Ontario Culture Minister believes ROM will pay off $33-million loan by 2027

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Culture Minister Michael Coteau says he is confident the Royal Ontario Museum will pay the $33-million it owes provincial taxpayers – but warns he will "hold them accountable" for the money.

As The Globe and Mail revealed last week, the ROM has struggled to pay off a provincial loan in recent years after some of its donors failed to fully fulfill their pledges. Since the museum is owned by the province, the government has wide-ranging power to intervene.

"It's an agency of the government. We have different processes and different pieces within legislation that we could use to hold our institutions accountable," Mr. Coteau said in an interview Monday. He declined to detail what exact action he would take if the ROM doesn't come up with the funds: "That's a hypothetical. If, when the situation comes forward, we'll discuss options."

Mr. Coteau said he believes the board will follow its plan to pay off the loan by 2027. The ROM's current payment plan is structured so the museum only pays back the bulk of the money in the final five years. "I'll hold them accountable if necessary. But at this point, they have a plan in place and I support the direction they're going in to ensure that they pay back that loan," he said.

The ROM's financial difficulties are tied to the construction of the Michael Lee-Chin Crystal a decade ago, which was partly funded with a loan from the Canadian Imperial Bank of Commerce. At the height of the fundraising campaign, the ROM struck some deals with donors that were anything but firm. One donor, Shreyas Ajmera, says he was allowed to pay whenever he liked, as his discretion. Another, Alex Shnaider, made a $5-million pledge that was contingent on the success of his real-estate development, a project that has struggled. Mr. Lee-Chin, after whom the Crystal is named, has paid less than $20-million of his $30-million pledge thus far. In 2007, the province assumed the debt from CIBC.

Progressive Conservative MPP Laurie Scott argued the government should have done more to oversee the ROM and ensure it did not slip into this financial state. Ms. Scott pointed to parallels between the ROM situation and the province's $395-million bailout of Medical and Related Sciences (MaRS), the non-profit research incubator, earlier this year. In that case, the province stepped in with a loan to salvage a troubled real-estate deal MaRS had made.

"If they had watched these files closer, earlier on, as red flags started going up … they should have gone in and said, 'What's going on? What are you going to do to fix this problem?'" she said.

Fundraisers disagree on whether the ROM's case is unusual. Several contacted by The Globe say they have seldom heard of such large pledges going unfulfilled. But one fundraising expert argued it is so common that a responsible capital campaign should always raise an extra percentage to cover unpaid pledges.

"It's certainly not the norm, but neither is it particularly rare," said Ken Wyman, who teaches at Humber College in Toronto, adding that he tells his students to expect a fulfilment rate of only 70 to 90 per cent.

On the other hand, philanthropy consultant Brad Offman, who sits on the board of the Toronto chapter of the Association of Fundraising Professionals, called unfulfilled pledges uncommon.

Both men stressed how important it is to have clear pledge agreements with donors, and noted that pledge schedules of five to 10 years are often used to spread out the donor's payments for larger gifts.

The ROM went even further. Spokeswoman Marnie Peters said some gifts are being pledged over a period of 10 to 20 years: "We are seeing a growth in larger gifts from donors in the philanthropic sector, and it is becoming increasingly common for these pledge payments to be completed over longer periods."