Alternative sources of funding in higher education institutions

27 October, 2021

 

At a time of crisis

If you compare the news before the COVID-19 crisis with post-crisis news, you can see that for a few years now there has been a growing need on the part of higher education institutions, not just public but also private, to find alternative sources of funding to deal with two main problems: a decrease in enrolments and budget cuts. An article published in El Diario three years ago stated in 2018 that, “on average, universities received 27.7% less funding than six years ago” (Sanchez, 2018). This is compounded by a fall in enrolments during the lockdown. In June 2020, Catalan campuses estimated “a decrease of up to 7% in bachelor’s degrees and up to 30% in master’s degrees for the next academic year” (Vallespín, 2020). The financial need is a global one, and it is even more acute in environments with widespread economic difficulties. In the United States, Southwest Tennessee Community College had an 18% drop in overall enrolments in spring 2021 compared to autumn 2020, “a decrease of almost twice the national average” (Cheng et al., 2021).

 

Solutions

Recently, Spanish Minister for Universities Manuel Castells stated in reference to the push to renew Organic Law 6/2001 on universities that “in these two decades there have been profound changes in the world and society, in addition to two serious economic crises that have had an extraordinary impact on public universities”. The aim of the reform is to “promote patronage and new income formulas, such as those derived from companies created and partly owned by universities, or patents” (Council of Ministers, 2021). While waiting for the effects of government reforms, many institutions cover the needs for overall improvement and progress through their own initiatives that help them both boost research and cover costs for students that have been hit by economic hardship. Below are a number of private and public university initiatives to obtain extra funding. 

 

University donation platforms

In the age of crowdfunding and platforms such as Patreon, donations are a solution chosen by many universities seeking an external source of funding which offers a philanthropic option that is easily accessible through many universities’ own websites. This is the case of the initiative The Impact of Giving at the Schulich School of Business, which provides the option of making donations online, appearing on a wall of donations or leaving a legacy in the form of a will. The University of Melbourne’s Believe campaign offers anyone interested the opportunity to help with a financial contribution as a single amount or regularly once a month. This has been essential for helping students with financial needs due to COVID-19 with their studies or basic needs, such as food, rent and healthcare.

 

                             Photo by Baim Hanif on Unsplash

 

Consultancies, advice sessions and tailor-made training as a service 

Some institutions offer the transfer of their know-how as an extra source of profit. This exchange offers financial benefit to the institutions, whose expertise helps customers to improve. An example of this is the Berlin School of Creative Leadership’s customized programmes, its consultancies and tailor-made interventions, designed to impact on the core of organizations to boost their strategic ambitions. Another similar case is that of Hyper Island, which offers consultancies to facilitate leadership, team development and strategy in order to create change in organizations.

 

Financing of start-ups and financial profit from patents

Entrepreneurship and innovation management are mainstays of the development of the university-business world relationship. Many universities go to great lengths to receive credit for entrepreneurship projects because they are aware that the work of their students is key to boosting the economy but public funding sources are not enough. The UC Anacleto Angelini Innovation Center of the Pontifical Catholic University of Chile, created in 2012 thanks to a donation of $15 million US dollars from the Angelini Group, is responsible for promoting entrepreneurship and innovation at university and has a self-financing model. It promotes meetings and joint projects between the world of academia and the public and private sectors. At Pennsylvania State University, the PCIV Ventures project promotes business activities and the creation of new companies around Penn’s main research and innovation projects, looking for entrepreneurs to lead the companies and investors to provide finance for the portfolio of new initiatives being developed.

Although for a large institution such as the Massachusetts Institute of Technology patents account for only 4% of revenue (Dominguez, 2017), this percentage can mean covering expenses for new projects or research. In the case of Israel, Yissum Technology Transfer Company, the technology transfer company of the Hebrew University of Jerusalem, strives to carry out innovative scientific research, aspiring to make advances in commercial solutions. Its business partners include companies such as Novartis, Merck, Intel and Google. Yissum has registered over 10,750 patents for more than 3,030 inventions. Unlike countries such as the United States, technology transfer entities in Israel take the form of companies. Yissum is an atypical entity, because it is a for-profit company owned by the Hebrew University, which is a non-profit organization.

 

Funding of research through consortiums with private initiatives and the creation of centres and institutes through donations

Many private sector companies need help from universities to obtain research results and start new projects based on them. These collaborations provide university research institutes with large amounts of funds. An example of this is the Karolinska Institutet, which in 2019 obtained 9% of its funding from private funds (4% from Swedish and 3% from foreign companies). Philanthropic donations provide a large injection of funds for the creation of research centres by entrepreneurs. The Turner Institute for Brain and Mental Health at Monash University, which focuses on detecting and treating mental health conditions, is funded by the David Winston Turner Endowment Fund as well as by the University of Buckingham’s Vinson Centre for the Public Understanding of Economics and Entrepreneurship.

 

Grants, endowments for students or universities from philanthropic funds

The private funds in the form of financial endowments received by universities are often used as general aid for the institutions or to create grants for students. The University of Cape Town receives 10% of its budget from donations and commercial income. It is the country’s only tertiary institution to offer aid to students above the government threshold. In 2019, it had a fund of €74 million in study grants and €22.5 million in endowments from donors such as Hasso Plattner Stiftung, The Gabriel Foundation, Thuthuka Education Upliftment Fund, The Bertha Foundation, the private individual Neville Isdell and The Andrew W. Mellon Foundation. Financial contributions make a big difference in the lives of many people, so much so that the University of the People is basically operated with financial donations and volunteering and also has scholarships offered by large companies. 

 

Conclusion

As discussed, the task of finding alternative sources of funding for higher education institutions is crucial and results in large or, at least, very important projects, whether they involve the construction of a research centre or the ability to cover the costs of students who would otherwise be unable to finish their studies. We have looked at a selection of examples, but there are also other sources of funding, such as renting out facilities, catering contracts, or organizing charity events.   

 

References

Cheng W-L., Law, J. & Pinder, D. (7 July 2021). COVID-19 crisis pushes US students into an uncertain job market. McKinsey. Viewed on 05/10/2021 at https://www.mckinsey.com/about-us/covid-response-center/inclusive-economy/covid-19-crisis-pushes-us-students-into-an-uncertain-job-market 

Council of Ministers. (31 August 2021). El Gobierno impulsa la reforma de la ley de universidades. La Moncloa, Madrid. Viewed on 05/10/2021 at https://www.lamoncloa.gob.es/lang/en/Paginas/index.aspx 

Dominguez, N. (4 December 2017). ¿De qué vive el MIT, una de las mejores universidades del mundo?. El País. Viewed on 30/09/2021 at

https://elpais.com/elpais/2017/12/01/ciencia/1512154281_894544.html 

Sanchez, D. (17 January 2018). Retrato de una universidad en crisis: menos financiación pública, más gasto privado y más lejos de Europa. El Diario. Viewed on 05/10/2021 at https://www.eldiario.es/sociedad/espana-grecia-chipre-universitaria-pib_1_2917954.html

Vallespín, I. (26 June 2020). La caída de alumnos por la pandemia amenaza a las universidades públicas. El País. Viewed on 05/10/2021 at  

https://elpais.com/educacion/2020-06-25/la-caida-de-alumnos-por-la-pandemia-amenaza-a-las-universidades-publicas.html 

   






About the author
Desirée Gómez is a specialist in educational innovation within the Generation and Knowledge Transfer Operational Group of the UOC eLearn Center. She carries out tasks of detection and analysis of educational trends, innovation and technology, content curation, communication and observation. She has a bachelor's and a master's degree in Art History from the University of Barcelona and specializes in international relations and educational and technological observation. She is currently studying a Postgraduate Course in Direction and Management of e-learning at the UOC.