A hard look in the gift horse's mouth

November 1, 1996

Next Tuesday Oxford University will decide whether to agree to the terms on which Wafiq Said's donation for the management school depend (letters, page 13). The argument is partly about the use of land promised for another purpose. But it is also about two other things: whether and on what terms to accept private donations and whether management studies is a "proper subject".

Meanwhile in less rarified parts of higher education, as we report in Universities and Industry (pages 29-33), universities with fewer hang-ups, fewer democratic procedures and less scope than Oxford for being choosy, are eagerly seeking to do business with investors from Korea and Taiwan.

The reported reactions of these inward investors to universities' approaches are revealing. Here the industrialists rather than the universities are proving hard to get. They want to be sure that anything they pay for will be tailored to their business requirements whether research or sponsored courses. They are not in the charity business and they are accustomed to doing their research and training in-house.

Universities have the best chance of success if they are prepared to work very closely with the incoming companies. If they do, the possibilities for profitable collaboration are there - but so are the possibilities of tension over the purposes of a university as David Packham and Mary Tasker point out (page 12). Those who worry about the academic respectability of management studies are going to worry about courses designed in collaboration with local companies.

The possibility of augmenting inadequate public money with private revenue was also discussed last week at a SmithKline Beecham symposium entitled Sustaining the strength of the UK in healthcare and the life sciences research and development: competition, cooperation and cultural change. The risk to Britain's scientific standing from falling public investment, in terms of percentage of GDP and in comparison with our competitors, is all too well known. Talented researchers are employed on terms which are an incentive to seek greener pastures elsewhere. Equipment is shabby and out of date. Research time is eroded by larger teaching loads and more administration.

The major charities, in particular Wellcome in this field, have plugged the gap to some extent but it is not enough and such donors do not expect to replace Government support. So one of the more encouraging themes to emerge at the symposium was the possibility that universities' commercial consultancy and spin-off companies may increasingly provide a revenue stream and that new biotechnology companies are already providing a substantial number of research jobs (5-6,000 was the figure quoted) with better pay and conditions than they could expect in universities. This is good news for researchers and potentially good news for universities.

The nascent biotechnology industry is poised at the point where so often Britain, and British universities, having done much of the basic research, have failed to reap the commercial benefits. We can no longer afford this profligacy, as has been explicitly recognised in Government science policy since the publication of the white paper Realising Our Potential.

Some useful changes have already been made to help turn invention to profit this time. In particular the change in Stock Exchange rules rather over a year ago, establishing the Alternative Investment Market (AIM) has made it easier to raise capital for new companies than was the case when they had to seek support from venture capitalists with their caution over companies with no established track record and their demands for relatively rapid payback.

It is clear, however, that more needs to be done, particularly by universities, if they and their staff are to gain from their inventive success. Better arrangements are needed for the protection of intellectual property and to secure a share of earnings. This means universities becoming more professional and tougher about negotiating deals with commercial companies. Cranfield's spectacular success (page 32) shows what can be done. It also means that scientists must keep proper notebooks which will support claims to priority if need be and should be briefed carefully on what constitutes publication.

All of this might be relatively simple but for the cultural conflicts of which the Oxford debate is symbolic. Universities are not commercial businesses. They thrive on, indeed exist to promote, the open exchange of information and ideas and to be critical, if necessary to the point of destruction. Protection of work in order to safeguard potential earnings can mean that work is not subjected to the proper rigour of academic debate at crucial phases and suffers in consequence. Accepting donations from those with axes to grind can distort academic programmes if donors are allowed to dictate what is done, or can lead to conflict and bad temper if donors feel their wishes have not been respected. The academic process is not, and should not be, about revenue maximisation.

These conflicts are best handled by keeping the two activities as distinct as possible. Commercial contracts for applied research, for specific training courses, for consultancy, protection of IPR and the negotiation of royalty agreements both on the behalf of universities and of individuals need to be handled separately from mainstream teaching and research.

In this way arrangements can be transparent. People can be paid properly for their revenue-earning activities and profits can be channelled back to the university to support its general work without compromising its central purposes. The university's charitable status is not jeopardised and the money that flows in as a result comes without strings.

The move to establish separate university companies, and indeed to incubate start-up companies within the university which then holds shares, is not new. However it is now accelerating as experience of how to do it spreads. Last week's symposium heard from a number of universities developing such approaches: Manchester, Nottingham, Southampton.

Just as commercial activities are best handled at one remove so too is fund-raising. The rules can then be laid out clearly as to what donors can and cannot expect to buy with their money. The pattern of governance in American universities, with their much longer established and larger fund-raising programmes, is more conducive to this kind of separation with boards of trustees in charge of endowment funds. For British universities, the establishment of separate fund-raising organisations is still rather unusual and apt to be resented since fund-raising requires high investment up-front. It is however a model which should be copied more widely.

Such a device may lessen fund-raising potential. Donors may indeed be hoping to buy a measure of influence which ought not to be accepted. But in the long run - and universities are about the long run - it should help avoid the kind of acrimonious muddle seen recently in both Oxford and Cambridge, muddle which can only deter donors.

It is going to be increasingly important for universities to generate private revenue streams if they are to maintain high quality work and maintain a real level of independence from Government intervention. It is even more important that they do so in ways which do not bring them into disrepute, as Alan Smithers points out. So far there has been too little detailed discussion of how these matters are best arranged. It is high time that discussion got going so that revenue can be maximised and academic values protected.

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