New Zealand's universities teach more than 100,000 students, own huge tracts of prime central city real estate and have hundreds of millions of dollars of donations managed by tax-free charities. With the sector one of the loudest in claiming Covid-induced poverty following the collapse of the international student market, business investigations reporter Matt Nippert pulls apart annual reports to assess top-end salaries, fundraising and investment-management prowess, to rank our richest tertiary institutions.
The New Zealand university sector is made up of eight institutions which collectively own $11.4 billion in net assets, generate $4.3b in operating revenue each year, and have charitable endowments approaching 10 digits.
Whichever way you slice the numbers, the top end of tertiary study is big business. But some universities are doing better than others.
By size, New Zealand's universities fit into three tiers. Auckland (34,521 students) is easily the country's largest, with the middle band comprising AUT, Massey, Otago, Victoria and Canterbury (around 20,000 students). Waikato (10,617) follows closely behind, with Lincoln (2633) trailing by some distance.
The bulk of university funding, for both teaching and research, is provided by central government. Alternative income streams - from student fees, donations and capital management - is what differentiates institutions.
All New Zealand universities have now set up foundations, with some coming later to this fundraising party than others. These charitable structures encourage donations by enabling donors to claim tax credits and typically manage funds for specific purposes, while providing universities with a supplementary asset base and income stream.
While puny in comparison to endowment funds in the US Ivy League or Oxbridge (Harvard's world-leading endowment fund, for instance, is worth $64b), the pool of funds held by New Zealand university foundations is not insignificant and now collectively totals $660 million.
Foundation operations at Auckland and Otago are well-advanced, accounting for three-quarters of the national total, and provide each university with more than $10m in annual funding.
In an effort to better understand the sector - which owns $11b in real estate - the Weekend Herald has built rankings to assess university wealth, taking into account a number of metrics.
Net assets determine accumulated wealth, net assets per student allows better comparison between institutions of differing scale, and the market indicator of average executive salaries provides an external assessment of prestige. Final rankings are determined by relative performance on all three measures.
It should be no surprise that the top of these rankings is dominated by older universities: age provides time to grow assets - and also a deep pool of former students who can potentially be recruited as donors.
1st: University of Canterbury
Christchurch's Canterbury University, founded in 1873, is the country's second oldest and earns its place at the top of this list largely due to its nationally-leading net assets per student and executive remuneration.
While Auckland University has a bigger gross balance sheet, Canterbury's $1.8b in net assets needs to cater for fewer than half as many students as Auckland. And despite the difference in scale, executive salaries at Canterbury still manage to eclipse their northern rival: the 14 staff identified as key in annual reports earned average salaries of $368,071, just pipping their Auckland counterparts.
The wider university holds $151m in investments, predominantly in listed equities with a sprinkling of private equity placements. Its University of Canterbury Foundation added to this total by last year pulling in $5.5m in donations. The foundation holds $34m in net assets, and appears to have generated relatively low returns last year - a bull market for equities - of only 11 per cent.
2nd: University of Auckland
The sole heavyweight in this division has nearly twice the number of students as its nearest rival at AUT. That size is largely responsible for Auckland's league-leading $1.3b in operating revenue and a central-city property portfolio that has seen $1b in development over the past decade and is now worth nearly $4b. Its art collection alone is reported to be worth $24m.
Auckland's fundraising prowess is considerably boosted by strong links to the wealthy medical sector, and helped its charitable foundations rake in $31m last year - nearly five times the total of its nearest rival, Otago. A single $16.5m gift in November by the Hugh Green Foundation, intended to boost brain research, represents the university's (and possibly the entire New Zealand tertiary sector's) largest-ever donation.
These foundations channelled $31.5m back into university operations in 2019 from a $257m asset base. Their financial asset portfolio - mostly listed equities, but with nearly $30m in investment properties and private equity - appears to have achieved the sector's best-equal returns of 21 per cent during the year. This high level of fundraising, and fund management, helped push the wider university to report a surplus of more than $90m last year.
3rd: University of Otago
The country's oldest university, founded in 1869, has quietly built an asset base and fundraising machinery second only to its much larger rival in Auckland. With $2.1b in net assets, its position on this ranking is held back only by relatively modest executive salaries - key staff there make $300,000 - which are among the lowest in the sector.
Otago's age and medical school provide both an attractive pool of potential donors and target for donations, with Graeme Hart having tipped in $10m in 2018 for a new dental facility in Auckland.
The Otago Foundation, with net assets of $243m, is comparable in size to powerhouse Auckland and contributed $10m in funding for university operations after delivering impressive returns last year of 21 per cent.
4th-equal: Massey University
An early pioneer in distance education, Massey has needed to accumulate relatively less in property on a per-student basis, but its expansion into Albany in 1993 still sees it with $1.2b in real estate.
The Massey University Foundation Trust secured $5.8m in donations last year, but its $47.4m asset base is still in a growth stage and despite returns of 16 per cent, only $2.8m was contributed back to the university proper.
4th-equal: Auckland University of Technology
The newest entrant on this list and graduating to university status only in 2000, AUT's central city location gives it property assets worth nearly a billion dollars. Its second place in student enrolments contributes to its executives - paid an average of $326,263 - being the third-highest-paid in the country.
The AUT Foundation is scrawny compared to its peers, with only $2m in net assets - largely held in short-term deposits. Charities Service filings indicate that six figures in annual donations are quickly transmitted to the university proper, rather than invested long-term to grow an endowment.
6th: Victoria University of Wellington
The capital city's university was founded in 1897 and, despite entreaties from its current management, is still called Victoria. Victoria's sprinkling of campuses across Wellington are worth $950m - but its unusual, albeit modest, levels of debt make it the only university whose net assets are lower than its real estate holdings.
The Victoria University of Wellington Foundation, with $67m in net assets, is the largest outside of the big two in Otago and Auckland, and last year pulled in $6m in donations. Its trustees - including Forsyth Barr managing director Neil Paviour-Smith and former Department of Prime Minister and Cabinet chief Sir Maarten Wevers - oversaw an investment portfolio dominated by international equities that delivered returns of 16 per cent last year.
7th: Lincoln University
The runt of the litter, Lincoln's size - with less than one-tenth Auckland's student numbers - sees it ranked last in terms of salaries paid to key staff (key executives there make only 60 per cent as much as their cross-province counterparts at Canterbury), but on a per-student basis net assets of $245m place it in the middle of the pack.
Asset holdings reflect Lincoln's status as an agricultural college: 9290 sheep and 1457 cattle valued at $3.6m; and the collapse of a joint venture with AgResearch in 2019 saw the university book $15.3m in losses.
The university has been slow to take advantage of charitable structuring to facilitate donations, with its foundation set up only last November and by March reporting zero activity. This lethargy in fundraising is also matched by what appears to be sub-par capital management: its $84m in financial assets largely held in trust languish in short-term deposits and last year earned returns of only 2.93 per cent.
8th: Waikato University
The baby boomer of the bunch, Waikato University was founded in 1964 and ranks only above minnow Lincoln in net assets and executive salaries. With 10,617 students, it ranks last in terms of net assets per capita.
Waikato's 2019 annual report flags employment grievances that might cost it $435,000, and a Human Rights Tribunal case that may raise liabilities of $350,000.
Outside of Lincoln's still-gestating foundation, and AUT's revolving door, Waikato's charitable arm is the smallest in the sector with $1m in donations, leaving net assets at just under $10m.