How Wealthy Are Canadian Universities?

Bonus: no elections were even mentioned in this post.

Between rising costs, federal and provincial funding cutbacks, dropping immigration quotas, and declining school-aged populations, Canada’s universities are racing headlong into a devastating financial crisis.

Or not. Based on their financial reporting, Canada’s universities are as strong and stable as ever, with massive endowments and eye-watering income streams. In fact, even if their public funding would disappear overnight, many of the largest universities would have enough gas in the tank to keep them on the road for years.

To figure out which of those two narratives best reflects reality, I used two separate AI tools to analyze publicly-available financial documents to create estimates covering most recent asset, revenue, and expense data for the 13 Canadian universities with a total enrollment of at least 30,000 students (full or part time). For my calculations, I used averages of the two datasets.

The data should be treated as tentative because I couldn’t confirm the accuracy of the AI estimates. However I did compare the two estimate sets looking for correlations and found that six of the 11 metrics were highly correlated, three were moderately correlated, and two (“sales and services” revenues and “land holdings”) were only weakly correlated.

We’ll begin with some tasty hors d’oeuvres. Which schools’ budgets have the highest concentration of public funding? Well that’ll depend on your province. Schools in Alberta and French-language schools in Quebec are the most reliant on governments, while Ontario’s are the least.

Institutional endowments are a big deal.¹ They consist of gifts given to universities that are designed to be used as equity in long-term investments. The idea is that the equity itself will never be touched, but the capital gains are to be used to fund programs of one sort or another.

The University of Toronto’s endowments are the country’s richest - apparently topping $3.3 billion. The poorest of the top-thirteen schools is Toronto Metropolitan University, who are forced to scrape by on just $175 million. Here’s how the leaderboard looks when comparing endowment dollars per student (both full and part time).

Who spends the most on their students? I have no idea. But I can tell you who spends the most per student. That, without a doubt, would be UBC. And it’s not even close.

Now let’s get back to the question in the title: just how wealthy are Canadian universities? Well what does wealth even mean?

If you lost your job tomorrow, how long could you keep going at current spending levels before you’d be forced to cut back? Personally, if I had a couple of years’ worth of money just sitting in the bank, I’d be pretty happy. Now what if your business suddenly lost its primary customer and couldn’t easily find a new source of revenue to fill the gap? Any business that could cover its payroll and utilities in such circumstances is a very healthy business.

So let’s try to visualize the scene if all federal and provincial governments suddenly cut their funding for universities to zero. For how long do you think our schools could maintain their current level of operations - including full research activities?

To build an estimate, I assumed that, under stress, academic administrations could sell off ten percent of their real estate assets and, over time, liquidate their “other assets” investments. I also assumed that they wouldn’t touch endowments (which would create a legal minefield).

I calculated each school’s available emergency resources and divided that by the annual cash shortfall the complete government pullout would create. The result is the length of time (in years) that a school could continue spending at current rates.

Impressive. Bearing in mind that those numbers are based on estimates and over-simplifications, they still suggest that Canadian universities are, as a class, among the wealthiest institutions in the country.

Of course, catastrophic funding changes would probably inspire all kinds of cost reductions, so most institutions could probably push their survival horizons a lot further. Not to mention using their considerable breathing room to actively search for replacement income.

Now even if all that is true, it doesn’t mean that governments should cut all post-secondary funding. But it could help us revisit many old assumptions that inform policy priorities, including who deserves special perks like tax exempt status.

1. And through their associated income tax credits, endowments are also partly funded by the government.