New Zealand universities teach more than 100,000 students, own large tracts of prime real estate in the city center, and have hundreds of millions of dollars in donations run by tax-exempt charities. With sector one
claiming the poverty caused by Covid after the collapse of the international student market, business investigations journalist said Matt Nippert pulls up annual reports to assess high-end salary, fundraising, and investment management prowess, to rank our richest colleges.
The New Zealand university sector is made up of eight institutions that collectively have $ 11.4 billion in net assets, generate $ 4.3 billion in operating income annually, and have charitable contributions close to 10 digits.
Whichever way you divide the numbers, the top end of tertiary studies is big business. But some universities perform better than others.
By size, universities in New Zealand fall into three levels. Auckland (34,521 students) is the largest in the country, with the middle group comprising AUT, Massey, Otago, Victoria and Canterbury (about 20,000 students). Waikato (10,617) followed closely behind, with Lincoln (2633) behind him.
Most of the university’s funding, both for teaching and research, is provided by the central government. Alternative income streams – from student fees, donations, and capital management – are what differentiate the institutions.
All New Zealand universities have now established foundations, with some coming to these fundraising parties more recently than others. This charity structure encourages donations by allowing donors to claim tax credits and typically managing funds for specific purposes, while providing the university with an additional asset base and revenue stream.
Although small compared to the endowments in the US Ivy League or Oxbridge (Harvard’s world leading endowment, for example, is valued at $ 64 billion), the pool of funds held by New Zealand’s university foundations is insignificant and now collectively amounts to $ 660 million.
The foundation’s operations in Auckland and Otago are highly advanced, accounting for three-quarters of the national total, and provide annual funding of more than $ 10 million to each university.
In an effort to better understand this sector – which has $ 11 billion in real estate – it is Weekend Herald has built a ranking to assess the wealth of universities, taking into account a number of metrics.
Net assets determine accumulated wealth, net assets per student allow better comparisons between institutions of different scales, and market indicators of average executive salary provide an external assessment of prestige. The final ranking is determined by the relative performance of the three measures.
It’s no surprise that this top ranking is dominated by older universities: age takes the time to develop assets – as well as the pool of former students who could potentially be recruited as donors.
1st: University of Canterbury
The University of Canterbury in Christchurch, founded in 1873, is the second oldest in the country and earns its place at the top of this list in large part due to its nationally leading net assets per student and executive remuneration.
Although the University of Auckland has a larger gross balance sheet, Canterbury’s $ 1.8 billion net assets need to serve less than half of the students as Auckland. And despite the differences in scale, executive salaries at Canterbury still managed to outpace their northern rivals: the 14 staff identified as key in the annual report earned an average salary of $ 368,071, beating only their Auckland counterparts.
The broader university has $ 151 million in investment, primarily in listed equity with multiple private equity placements. Its University of Canterbury Foundation added to this figure last year by attracting a donation of $ 5.5 million. The foundation has $ 34 million in net assets, and appears to have generated a relatively low return last year – a bullish market for equities – of just 11 percent.
2: University of Auckland
The division’s only heavyweight has nearly twice as many students as its closest competitor in AUT. That measure is largely responsible for Auckland’s league-leading $ 1.3 billion operating income and downtown property portfolio that has generated $ 1 billion in development over the past decade and is now valued at nearly $ 4 billion. The art collection alone is reportedly worth $ 24 million.
Auckland’s fundraising prowess is largely driven by its strong links with the rich medical sector, and helped its charity foundation raise $ 31 million last year – nearly five times the total of its closest rival, Otago. A $ 16.5 million prize in November by the Hugh Green Foundation, intended to enhance brain research, represents the university’s (and possibly New Zealand’s entire tertiary sector) contribution to the largest ever.
The foundation funneled $ 31.5 million back into university operations in 2019 from an asset base of $ 257 million. Their portfolio of financial assets – most of which are listed equity, but with nearly $ 30 million in investment property and private equity – appears to have achieved the sector’s best equivalent of return of 21 percent this year. This high rate of fundraising and fund management helped push the wider university to report surpluses of more than $ 90 million last year.
Third: University of Otago
The country’s oldest university, founded in 1869, has quietly built an asset base and a fundraising machine second only to its much larger Auckland rival. With $ 2.1 billion in net assets, his position in this ranking is held only by relatively modest executive salaries – the main staff there make $ 300,000 – among the lowest in the sector.
Otago’s medical school and age provide an attractive pool of potential donors and donation targets, with Graeme Hart tipping $ 10 million in 2018 for a new dental facility in Auckland.
The Otago Foundation, with net assets of $ 243 million, is comparable in size to Auckland’s power plant and contributed $ 10 million in funding to university operations after delivering an impressive 21 percent return last year.
Fourth degree: Massey University
As an early pioneer in distance education, Massey needed to accumulate relatively few properties per student, but his 1993 expansion to Albany still generated $ 1.2 billion in real estate.
The Massey University Foundation Trust raised $ 5.8 million last year, but the $ 47.4 million asset base is still in its infancy and despite a 16 percent return, only $ 2.8 million was contributed back to the university.
4th degree: University of Technology Auckland
The newest participant on this list and graduating to university status only in 2000, AUT’s downtown location gave him nearly a billion dollars worth of property assets. Second place in student enrollment contributes to its executives – paid an average of $ 326,263 – being the third highest paid in the country.
AUT Foundation is very small compared to peers, with only $ 2 million in net assets – most of it held in short term deposits. Charities Service submissions show that six figures in annual donations are quickly sent to universities, rather than being invested long-term to grow an endowment.
6: Victoria Wellington University
The capital’s university was founded in 1897 and, despite the demands of its current management, is still named Victoria. Victoria’s campuses spread across Wellington are worth $ 950 million – but its unusual, albeit modest, debt levels make it the only university whose net assets are lower than its real estate holdings.
The Victoria University of Wellington Foundation, with net assets of $ 67 million, is the largest outside of the top two in Otago and Auckland, and last year attracted $ 6 million in donations. Its supervisors – including Forsyth Barr managing director Neil Paviour-Smith and former Chief of the Prime Minister and Cabinet Department Sir Maarten Wevers – oversee an investment portfolio dominated by international equities that provided a return of 16 percent last year.
7: Lincoln University
The dwarf litter, Lincoln’s size – with less than a tenth of Auckland students – makes him last in the rankings in terms of salaries paid to top staff (key executives there make only 60 percent as much as their cross-provincial counterparts in Canterbury), but with assets. net per student of $ 245 million, center the package.
The asset holdings reflect Lincoln’s status as an agricultural college: 9,290 sheep and 1457 cattle worth $ 3.6 million; and the collapse of the joint venture with AgResearch in 2019 cost the university $ 15.3 million in losses.
The university has been slow to capitalize on charity arrangements to facilitate donations, with the foundation only being established last November and reporting no activity in March. This sluggishness in fundraising is also offset by what appears to be substandard capital management: $ 84 million in financial assets, mostly held in trusts, languishing in short-term deposits and only earning 2.93 percent returns last year.
8: University of Waikato
The baby boomer of the group, Waikato University was founded in 1964 and ranks just above minor Lincoln in terms of net assets and executive salaries. With 10,617 students, it ranks last in terms of net worth per capita.
The Waikato 2019 annual report marks an employment complaint that may cost $ 435,000, and a Human Rights Court case that could increase liability by $ 350,000.
Outside of Lincoln’s thriving foundation, and the AUT revolving door, the Waikato charity is the smallest in the sector with a $ 1 million donation, leaving net assets of just under $ 10 million.