April 17, 1998

When would you say no to money?

A recnt issue of Maclean's magazine reports that U of T social work dean, Wes Shera, turned down a tentative $1 million endowment from a Hong Kong millionaire who made his money in tobacco.

On the other hand, Mother Theresa used to take money from despots.

As Canadian universities become increasingly dependent on private dollars, more and more top administrators have to decide when to say no. Folio posed the question, When would you say no to money? to a sampling of deans and adminstrators via email last week. Here are some of their responses.

Dr. Roger Smith, acting vice-president research and external affairs

Smith, acting vice-president and former business dean, says he hasn't had to say no yet. But he would. First if the donor attached strings that would pull the university from its mission and strategic objectives. And secondly, "When there's clear evidence the funds have been gathered by illegal means, then of course the answer is no."

However, it's unlikely the university would ever face the choice of turning down funds from an illegal source, says Smith. Not only are criminals not lining up to donate to the university, but police have greater knowledge of who's involved in criminal activity than university administrators do. Courts would likely have seized ill-gotten assets long before the nefarious donor could give them to the university.

When the donation involves money from legal activity, sanctioned by society, such as selling tobacco or gambling revenue, Smith says he'd take the money. "We're not here to cast moral judgement on what everybody else does," says Smith. "There're certain things we don't do at a university and one is try to dictate people's beliefs." The university's mission and objectives are designed with the greatest good to society in mind, he says. "As long as we feel we can accept the money and put it to good use in a way that serves society, then we have a responsibility to do so." Smith says universities like Harvard, dealing with a donor base in the billions, use the same criteria.

While he's never said no, Smith does recall a time the U of A passed on government funding when the incentive offered did not align with the university's objectives. Both the U of C and University of Lethbridge expanded undergraduate business programs with incentives from government while the U of A chose not to. In at least one other case, says Smith, a donation was held in trust to ensure there were no claims against the money.

Guy Mallabone, director of development

While Mallabone loves to say yes to money, he has an extensive list for when to say no (see sidebar). That list includes saying no when some aspect of the gift -- or giver -- conflicts with a moral stand the university has taken. The J. Armand Bombardier Foundation recently gave the U of A half a million dollars to fund a professorship in a new bilingual business program. Bombardier has a small subsidiary company in Northern Ireland which produces Starburst and Starstreak defence missile systems. Where do we stand on this?

"Currently, the university hasn't set black or white standards," says Mallabone. Other organizations, like the Red Cross, for instance, "wouldn't take money from arms dealers at all." Then, the organization got into the debate of 'what if it was a subsidiary of a subsidiary of the donor company.' "It then became a board decision on a case-by-case basis."

Establishing just what might be morally taboo is even more difficult for a university, he says. "The university is the bastion of free thinking." Deciding categorically what the moral guidelines were would be a "slippery slope. How about certain medicines that could be used in abortion? What about money from companies that conduct possibly unethical animal experiments?"

Dr. Randy Garrison, dean of the Faculty of Extension

"Let me preface my response by stating that our faculty must constantly deal with the reality and challenge that we are a cost-recovery operation. Our survival depends on paying our way through revenue generation of various kinds. The faculty consists of a number of subsidiary business units who must pay their way."

So when would Garrison say no to money?

"Clearly, when it conflicts with the university's and faculty's goals. More specifically, when it compromises our perceived and/or actual neutrality and, therefore, credibility. This generally occurs if we become associated with a sole supplier/benefactor that brings a questionable or overly narrow agenda/message.

A good example is the recent VLT conference organized by our Government Studies Unit. To make this event happen, we had to get sponsors (ie, strength). However, it would have weakened the faculty's and university's credibility if the sponsors were perceived to be all on one side or the other of the issues related to VLT's. This perception of bias can be avoided by having a variety of sponsors with different interests or point of view.

At the same time, given the challenging financial position we find ourselves in, it would be very difficult to turn down a large sum of money from even a questionable benefactor if few strings were attached. It is easy to say in the abstract what one would do, but each situation would have to be judged by its particulars. For each case, one would have to consider whether any risk to the reputation of the university or the faculty would be outweighed by the benefits of having a sponsor support an educational activity that would otherwise not be possible. I guess I worry that we may, in small ways, be striking Faustian bargains in order to realize our goals in these difficult economic times."

Dr. Murray Gray, dean of Graduate Studies

"Your question poses an interesting ethical question. My immediate thought is that the proposed use of the money is the key issue for the university. If the money reinforces something that the university wants to do already, then I would be favorably disposed. I can think of some well known international endowments (e.g. Nobel, Rhodes, Rockefeller) where the source of the funding had some taint, especially from a late-twentieth century perspective. The outcome of these endowments, and their goals, are what really matter.

The problem with many endowments, of course, is that they seek to support activities that are either new to the university or marginal. The result of the bequest is to draw university resources into the target activities. When these activities are underfunded overall, the university suffers. "

Mallabone's 'Top 10' reasons to refuse a donation to the University of Alberta

(These guidelines apply to philanthropic gifts, he says. Those for business investments may vary.)

When the strings attached to the funding:

1. jeopardize the university's ability to conduct independent research free of interference from the donor;
2. conflict with the university's stand on a moral or ethical issues (ie: tobacco company, arms manufacturer, etc.)
3. impose a degree of unacceptable interference on the student's ability to pursue their goals of education, study, and research without undue promotional influence (ie: an unacceptable degree of advertising or promotion)
4. go against the fostering of cultural diversity and pluralistic values, where all people are treated with dignity and respect;
5. violate any applicable law or regulation
6. do not recognize and value privacy, freedom of choice and interests of all those affected by the donation
7. require that the person securing the gift be paid by a percentage of the funds donated, rather than with a salary, fee, or performance-based compensation
8. require that a finders fee be paid in return for the provision of the gift
9. require that the university disclose confidential constituent information
10. require that information created through the donation of a gift, be transferred to or utilized by the donor

"As a side note," says Mallabone, "all central development officers are required to sign a code of ethics and standards of practice which essentially follow these points listed above."

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