By Julian Dierkes
On Nov 14 2022 I was invited to speak to the parliamentary working group for draft education laws.
I was really pleased to accept this opportunity, in part because it is a chance for me to merge my research passion for contemporary Mongolia with my administrative practice as a Senior Associate Dean, Students in UBC’s Faculty of Graduate + Postdoctoral Studies.
These two focus areas of my work have also come together in many conversations that I’ve had with Orkhon Gantogtokh who is pursuing her PhD in Education Studies at UBC and has also recently written about higher education in Mongolia (see e.g. East Asia Forum)
One of the topics that I prepared to speak about was university governance. Over the years, I had heard many complaints about political appointees at Mongolian universities and their lack of academic sensitivity and understanding, but also professors’ resentment at having non-academics appointed to the presidency of their universities in particular or at not being involved in that appointment at all.
In my presentation to the UIX’ working group I had thus expected to provide an overview of UBC governance structures to compare to those relevant to Mongolian public universities. But, somewhat to my surprise, I found fairly few structural differences. The main difference is probably that the UBC Board of Governors does put together hiring committees for appointments to some of the main university positions, including those of the president and the provost. Given the participation of elected representatives of university stakeholders (in UBC’s case, faculty, staff, students, and alumni), there is more indirect participation in hiring decisions by those stakeholders.
But in principle, the UBC Board of Governors as constituted pursuant to the BC Universities Act, is subject to some significant potential political meddling, as it is alleged more regularly at Mongolian institutions. However, such meddling occurs relatively rarely, at least when it comes to specific decisions. Once political appointees join the Board (currently serving members of the provincial and national parliament, and bureaucrats are excluded by the law), they appear to adopt a professional ethic that looks out for the institution’s interests more than the partisan interests of the current provincial government, probably recognizing that political meddling in university affairs has a pretty immediate and almost always detrimental effect on research and rankings.
In my presentation to the committee, I thus had to conclude that the governance structures of UBC and Mongolian public universities are surprisingly similar at a constitutional and structural level, so that differences are largely to be found in practices, not institutions or laws.
To my surprise, the committee then proceeded to ask me about endowments held by the university. My connection to UBC’s endowments is peripheral, though there are a number of graduate awards and fellowships that draw an endowments for funding, and my own position (Keidanren Chair in Japanese Research) is largely funded out of an endowment. But even in my work with the funding portfolio at the Faculty of Graduate + Postdoctoral Studies, I am by no means an expert on endowments.
The questions about endowments came up after I presented a snapshot of UBC’s budget. I thought such a snapshot was important to provide even though I also found this somewhat embarrassing as UBC’s annual budget of over $3b amounts to about 40% of the total Mongolian state budget. At the most general level, UBC’s budget breaks down to about $1b provincial funding, $1b in tuition income, and the remainder is made up of endowment income and other funding (research funding, largely federal, etc.).
How do endowments work?
There is a lot of detailed information on the UBC endowment available on the UBC Finance website.
Basically, however, an endowment is a financial account that is held to benefit a particular purpose where only the income from the original amount can be used for that purpose. [Obviously, the Wikipedia page on financial endowments offers much more carefully worded and comprehensive definitions than I will provide here.] Imagine setting $100 aside for a particular purpose and then restricting yourself to only spending the income (interest, investment income, etc.) from that original $100 for that purpose. That set-up is meant to be permanent, i.e. will last “forever”. There are general endowments that just return income to the overall university budget and there are very specific endowments that generate income for a specific purpose, say a lecture series, or research in a particular area.
While versions of endowments seem to be common in many different cultures (often taking the shape of endowments of religious activities, for example), the important role that endowments play for contemporary universities is peculiar to some European universities (Oxbridge most notably), but also across North America, though much more so in the U.S. than in Canada.
There are all kinds of policies that encourage philanthropic giving, esp. in the U.S., most prominently in the form of tax write-offs, i.e. deductions from taxable income for certain kinds of donations. There is also a well-established culture of philanthropic giving that may well be linked to perceptions of entrepreneurial activities vs state responsibilities.
Endowments to Support Mongolian Universities?
I would have to say that I am pretty skeptical that enabling endowments really would change the operations of Mongolian universities.
I could imagine such an impact if there was a decision, for example, to set aside some state (mining) income for such endowments. There have been several proposals/implementations of sovereign wealth funds for Mongolia. Some sovereign wealth funds are actually similar to an endowment in that they are meant to be a permanent fund generated by non-renewable income that is intended in tern to generate renewable income through investment but only the profits from that investment. One could imagine a version where a Mongolian sovereign wealth fund generates an income to support education, including endowments or budget contributions to public universities, but that strikes me as fairly unlikely. The perennial agitation for reductions in tuition fees at state universities or scholarship support might lend itself more to an endowment generated by mining activities, for example, but given the near-total reliance of the state universities on state budget, an endowment of scholarship activities would essentially amount to endowment to the universities.
So, private individual or corporate donations to Mongolian universities to support ongoing activities in perpetuity? That pre-supposes so many different aspects: tax code, an interest in or culture of philanthropic giving, an entire machinery of university investment officers and account and budget systems to spend that money, etc. And, if not linked to a sovereign wealth fund, is the likelihood of sizeable donations high enough to invest in all of these pre-requirements? Sure, I could imagine some private and corporate interest in endowing activities focused on mining or minerals at MUST, to take a somewhat plausible example, but note that vast sums are needed to make endowments work. Obviously, the financial situation is quite different in Mongolia, but typical pay-out rates in Canada have been in the range of 2-4% for the past decades of relatively low inflation. So, a donation of $1m into an endowment only generates an income in the tens of thousands of dollars. Applying that analogy to Mongolia (at different interest/inflation rates), it is unclear to me that there would be enough interest to endow, say mining engineering activities with the multiple billions of tugrik that would actually enable a sustained program of research, teaching, scholarships or whatever else the purpose is.
Sure, if it was simple to create the structures to enable such endowments, it would be good to do so, even for rare/small amounts, but that does not strike me as simple.
Note for example, that many OECD countries have recognized the extent to which the excellence of U.S. universities has been partly fuelled by endowment incomes, but even where some changes have been made in tax codes, etc. that has not unleashed massive amounts of giving into university (or other) endowments.
Endowments of Mongolian Studies at International Universities
You will not be surprised to read that I find an endowment of Mongolian research activities at universities around the world entirely plausible. I obviously occasionally fantasize about what I could do with a $1m, nay $5m endowment at UBC for example. A professorship in research on Mongolia? Research project funds for several decades? Scholarship funds for graduate students conducting research on Mongolia? A sizeable announcement would not only make UBC even more visible with research on Mongolia than even this blog can ;-), but would also establish research on Mongolia in some permanence. The difference to considering endowments for Mongolian institutions where a similar amount of money could arguably have a much greater impact, is that all the systems for endowments, including the account, investment and tax measures, are all set up at UBC already allowing for an endowment to benefit research on Mongolia in a relatively straightforward and direct manner.
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