Myriad of `other sources' fill funding breach

November 4, 1994

Since the early 1980s, when vice chancellors turned increasingly to a myriad of so-called "other sources" of income after the first Thatcher government sanctioned a 17 per cent squeeze on central funds, British industry has become a key player in the financing of the university system. In 1992-93, the business sector invested well over Pounds 160 million in the "old" universities, about 3 per cent of total recurrent income. This considerable figure does not account for the thousands of pounds which industry has also provided for scholarships and bursaries.

But there are signs that the 1990s recession severely hit the industrial contribution. In 1992-93, the latest year for which figures are available, industry gave Pounds 122.5 million towards research funds -- Pounds 115.8 million from private companies and Pounds 6.6 million from public corporations. That is more than double the Pounds 50.5 million given in 1982-83. In cash terms the 1991-92 figure of Pounds 122 million went up by only 0.4 per cent, in real terms down by 3.6 per cent.

The biggest beneficiary of industry's largesse is Nottingham, which pushed last year's top dog, London's Imperial College, into second place. In real terms, Nottingham's total of Pounds 6.3 million is a 1.9 per cent improvement on last year, a notable achievement during a time of reduced industrial performance nationally. By contrast, Imperial reflected the national pattern, receiving Pounds 6.2 million, thereby falling by 6.4 per cent in cash terms and 10.2 per cent in real terms.

Three Scottish universities have bucked the downward trend and maintained their impressive top ten positioning, with Heriot-Watt continuing to punch above its weight in student numbers and to attract in excess of Pounds 3.5 million. Cambridge also did well, receiving just short of Pounds 6 million, an improvement on last year of a remarkable 32 per cent in cash terms and 26.5 per cent in real terms. By contrast, Oxford slumped to Pounds 4.8 million, a drop of 5.6 per cent in real terms. Warwick, Leeds and Manchester were relegated from the top ten league table.

Meanwhile, with industrial money harder to get, the "old" universities have located a range of other "other sources" of income, notably research-based charities like the Campaign for Cancer Research, the European Community, and a plethora of anonymous and not so anonymous philanthropists. These are proving more generous than ever. The proportion of income from this category has doubled since the early 1980s, and universities now receive more money from the so-called "other sources" than from either government block grants or from tuition fees.

In cash terms, revenue from "other sources" has quintrupled to Pounds 2.2 billion, which is 41 per cent of overall income. By comparison, exchequer grants now total Pounds 1.8 billion, or 33.3 per cent, and tuition fees amount to Pounds 1.4 billion, or 25.2 per cent of income.

Most "other" university income is drawn from research grants and contracts, over Pounds 1.1 billion. After government, which in 1992-93 gave Pounds 385 million through research councils and a further Pounds 151 million through central and local authority bodies, charitable bodies are the most consistently munificent, giving a quarter of a billion pounds in 1992-93.

Next is British industry followed by the European Community, which handed out over Pounds 80 million, nearly Pounds 20 million pounds more in real terms than 1991-92. It also gave Pounds 21.6 million for services rendered, a 16.3 per cent increase on the previous year.

Payment for services rendered -- which totalled Pounds 0.25 billion in 1992-93 -- has nearly doubled in real terms over the past decade and, in the teeth of recession, it grew by 7.8 per cent between 1991-92 and 1992-93. Within this kaleidoscopic group, most comes from health and hospital authorities, some Pounds 57 million. Industry is the next most extravagant user of university services, spending nearly Pounds 40 million. Around Pounds 8.4 million comes from university teaching companies.

Universities receive Pounds 0.23 billion from a mishmash of "other" sources, including university companies, which attracted Pounds 11.2 million in 1992/1993, athletic facilities, which raised Pounds 7.4 million, university health services, which brought in Pounds 4 million, and some shrewd investment, which made Pounds 66.6 million. In real terms, this miscellaneous category has doubled in size over the past ten years, and since 1991-2 has expanded by 17.8 per cent.

Income from endowments and donations has grown rapidly since the early 1980s as universities have made more use of the "alumni factor".

Today, universities are getting more than five times as much as in 1982/1983, and four times as much as 1987-88. Perhaps surprisingly, this source of income has bucked the trend of recession, growing by nearly 9 per cent in the year between 1991-92 and 1992-93.

Cambridge is top, receiving over Pounds 24 million 1992-93, 12 times as much as ten years ago. Indeed, more than 11 per cent of all endowed and donated income went to Cambridge, which increased its share from 7.9 per cent in 1982-83. After Oxford -- which topped the list during the 1980s -- Manchester and Leeds are third and fourth, each receiving around Pounds 10 million. Birmingham, which was the third placed university a decade ago, has slipped to eighth.

Individuals or companies making endowments (as opposed to donations) clearly prefer to make specific pledges, which totalled Pounds 51.4 million. By comparison, general endowments amount to Pounds 15.5 million, with Liverpool getting the highest share, over Pounds 1.7 million.

Amidst all this financial turmoil, one thing has not changed: the oldest universities still rank among the richest universities.

Ten years ago, the biggest income earners were Oxford, Edinburgh, Manchester, Cambridge and Glasgow, in that order. Ten years on, these five still dominate the top five positions (even though their sequence has been shuffled, with Cambridge and Edinburgh swapping positions) and they continue to command almost a fifth of the total recurrent income. In real terms, Oxford's income has expanded from Pounds 140 million to Pounds 212 million.

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