Strategic Management Upside Down: Tracking Strategies at McGill University from 1829 to 1980

Canadian Journal of Administrative Sciences, Dec 2003 by Mintzberg, Henry, Rose, Jan

Finances

Figure 4 shows the income of McGiIl University from the 1870s (when reliable data became available) to the end of the study period, broken down by its three main sources. Again, as the plot is on a semi-log scale, the steady long-term rise in total income can be seen, which accelerated after the second World War.

In some ways, the curve is smoother than the one for enrollment, with the exception of two sharp blips: down then up late in the last century, and up then down and up again in the 1920s.

The breakdown of this income between student fees, interest (reflecting donations and endowments), and government grants tells an interesting story of the university's history. Rough periods of emphasis can be delineated, but identified as much by the crisscrossing trends as by dramatic shifts.

Commensurate with its founding on James McGill's �10,000 grant, not to mention the considerable real estate that accompanied this, McGiIl was a university supported largely by donations for virtually its first full century; into the new century, interest made up the lion's share of the income. But this belies the history that preceded the data of Figure 4, because in its early decades the university stumbled from one financial crisis to another, through continual bouts of poverty and debt. It was not until 1837 that the family challenges to the initial grant were exhausted. A first building was then constructed, which ran a factor of three over budget, leaving insufficient funds to pay the professors. By 1852, after a series of real estate manipulations, the university had to close its doors for one year, firing all its staff.

What might be called the age of the benefactors began in the early 186Os, shortly after William Dawson, McGiIl's great Principal (and one of its great scholars as well) began his 40-year tenure. Three men in particular supported the university: William Molson of the beer family, then, in the 1880s, Sir Donald Smith, who earned his fortune building the Canadian Pacific Railway, and Sir William McDonald of tobacco interests. Major grants from the U.S. Carnegie and Rockefeller Foundations in the 1920s (including a million dollars from the latter for the Medical Faculty in 1920) brought the age of the benefactors to a close, although important benefactors did appear later.

Government income was low and relatively steady in most of these years, showing two major increases in the first two decades of the 20th century but still remaining far below the other two sources of income. Fee income rose very sharply near the end of the first century and then began a very steady if occasionally interrupted rise, suggesting that, of all the parameters of this study, this was among the most stable and, taking inflation into account, the slowest to increase. By the mid1930s, for about 10 years, fee and interest income were virtually identical, after which the former exceeded the latter in almost all the remaining years.

Government grants increased steadily and, from the 1940s, at a more rapid rate, bypassing interest income in the 1950s and, after running almost identical with fee income for most of the 1950s, pulling rapidly ahead of it as well. So, by 1960, the year in which McGill took a wrenching decision to accept major and statutory provincial government funding ($5.3 million, compared with grants in the $1.5-$2 million range previously), the university slipped closer toward the public sphere. "Publicly-funded" might be a better term than "public", since McGiIl retains its sizable endowment and the right to add to that, also its status as a private institution. In general, universities in Canada are neither as private nor as public as those in the United States. Almost all university activity is publicly funded in Canada, yet allows significant although varying degrees of autonomy.