MaRS Discovery District lives on Government Grants and miss Fundraising Targets by Miles

The MaRS Discovery District (MDD) is a registered charity owned by the Ontario Provincial Government. MDD was one of the major issues (together with the expanding electricity mess) that resulted in turning the majority McGuinty led Ontario Liberal Party in the 2011 election into a minority!  MDD was conceived in “2001 to develop a world-class innovation and convergence centre (the MaRS Centre) in Toronto dedicated to improving Canada’s economic prosperity from innovation in the life sciences sector.”

MDD didn’t get rolling until the Liberals gained power in 2003 but from that point on MDD took off with incredible support from Provincial taxpayers. As evidence, Provincial support to the end of 2011 was in excess of $150 million and reviewing the 10 years from 2010 to 2019, MDD received $228 million in provincial funding as well as $9.4 million in Federal funds. Actual donations, for which MDD issued tax receipts, were a paltry $4.6 million or an average of $460K annually for those 10 years.

MDD had originally arranged financing for their Phase 2 expansion via IO (Infrastructure Ontario) another provincial entity established by the McGuinty led government but it was never clear* how the $235 million they arranged to borrow via IO would be able to pay the estimated cost of the building of $344 million.  As it turned out IO’s 2015 annual report noted: “The Loan receivable from the Medical and Related Sciences (MaRS) was transferred to the Ministry of Research and Innovation on March 31, 2015.”  The money supplied by the Provincial government at that time reached at least $400 million to cover the expansion.  As time went on and the building was completed Brad Duguid, then Ontario Economic Development Minister, was finally able to announce MaRS had  “completed a $290-million private financing of its west tower building project, which has enabled it to repay three-quarters of the nearly $400-million in loans received from Ontario to complete the stalled project.”  The Globe and Mail carried the story on February 9, 2017. Ironically one of the “premier” tenants in the Phase 2 building is none other than Public Health Ontario (PHO) an outgrowth of the 2003 SARS epidemic! PHO is now guiding the Ford led government on the Covid-19 pandemic!

Just months before the foregoing announcement the Globe ran an article stating: “The long-time CEO of Toronto’s MaRS Discovery District, Ilse Treurnicht, has informed its board she will be stepping down as of June, 2017, ending a 12-year run at the head of the non-profit innovation hub funded primarily by the province.”  If one looks at the “Sunshine list” it is obvious Ms. Treurnicht was extremely well paid particularly when one realizes that she was the CEO of a “charity”! In most years she was paid over $500K.  Comparing her salary to the average annual tax receipted donations of $460K indicates they didn’t even receive enough to pay her salary.  From 2010 the number of employees at MaRS grew from 51 to 211 and compensation costs in 2019 were $23.5 million meaning the average salary for all employees was $111,000!

The foregoing is humorous as when MDD were finally able to arrange partial private financing for their Phase 2 expansion and repaid the Province $290 million of the $400 million of debt they had incurred, Ms. Treurnicht was quoted in a Globe article and presumably the reporter obtained all of the following information from her in addition to her quote.

When the building is fully occupied later this year, it will generate about $20-million in annualized net operating income, enough to make it self-sustaining, MaRS CEO Ilse Treurnicht said.

MaRS will now focus on fundraising, with a goal of bringing in more than $50-million from private donors for programming to help startups. MaRS board members have personally pledged close to $7-million of that amount.

“It’s really exciting because we now have what we always needed – long-term stable financial base for the infrastructure of Mars,” Ms. Treurnicht said.”

MDD have recently released their March 31, 2020 Annual Report but haven’t filed it with the CRA.  Nevertheless, there are parts of the report that make for interesting reading including the fact they once again they finished their year without showing a profit.

What is also interesting is reading the auditor’s notes which indicate their realty and other holdings.  Note 1 tells us about “MaRS Phase 1 Investment Trust, MaRS Phase 1 Inc. and 2550106 Ontario Inc.” as well as “Phase 2 Investment Trust and MaRS Phase 2 Inc.”. They note those realty holdings are “Ontario for-profit” companies.  Other “for profits” owned by MDD include: MaRS Discovery Enterprises Inc., MaRS Catalyst Fund and MaRS 101 Investments. The “not for profits” under the MaRS wing are; MaRS Investment Accelerator Fund Inc. and MaRS Discovery Services Inc. The latter owns 100% of MaRS 101 Ventures and 100% of MaRS Catalyst General Partner Inc. There are companies, etc. MDD claim an interest in but for the sake of brevity let’s stop there.

After reviewing the “not-for-profits” and the “for-profits” owned by a “charity” owned by the taxpayers of the Province of Ontario one wonders; did the Kielburgers’ get their WE to ME organization abilities from the former Ontario Liberals who for 15 years were running the Province?  Just saying!

In reviewing the 2018 and 2019 CRA filing’s for MDD the $50 million goal of donations, cited by their former CEO, Ms. Treurnicht as noted above, appears to be “pie in the sky” as receipted donations in 2018 were $704K and in 2019 were $538K.  That’s a big miss by any planning standards and brings to light an article Peter Foster had in the Financial Post in June 2014 about MDD where he wrote!

MaRS DD was based on the zombie delusion that governments can pick winners or, in this case, carefully select those whom they will guide across the so-called “valley of death” – a place littered with the bleached bones of brilliant innovators who couldn’t sell their dreams to blinkered, flinty-eyed financiers.”

Six years later and MaRS Discovery District is still convinced they can pick the winners out of the clouds of their organization and guide them over the “valley of death”!

The time has come for Ontario’s Auditor General to examine this labyrinth and give Ontario taxpayers the facts about their charity; MaRS Discovery District!  From the outside MaRS looks more like a realty company than a Charity!

*Refer an article by the author in the Financial Post on June 10, 2014.

Author: parkergallantenergyperspectivesblog

Retired international banker.

4 thoughts on “MaRS Discovery District lives on Government Grants and miss Fundraising Targets by Miles”

  1. Fabulous!!!!

    On Sun, Jul 26, 2020 at 8:09 PM Parker Gallant Energy Perspectives wrote:

    > parkergallantenergyperspectivesblog posted: “The MaRS Discovery District > (MDD) is a registered charity owned by the Ontario Provincial Government. > MDD was one of the major issues (together with the expanding electricity > mess) that resulted in turning the majority McGuinty led Ontario Liberal > Party i” >

    Like

  2. The sad part about this seems to be that these antics continue and the only thing that changes are the bag people. The pious assertions and accusations in the public press seem more to reflect resentment that it is not THEIR hands in the cookie jar — than any absolute truth. Still, profiting from public service is a tradition that likely goes back to Hammurabi. All we can hope is that something that is actually helpful to the public will accidentally get done while they are picking our pockets.

    Liked by 1 person

  3. Would it be fair to assume that the vast majority of the people of Ontario have no idea which charities are legitimate and which charities are not?
    Thank you Parker, for asking the big questions, and especially for questioning the validity of the basis for environmental science investments in Ontario.
    Is our Auditor General actually capable of understanding the scientific deceptions that may be involved with this investment?

    Liked by 1 person

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