As U of T scrambles to patch up recent financial blunders and put together a new investment plan, many students and staff are concerned about where their money might be headed.
In 2007-2008, nearly 30 percent of the university’s endowment went down the drain due to investment mistakes. University of Toronto Asset Management (UTAM), a private firm hired to oversee all institutional funds, had decided to adopt an American model of investment. U of T’s money was channeled into liquid assets like hedge-funds and private equity.
This high-risk model had worked (and still works) for private American schools with massive endowments, like Harvard or Yale. It proved to be a disaster for U of T. The current administration, under David Naylor and VP Business Affairs Cathy Riggall, is thus burdened with digging the university out of a major financial hole. UTAM has been asked to overhaul most of its previous policies. President Naylor stresses the need for a “more stable” investment portfolio. He says that U of T’s large size and unique college structure mean that it cannot afford to gamble money on unpredictable liquid assets.
But there is debate as to what "stability" really entails. In light of the ongoing Governing Council elections, students are wondering how much say they will have on where the university channels their money.
The issue was raised in last week’s GC Townhall. A major concern was whether U of T would make unsavoury investments, without any prior dialogue, in order to get on financially firm ground. After all, in the name of research, U of T has historically poured money into controversial companies like Lockheed-Martin.
“UTAM needs to have at least something of an ethical voice,” said GC Candidate Daniel Gatto.
Currently, plans to work towards a more ethical investment model inevitably run into the lopsided nature of U of T governance. UTAM is a private corporation, with its own board of directors and minimal administrative regulation. Bowing to public pressure in 2005, the Business Affairs Board created a Responsible Investing Committee which included two students. The role of this committee has solely been to put forward suggestions and advice, not to make decisions. Real power regarding the university’s finances still rests with UTAM. The organization has substantial autonomy in all its choices.
For GC Candidate Olivier Sorin, this needs to change if there is to be any fiscal transparency at the university. “Even the administration has realized that enough is enough,” he said at the meeting. “UTAM must be held more accountable. As members of the Governing Council, we should have the opportunity to ask where and how our money is being invested.”
Editor's note: changes have been made to paragraph 6.