is hoped to exceed Boundless’ success.

Plans to establish the new initiative were discussed at U of T Business Board’s penultimate meeting of the 2018–2019 academic year, in addition to an annual update from the University of Toronto Asset Management Corporation (UTAM) and a review of the latest operating budget for the Residential Housing Ancillary.

The Business Board is part of Governing Council, and is responsible for monitoring and approving the university’s resource allocations, business policies, and major transactions.

New major fundraising initiative in the works

Vice-President Advancement David Palmer’s annual report to the board centred upon the past, present, and future of U of T’s Boundless Campaign. Boundless is a fundraising initiative that raised $2.641 billion for the university between 2011 and 2018, exceeding its initial $2-billion goal, setting a new record for Canadian philanthropy.

Accordingly, Palmer revealed that plans are underway for the university’s next major fundraising initiative, which he hopes will continue and even exceed the achievements of Boundless. As with its predecessor, the fundraiser will emphasize philanthropy, alumni engagement, and volunteerism.

The campaign is set to be publicly launched within the next five years and anticipated to run until 2029. Since this overlaps with U of T’s upcoming bicentennial in 2027, Palmer described the initiative as laying a foundation for the “excellence of this university’s third century.”

Palmer emphasized the need to sustain fundraising momentum in the aftermath of Boundless. “We don’t want our donors and volunteers to say, ‘Oh, you’re done. Guess you have all you need from us; we’ll go off and do other things.’ [This is the] worst thing that could possibly happen to us,” he said.

The office of the Vice-President Advancement’s analyses indicate that there is still untapped financial potential. “We’ve barely scratched the surface,” Palmer told the board. “We’re not done. The future is truly boundless.”

To maintain engagement, the office has pursued a broad digital and social media marketing strategy. Web pages, newspaper advertisements, university-sponsored events, and other promotional materials portray U of T as an enduring source of research and innovation, whose continued achievements are made possible by generous benefactors. Palmer hopes that this message conveys the university’s gratitude for Boundless contributors while emphasizing the importance of continued fundraising endeavours.

Losses incurred in pension and endowment returns

Daren Smith, President and Chief Investment Officer for UTAM, presented his organization’s annual financial report for the 2018 calendar year.

UTAM is an investment manager owned by U of T that currently oversees $10 billion in funds. It is responsible for overseeing the university’s endowment and pension funds, as well as expendable funds cash for projects and operations not currently designated for use. U of T is the only university in Ontario to own a distinct not-for-profit for investment management organization; other universities rely on their governance committees and staff members.

Invested expendable funds, consisting of $2.2 billion at the end of 2018, provided a positive return of 2.1 per cent, just short of the 2.3 per cent target. Invested pension and endowment funds incurred losses of 1.6 per cent and 1.5 per cent, respectively. These numbers were far lower than the annual target of a six per cent return on each, which Smith suggested was a result of the downturn in the capital markets seen over the past year.

While this is a nominal loss, Smith said that the active investment strategies undertaken by UTAM significantly outperformed the passively managed reference portfolio for the same time frame comparatively adding a combined value of $59 million to pension and endowment. The reference portfolio is a theoretical portfolio assuming traditional asset allocation, used to compare and evaluate active investments.

“We are long-term investors and while the short-term results… are important, our focus is on the long-term,” Smith said. Since the beginning of 2014, the pension portfolio has seen an annualized return of 7.5 per cent, while endowment has seen a 7.6 per cent return.

This trend was consistent with the returns seen for the 10-year period from 2009–2018. “Over the longer period, over five years or over 10 years, the portfolios have done their job and met or exceeded the university’s target returns,” Smith said, referring to UTAM exceeding the 5.7 per cent target return set out by the university for the longer terms.

“[UTAM is] pleased with the fact that the returns over the long term have been able to achieve the university’s target returns, which is the paramount objective,” Smith said.

Positive operating income from residential units

The Business Board also approved the 2019–2020 operating plan and budget for the Residential Housing Ancillary.

The Residential Housing Ancillary is a department of U of T’s Ancillary Services, which itself is a division of University Operations. The department is responsible for 163 rental units spread across 83 residential addresses in the Huron-Sussex neighbourhood in the northwest corner of UTSG. Over half of these units are rented to faculty members, eight per cent to student families, and the rest are occupied by long-term tenants.

The forecast for the current fiscal year anticipates a net operating income of $746,364 significantly higher than the $275,180 predicted by the 2018–2019 budget. Anne Macdonald, Assistant Vice-President Ancillary Services, attributed most of this positive discrepancy to the deferment of several major capital maintenance projects, including window and roof replacements and general renovations.

Since these projects are now expected to be completed during the next fiscal year, the new 2019–2020 budget predicts a net operating loss of $241,598. However, the report submitted to the board indicates that total revenue should once again exceed operating costs in subsequent fiscal years.

“It is the goal of the Residential Housing Ancillary to operate the properties on at least a break even basis, to avoid the need for permanent subsidy from the operating budget,” the report submitted to the board affirms.

According to Vice-President Operations and Real Estate Partnerships Scott Mabury, the Residential Housing Ancillary is not yet a formal part of U of T’s new Four Corners real estate strategy. Four Corners will prioritize non-academic amenity spaces and expanded housing for faculty members, staff, and students across all three campuses. The strategy will eventually include the university’s properties in the Huron-Sussex neighbourhood.

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