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I'm getting the feeling that these articles aren't telling the whole story. I'm more interested to find out how they came to such a decision and whether they'd planned on giving the money to a different cause, which I'd support because I think that you should make new university students aware of a wide variety of worthy causes out there.
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The story is not their future plans for giving to another cause but the rationale for their decision. As a Carleton grad, I am very disappointed, and yes, it does affect the reputation of the whole university.