McMaster University’s health sciences research gets major boost with largest cash gift in Canadian history

McMaster Univ is hoping to parlay the largest cash gift in Canadian history into an outpouring of similar gestures that will help to boost health research at its own institution and universities across Canada. Late last year, McMaster announced that a $105-million donation from Michael DeGroote — a retired industrialist with a long history of involvement with the university — will be exclusively devoted to health care research and education.

Capital expenditures including the completion of McMaster’s new $80-million health sciences building will receive $41 million, while the remainder — $64 million — will provide an endowment for a variety of initiatives with a significant portion remaining undedicated for the time being (see chart, page 2). Those initiatives are being structured to attract the world’s best researchers in the areas of pain, cancer and infectious diseases and include an incentive that university officials contend will be irresistible.

McMaster officials plan to identify the top two or three individuals in each of the three targeted research areas. Those researchers will be invited to visit the university’s (then completed) health sciences building. As an added endorsement they will offer prospective candidates an endowment of $7-8 million which can be used to build research teams.

“We will link an endorsement to them and allow them to use it to their best judgement. They can attract the cream of the cream for their research teams,” says Dr John Kelton, dean and VP of McMaster’s faculty of health sciences.

De Groote’s gift will be transferred to McMaster a over five-year period, beginning this year with $25 million, and $20 million in each of the subsequent four years. Once received in full, the endowment portion of the gift is expected to generate approximately $3 million annually. McMaster is currently seventh in Canada as ranked by sponsored research income ($197.3 million in 2002) with more than 40% flowing to the health sciences.

DeGroote is a retired businessman now living in Bermuda who owned several businesses over his working career while living in the Hamilton area. The enterprise he is most commonly identified with is Laidlaw Transport Ltd, which he grew into a multi-billion operation before selling in 1988. Other businesses he was involved with include several US firms and the Hamilton Tiger-Cats football franchise.

Kelton, along with university president Dr Peter George, were instrumental in negotiating DeGroote’s gift, which is exclusively devoted to the health sciences. He says De-Groote has donated money to the university in the past but for the most recent gift he indicated that he was particularly interested in supporting the health care sector.

“Three years ago, he told us to come back with a proposal. His health wasn’t good at the time so quite a bit of time went by before George and I contacted him and let him know we were getting ready to make a proposal,” says Kelton.

NEGOTIATIONS WERE SHORT AND SWEET

Late last year, Kelton and George met with DeGroote and his two sons in a Toronto hotel. After outlining McMaster’s vision for the health sciences and explaining the tight fiscal environment facing Canadian universities, they made a pitch for $105 million, and offered to name the new health sciences building after him. Later over lunch, DeGroote informed the incredulous university administrators that they had a deal.

“It was an astonishing event. There was no debate about lowering the amount. His decision happened within an hour,” says Kelton. “He is especially captivated by research and how it allows a jumping of concepts.”

START OF A TREND?

Kelton says the significance of De-Groote’s generosity beyond the immediate impact of such a large sum of money, is the precedent it sets both for McMaster and other Canadian universities. He’s optimistic that the gift will stimulate other major acts of philanthropy and could set in motion the naming of other medical schools.

“This is the first time a medical school has been named after a benefactor. There’s nothing sacred with a medical school compared to a business school although some don’t believe this,” says Kelton, adding that a previous $4-million donation by DeGroote allowed McMaster to be the first university in Canada to name its business school after a donor. “When people give large gifts it stimulates others to think about the same thing. This will attract major donors. In addition to the medical school, I’m responsible for the schools of nursing, rehabilitation and midwifery. I’d like to get new names for all of them through new donors.”

When structuring the disbursement of the gift, McMaster officials decided to split it between capital outlays and an endowment that would benefit a variety of areas within the faculty of health sciences. Dr Mamdouh Shoukri, McMaster’s VP research and international affairs, says .the strategy will provide revenue to support faculty positions indefinitely and boost areas where the university is already strong.

“It will help increase capacity and the critical mass of people in three areas to the point where you can call them centres,” says Shoukri.

Kelton says the endowment portion of the gift has the additional intent of providing future flexibility, hence earmarking $25 million for a development fund.

“We decided to use as much of the endowment as we could to help generations to come,” he says. “There will be no decisions on $25 million of the endowment for at least five years.”

The largest US donations dwarf anything experienced in Canada — witness last week’s US$1.25-billion donation to the Salvation Army by the the widow of McDonald’s Corp founder Ray Croc. But when looking strictly at medical schools, the McMaster gift ranks highly. Kelton says the DeGroote donation is second only to the $200-million given to the UCLA school of medicine by music mogul David Geffen.

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