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Postsecondary Problems: Universities as Charities

Ryan Jones February 29, 2016

Universities as Charities from Chimp on Vimeo.

Every year about two million Canadians enroll in postsecondary classes in order to further their education, broaden their life experience, and experience the collegiate lifestyle. Ideally, a university or college education will lead to quality employment prospects down the road, or at least a better understanding of how the world works. But did you know that universities are charities? Universities qualify for charitable donations thanks to the Canadian Income Tax Act, which outlines the four major charitable purposes allowable by law:

  • the relief of poverty
  • the advancement of education
  • the advancement of religion
  • other purposes beneficial to the community as a whole that the courts have identified as charitable

Obviously, universities are deeply involved in the advancement of education and thus qualify under that category. But are postsecondary institutions really deserving of people’s hard earned dollars and fundraising efforts? We took a look at issues facing colleges and universities across the country.

Funding inequity

It might be hard to imagine that the hallowed halls of many large universities are in need of charity, and it’s true that many are wealthy institutions indeed. However, there are two sides to every coin and many schools are underfunded thanks to a variety of factors.

Most universities are funded in large part by an endowment fund. This is a huge amount of money, much of it donated by alumni and charitable donors, that generates interest. The principal remains intact while the interest funds school programs, infrastructure projects and salaries. But not all endowments are created equal. As of 2014, Victoria University in the University of Toronto maintained an endowment of $114,420 per student, making it the most highly endowed school in the country. Conversely, Université du Québec à Montréal (UQAM) had an endowment of only $635 the same year, less than 1% of the funding at Victoria University. While a larger endowment doesn’t always result in a better education, it certainly helps.

Another factor in university cash flow is government funding. During times of economic hardship, funding for education is a ripe target for cuts. Postsecondary funding is mainly determined by provincial governments, and as such, budgets can be altered unevenly across the nation. For example, in the Maritime provinces, student enrolment is down due to declining populations, so associated funding is also down. Budget shortfalls require additional donations to float institutions through hard times.

Program Funding

Sometimes a university can be well-funded but individual programs within an institution can still struggle. For example, the Innocence Project at UBC’s Allard School of Law continues to operate because students and lawyers give their time for free, and in some cases donate their own money to the program that works to resolve claims of wrongful conviction. Donations made to UBC can be earmarked for the Innocence Project but this is a rare occurrence.

Aging Infrastructure

So your endowment is well-funded, your programs have what they need, teachers and staff are getting paid, but then a crack in the foundation of the student union building is discovered. What should the administration do?

Aging infrastructure is a reality for institutions like Canada’s oldest, Université Laval, founded in 1663, but even schools built in the twentieth century experience degradation of buildings and facilities. Colleges and Institutes Canada found that the average age of buildings at universities and colleges is between 41 and 50 years old, many of which require substantial repairs or replacement altogether. Additionally, schools with increasing enrolment and expanding campuses frequently require new buildings to complete their educational objectives.

What You Can Do

If you attended a university or college, consider giving to your alma mater. If you have more specific charitable goals, research which schools are working in areas that align with your preferences and donate to those schools or programs. If your only concern is that your charity dollars go to a reliable institution that will use them wisely, you may want to consult our Top-Rated University Charities list.

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