Victoria University is facing a furious debate over academic freedom. Photo / Supplied
A dispute between two wealthy philanthropists and Victoria University could see the closure of a well-regarded policy school that has scrutinised the way the government works since 1983.
The dispute arose after the school refused to bow to the wishes of the two donors who, over a period of years, tried to direct the institute to do more research into areas in which they had a particular passion, including the pernicious influence of political donations and lobbying on New Zealand politics.
One former director of the institute, Professor Jonathan Boston, said he believed the university’s decision not to push back against its donors and capitulate was a violation of the principle of academic freedom.
The dispute saw Victoria University’s Institute for Governance and Policy Studies (IGPS) change the terms of the philanthropists’ original donation, turning it into a contestable fund - effectively defunding the institute which lost its main source of secure income.
Left without funding, the IGPS’s future looks bleak and last month the university began consultation on what to do with the institute’s future, according to documents seen by the Herald. The university admits one outcome of this is that the Institute closes its doors.
The potential closure has alarmed academics at the university.
Boston’s submission on this consultation said it was “almost unbelievable” that “a major university in a capital city would be seriously contemplating the demise of an institute like the IGPS”. Boston was the first director of the institute when it became the IGPS in 2012, having previously been the IPS (Institute of Policy Studies)
The funding was withdrawn after Grant and Marilyn Nelson, the wealthy philanthropists whose Gama Foundation endowed the IGPS, grew unhappy with the focus of its research, which they wanted to focus more on the issue of the influence of lobbying and donations in New Zealand.
The Herald has been able to reconstruct the story using 132 pages of emails from the university, released under the Official Information Act, as well as leaked documents, including letters.
In emails released to the Herald under the OIA, the Nelsons told the university the IGPS did not focus its research enough on the influence that donations were having on New Zealand politics, which had been a key reason for their two donations to the institute, totalling $10m.
But members of the university dispute this. At once stage, a review by the university’s auditors, PwC was suggested to review the Nelsons’ concerns and resolve the dispute.
But this review never took place.
Instead, the university and the Nelsons agreed to change the terms of the agreement without reviewing whether the Nelsons’ criticisms were justified.
A spokesperson for the university would only say that “[a]t one stage a PWC review was proposed, but a decision was made not to pursue this and instead to consider a new funding agreement”.
Instead, a new arrangement for the Nelsons’ donation was agreed. This was based on a grant model, where academic staff apply for grants for research based on certain qualifying criteria.
The university told the Herald the funding was not “withdrawn” from the IGPS by the Gama Foundation, “rather a new funding agreement was entered into governing the use of these funds”.
A consultation document, obtained by the Herald, said the Gama Foundation had initially decided to withdraw funding from the university altogether, before being talked down.
“The Foundation decided to remove its donation in mid-2021, but following negotiations, agreed to keep the donation with the university. IGPS, along with other interested groups, need to apply for funding,” the document said.
The consultation document said the university could not itself support the institute, which was losing staff. Director Simon Chapple left at the end of February and a new director has not been appointed.
Grant Nelson justified his dispute with the university by saying that he was not getting the research that he wanted from his donation.
“University staff whose salaries are paid by the taxpayer, have to lecture, mark papers etc. If they have any spare time they have the academic freedom to do any research that they want to do. That is entirely different to being paid from income from an endowment that requires full-time research to be done on particular issues,” Nelson said.
“We provided $10 million to make sure that the research work that we wanted to get done was carried out and it was very disappointing that staff thought that they could ignore this and get away with doing whatever they wanted to do,” he said.
The Nelsons Family and the Gama Foundation
Grant Nelson and his wife Marilyn made their money from a building supplies business which they built from Christchurch and sold in the mid-1990s.
Instead of using the proceeds from that sale to live a glamorous lifestyle, the Nelsons, the couple decided to give their money away.
RNZ reported in 2022 the couple planned to give away $50m by the time they retire. Through their Gama Foundation they purchased blocks of native bush throughout Canterbury. In a story published in The Press in 2011, when the couple were given Queen’s Service Medals for services to philanthropy, Grant Nelson said he believed it was important to preserve native bush and make it available for the public
“We thought it was important to preserve what little of it was left in the country, and it’s also important that it’s made available to the public,” he said.
Along the way, the Nelsons acquired a frustration at lobbying and donations in politics, and a desire to use research to expose the influence of lobbying and political donations on the political process.
Two donations to Victoria University
Grant Nelson told the Herald he had begun talking with the university in 2011 and 2012 about a donation.
In a statement to the Herald, Nelson said his meetings with Victoria’s School of Government were “about the research we wanted to get done on lobbying, political party donations and decision-making processes”.
“We agreed to make an endowment of $3 million to get the work done and signed a Charter that included initial and priority work but it had to be very general in order to be still relevant in 100 years time,” he said.
The original 2012 Gift Agreement between the Gama Foundation and the university that set out the terms of the donation stipulated the money was to support the IGPS “as an endowment” and the institute would “deliver high quality and high impact research that informs the policy-making process and influences policy development and implementation across a number of significant areas”.
It did not detail any specific area where the institute’s research should be directed. The agreement did, however, make reference to the Institute’s charter, which did include the influence of donations and lobbying, areas in which the Nelsons were passionate, amongst several other potential research topics for the institute.
The Gift Agreement also had an out.
It stipulated that in the “unlikely event… it becomes impossible for any of the Objectives to be undertaken, the Vice-Chancellor shall, after obtaining the consent of the Donor, direct that income to be used for alternative purposes that are deemed to be the most consistent with the intentions of the Donor”.
Nelsons grow unhappy
Grant Nelson told the Herald that for the first three years of the donation he was not happy with the way the money was spent.
“After 3 years little work was done because the income was spent on accommodation, Policy Quarterly [a journal published by the IGPS] and public forums and lectures, all unrelated to the Charter.
“We then had a meeting and were assured that if we contributed $7 million this would ensure that the work got done,” Nelson told the Herald.
Annual reports from the IGPS show that some work was done in Nelson’s preferred areas of lobbying and donations.
The 2017 report notes a paper on lobbying, in 2018 and 2019, the institute produced work on both lobbying and donations. Although neither issue appears to have been the main focus of the institute, lobbying and donations were just some of many topic areas set out in the charter.
In the aftermath of the Jami-Lee Ross scandal, which shone a light on the murky world of political donations, the Labour Government said it would look at the issue.
Grant Nelson told the Herald he wanted to use this opportunity to have more research done on the issue of political donations.
“When the Government said that they would review political party donations, I asked that in order to make up for lost time, 50 per cent of the work being done be devoted to this issue but this was refused,” Nelson said.
Victoria university forced to pick a side
Beginning in 2018, the Nelsons’ correspondence with the University reveals a growing frustration with the institute’s research.
In 2018, with the Nelsons emailed Guilford about “problems” with the IGPS and wondering whether a “stewardship” role should be established to mitigate them.
“If existing donors have confidence that the funds they have provided are being used in the way they intended, this could encourage them to provide additional funding or support new research projects,” the Nelsons wrote to Guilford in an email.
Over the course of 2021, Guilford and the Nelsons corresponded over the family’s continued frustrations with the IGPS. Guilford proposed a different philanthropic model, the Borrin Foundation, a grant-based organisation that funds legal research.
In March of 2021, Grant Nelson began a string of emails with the head of Victoria’s School of Government, Girol Karacaoglu about his concerns.
Karacaoglu told Grant Nelson that he believed the institute was “clearly” living up to its charter, but that it was not giving sufficient time to the issues the family cared about.
“It is clear from the ongoing conversations we are having via e-mail (as well as the face-to-face conversation we had in Wellington recently), that the main issue is not whether the activities of IGPS are aligned, and in compliance, with the Charter (clearly they are), but rather whether we are giving sufficient priority to the issues that you want us to focus on in the short- to medium term,” he wrote.
Karacaoglu said the institute’s advisory board had discussed the issue “at length” with its director, then Simon Chapple, and was committed to devoting staff time, where available, to looking into lobbying and donations.
He signed off saying there was little more he could do to address the university’s concerns.
“This is the best we can do.
“Hope it meets your expectations,” Karacaoglu said.
Nelson wrote back saying he was “not able to agree” with Karacaoglu’s assessment that the institute complied with the charter.
Karacaoglu replied that he was still very much sure the institute did comply with the charter.
“We reiterate that all the activities of the IGPS, certainly since Simon Chapple took over as Director in 2017 (in whose appointment you were involved and you strongly supported), have been fully aligned with the Charter,” he said.
“The Charter mentions donations as one amongst seven ‘possible initial research projects’,” he said.
“There is no notion whatsoever in the Charter that the major activity of the IGPS, or even a plurality of its activities, is researching lobbying and political party donations,” he said.
Other documents suggest the broader University agreed with Karacaoglu that the charter had been complied with.
For instance, Vice-Chancellor Nic Smith gave Chapple a reference letter in February 2023 saying that the University considered Chapple had “performed his duties as Director of the Institute of Governance and Policy Studies (IGPS) in full fulfilment of IGPS’ governing charter”.
The Nelsons’ emails to Karacaoglu became less frequent. From April of that year, they corresponded more frequently with then-Vice-Chancellor Grant Guilford.
On April 21 2021, Guilford, aware of the Nelsons’ concerns, said the issue of the IGPS’ alleged deviation from its charter was of “sufficient importance” to investigate, and suggested a retired judge.
This wasn’t to the Nelsons’ taste, and they emailed back saying they had a bad experience with a retired judge looking into a dispute with Fletcher Building, which he retold in detail to Guilford.
They also expressed a concern that a retired judge or a lawyer might take an overly legal reading of the dispute.
“If a retired judge or a lawyer was to investigate what has occurred, there is a risk that they could take a narrow legalistic approach which would not be appropriate,” they wrote.
Guilford accepted this concern, and replied to the Nelsons saying: “I understand your aversion to overly legal interpretations”.
He offered up the former Auditor General Lyn Provost, who had just begun to chair the institute’s advisory board, although she was deemed not independent enough.
In May, Guilford floated the idea of the university’s auditors, PwC carrying out the review. The Nelsons liked this idea and on May 24 told Guilford that they would be “happy with PWC”.
The review never took place.
Grant Nelson told the Herald that when he “received the proposed terms of reference, it appeared that the IGPS staff had prepared them so that was not going to work”.
Guilford told the Herald that it had been impossible to “agree the terms of reference with the Nelsons”.
He said the Nelsons had the right to shift the donation from the university entirely if they wished so, in the end, they suggested a compromise.
“What we had suggested instead was that we would go to a contestable model whereby they as donors, they moved back to being setting the priorities for the funding,” he said.
Nelson said he had agreed to the contestable fund model and “it has been very successful”.
He said the three IGPS staff had not applied for any grants.
A letter from then-director Simon Chapple to the university, seen by the Herald, suggests this decision was made at speed, and that far from setting the terms of reference, staff at the IGPS were unaware the review had even been commissioned.
But that was moot. Chapple’s letter said that three hours after first being informed of the review, he was told that it had been paused.
Instead, a new idea was suggested by the university.
This would keep the donation with the university but change the way in which its funds were disbursed. Instead of simply funding the IGPS, university staff would apply for money from the fund. The criteria for receiving funding was narrower.
A university spokesperson said that the Gama Foundation “did not withdraw the funding they had provided to the IGPS, rather a new funding agreement was entered into governing the use of these funds”.
Grant Nelson told the Herald that it “suggested that the best way to get the work done would be to have staff apply for grants. To get the grants they would have to do the relevant work. We agreed to this and it has been very successful”.
He said it was notable that “three IGPS staff have not applied for any grants so clearly they never had any intention of doing the work they were paid to do”.
In August, Guilford met the then director of the IGPS Simon Chapple and other staff to discuss the new way the funds would be disbursed.
Gulford relayed that meeting to the Nelsons via email, saying it “did not take Simon too long to grasp that, if the IGPS would like to benefit from the investment income of the endowment, the staff will need to submit grant proposals that address the priority objectives”.
“I made it clear that, if the IGPS did not want to benefit from the investment income, they would not be compelled to bid into the fund. I.e. that they had a choice to make,” Guilford told the Nelsons.
The university disputed the idea that it had trod on the principle of academic freedom in pausing the review and coming to a new arrangement with the Nelsons.
“The university greatly values its ongoing relationships with its donor community, and respectful conversations about preferences and plans for the future are part of this relationship. Academic freedom is protected under section 267 of the Education and Training Act 2020, but academic freedom does not guarantee funding for any particular activity,” the spokesperson said.
Speaking to the Herald, Guilford agreed academic freedom was the “key issue” at stake in the dispute.
He said the problem was due to the original gift agreement.
“It was quite specific about giving the donor quite a lot of authority over the operations of the IGPS, but also very specific about the type of research that would be done and the type of communications that would be undertaken as a result of what the donors saw as their investment in the university and in their view that that hadn’t been met, I suppose in the sense that they wanted to see more research in their priority area, which was political donations and the influence that was having on our democracy,” Guilford said.
He said the details over how much control donors get over what they donate to need to be set out very clearly when the donation is made.
“That’s the challenge. They are difficult things and they need to be very, very carefully worked through right at the start and not have murkiness - otherwise you get into this type of trouble that we got into,” he said.
The end of the IGPS
With no secure finding, the IGPS looks like it may close its doors. Chapple’s letter said he believed Guilford had “undermined core principles of academic freedom”.
Boston told the Herald that " “[t]wo of the ethical values that are fundamental to the nature and role of universities are ‘institutional autonomy’ and ‘academic freedom’”.
“In my view, the unwillingness, indeed, the utter failure, of the university to protect and uphold the core values of institutional autonomy and academic freedom in relation to the IGPS in 2021... sets a dangerous precedent.
“In effect, it endorses the right of philanthropic donors to go well beyond the provision of funding to support broad fields of research and, instead, to seek to determine, in an ongoing manner, the precise nature, focus, and scope of that research.
“Such arrangements are contrary to the core values of a university in a free and democratic society.
“They should not be tolerated,” he said.
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