The Benefactor Wall

Does corporate investment in business schools compromise academic freedom and research integrity?
Although shrinking with time and circumstance, my MBA-acquired intellectual property inhabits prime cerebral space. There, in the deep folds of the cortex, the forces of theory and practice, numbers and narrative compete for mental supremacy. It can’t make for easy combat. Armed with formulas, spreadsheets and case-study conclusions, the synapses fighting for the free market are poised to wield the upper hand. But the underdog synapses struggling for socio-economic equity carry the business- school equivalent of Aesop’s Fables. Here are a couple of my favourites.

First, the day my professor of organizational theory invited the local Frito Lay plant manager and a high-ranking civil servant to address our class. While handing out more bags of potato chips than any 7-Eleven could stock, Mr. Frito Lay delivered a slick presentation on building teamwork among spud peelers. Mr. Bureaucrat, meanwhile, was pensive and modest as he shared stories of managing education and health-care budgets worth billions.

Afterwards, the potato guy was mobbed by students thrusting their résumés into his well-manicured hands. The other guy hovered in the background with only our professor for company. Over a bag of ripple chips, I contemplated the shape-shifting power of packaging and presentation—potato-chip production had been elevated to a calling more noble than educating the young or healing the sick.

A couple of months later, the CEO of a major financial institution was invited to speak on the issue of bank mergers. Cuddling a logo-clad teddy bear, Mr. CEO boasted of his company’s efforts to combat child poverty. He pledged that no child be left behind in an era of trade liberalization (note the savvy link to the bank merger issue). Then, with an abrupt toss of the teddy, he launched a fiery defence of front-line layoffs and corporate restructuring. The crowd rewarded him with a standing ovation. Slipping out the side door, I wondered whether some of the children living in poverty weren’t the very offspring of his company’s offloaded and underpaid front-line workers.

Questions about the relationship between the classroom and the boardroom loomed large during my B-school tenure. Signs of corporate influence over case-study selection, focus-group exercises and speaker series existed but were not flagrant enough to trigger any blowing of the scholarly whistle. Still, the scent of compromise lingered in the halls and I worried more about what I couldn’t see than what I could.

The increasingly cozy ties between corporate Canada and those being trained for entry into its inner sanctum strikes many as practical and efficient. Corporations, they argue, should invest in the education of its next generation of leaders through scholarships, research chairs, technology, and alpha-dominant bricks and mortar. And, in exchange, corporate logos decorate donor walls, and business executives-cum-benefactors attend gala receptions. Sure, the fanfare surrounding such quid pro quo philanthropy may be excessive but this very exposure brings deals out of the back room and into the scrutiny of the public domain.

For it’s the deals that stay behind closed doors that alarm the nearly extinct camp of purists. They argue that any external influence over research and teaching threatens academic freedom. Of course, back room deals, telling glances and whispered codes are difficult to trace. But if an algorithmic model were simulated to narrate the story of corporate involvement in Canadian business schools, it would be built around the facts, supplemented with controversy, and interspersed with conjecture.

Here’s what we know to be true.

Over the last decade, several business schools have profited from the sale of their names to corporate Canada’s wealthiest. At last count, of the 34 universities offering MBA programs, 12 sport surnames distinct from their parent institutions. Think Ivey (University of Western Ontario), Schulich (York University), Rotman (University of Toronto), Molson (Concordia University), Asper (University of Manitoba), Sauder (University of British Columbia), Haskayne (University of Calgary) and, most recently,
Desautels (McGill University). Of the 22 schools that have kept their maiden names, some have done so on principle while others are eagerly awaiting corporate courtship.

Queen’s University, for one, is holding firm. Richard Seres, executive director of marketing and communications, explains: “Queen’s has a stellar reputation and strong name recognition. Why would we risk trading that in for a new name, a new identity?” Instead, Queen’s has sold off real-estate naming rights at some impressive prices. The School of Business is now Goodes Hall thanks to a $10-million donation from Melvin Goodes, a Queen’s alumnus and former CEO of Warner-Lambert.

Just how much does it cost to name a business school these days? The price is high and rising. In the U.S., real-estate developer Stephen Ross recently announced a gift of US$100 million to his alma mater, the University of Michigan. That’s a ten-fold increase since one of the first North American institutions was named. In 1979, Northwestern University’s business school received a $10-million gift from the John and Helen Kellogg Foundation and was re-christened the Kellogg Graduate School of Business.

The first Canadian deal was struck in 1995 with an $11-million donation from the Richard Ivey family to the University of Western Ontario. Later that same year, York University received a gift of $15 million from mining tycoon Seymour Schulich and became the Schulich School of Business.

A decade later and the price tag is considerably steeper. In November 2005, the largest Canadian money-for-moniker deal was struck with a gift of $22 million to the Faculty of Management at McGill University from the Canadian Credit Management Foundation and its CEO, Dr. Marcel Desautels.

Of course, corporate fortunes can change overnight, turning once-coveted names into marketing liabilities. Queen’s University found itself in the awkward position of having named a wing of Goodes Hall after alumnus David Radler. As deputy chairman and COO of Hollinger International, Radler had arranged for a gift of $1 million to the school’s building fund. Following his plea of guilty to fraud, the Board of Trustees at Queen’s University announced “(it) has, with regret, decided to return all monies received in relation to a gift pledge from Mr. David Radler and to remove the Radler name from a wing of its School of Business and Benefactor Wall.”

The move, heralded by business ethicists, was a relatively inexpensive one to make. Says Seres: “What if we had entered into a naming rights agreement with this individual, sinking considerable time and resources into a new brand? The damage to a school’s reputation could be irreparable—and no donation can compensate for that.”

And what about the philanthropic franchising of academia? Remember Seymour Schulich, the mining magnate with a knack for investing and a predilection for cowboy collectibles. In just over a decade, Schulich has built an academic name for himself, literally. The Schulich brand now graces a business school (York), a medical school (Western), an engineering school (Calgary), and a music school (McGill).

Perhaps the URLs tell the story best: www.schulich.yorku.ca was established in 1995 for $15 million, www.schulich.uwo.ca in 2004 for $26 million, www.schulich.ucalgary.ca in 2005 for $25 million, www.mcgill.ca/music/schulich in 2006 for $20 million. It’s a striking and laudable feat. Yet will the expansion of the Schulich higher-education brand compromise the autonomy—or integrity—of the individual product lines?

Schulich’s York investment says no. Paul Pivato, who heads up media relations at York, sees the growing Schulich enterprise as good for everyone. “Mr. Schulich is one of this country’s greatest philanthropists.
He has given to numerous universities and our school is completely supportive of Mr. Schulich’s generosity in naming other faculties,” he says. As to whether York has B-school exclusivity over the Schulich name—this question, like others, remains unanswered.

Herein lies the dilemma in determining whether corporate donors are influencing the agendas of the business schools they fund. There is a disconcerting lack of transparency around deals made between
business and business schools. Requests to see copies of documents are routinely redirected or ignored. Often, it seems, the terms are reached verbally and never committed to writing. Imagine—multi-million dollar deals between corporate Canada and institutes of business education entrusted to the oral tradition.

Take, for example, Schulich’s Chair in Corporate Social Responsibility. Announced in 2003 by former Hewlett-Packard CEO Carly Fiorina, the $2-million endowment was negotiated by Paul Tsaparis, HP Canada’s president and Schulich alumnus. Yet, according to Pivato, the terms surrounding the chair are strictly verbal. No written—let alone legal—document exists.

Perhaps the most controversial donor deal came out of the University of Toronto with the Rotman Foundation’s offer of $15 million to the business school. Rotman’s offer came under 11th-hour faculty fury when it was revealed that the agreement would allow for “the unqualified support for and commitment to the principles and values underlying the (donor’s) vision by members of the Faculty of Management.” The faculty claimed that such language represented an abrogation of the university’s commitment to academic and research freedom.

Eventually, the objectionable details of the deal were resolved to the satisfaction of both benefactor and scholar—and U of T’s B-school was branded the Rotman School of Management. As a result of this donor debacle (and others including Barrick Gold, Nortel and the TSE), the U of T developed guidelines to govern all future donations and pledged to make public all agreements on donations larger than $250,000. Few, if any, other Canadian campuses have followed its lead.

The University of Calgary, it seems, has not. Recently, a group of donors—led by energy giant Nexen—funded a Chair in Business Ethics to be housed in the Department of Humanities. The search committee included representatives from two of the eight corporate donors and each donor was granted a seat on the advisory committee which works with the appointed chair, Dr. Gregory Daneke.

“Sure, it’s a little unusual to have corporate donors involved like this,” admits Daneke. “But I’ve found it a helpful forum to discuss current ethical dilemmas facing the corporate sector. Do I feel compromised in any way? Absolutely not.”

A businessman with strong ties to the University of Calgary isn’t so sure that Daneke will be able to maintain his independence. Speaking on the condition of anonymity, he says, “I’ve heard that one of the donors tried to direct Dr. Daneke’s research to meet his own company’s needs. If they want a consultant, they should hire one. But funding a research chair for private gain is suspect if not unethical.” He sees it as but one example of an insidious trend sweeping Canadian campuses. “There’s no doubt that corporations are wielding far too much influence over the direction of academic research. But there’s a culture of ‘don’t ask, don’t tell’ when it comes to the quid pro quo deals between corporations and academia.”

And so fact meets controversy meets conjecture. Still, the question remains. Are Canadian business schools selling off the assets of academic freedom and research integrity to the highest bidder?

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