High-risk gambles put match-funding at risk

Government cash could be diminished by rush to maximise returns in top band, says Zoe Corbyn

May 22, 2008

The Government's £200 million scheme to match-fund philanthropic donations to universities could hit difficulties if too many institutions decide to adopt the "high-risk, higher-return" approach, experts warned this week.

The Department for Innovation, Universities and Skills announced last month that its scheme to encourage universities to raise more money through donations will operate in three tiers.

For universities that join the first tier, donations will be matched pound for pound, but only up to a relatively low maximum funding limit, expected to be in the region of £100,000. In the second tier, with a higher limit, the Government will pay £1 for every £2 raised, and in the top, higher-risk tier, the Government will pay £1 for every £3 raised, up to a limit expected to be about £5 million.

The limits for each tier have not been set because institutions have until the end of June to nominate their preferred tier before the scheme begins operation in August.

But experts warned this week that a rush by universities to join the higher tiers could reduce the size of the pot available, holding back the most successful fund-raisers, and that universities without a tradition of fundraising would be unable to raise the cash required to deliver the Government's payoff.

It had been expected that institutions without a strong fundraising tradition would choose the lowest tier, with most opting for the second tier and only a handful of the best fundraisers opting for the third. But experts say that everyone appears to be aiming higher than had originally been planned.

"It is a general feeling across the sector," said Joanna Motion from the Council for Advancement and Support of Education, which provides training in fundraising to universities. "The whole conversation that has gone on about matched funding over time has steadily raised universities' confidence and aspirations. The risk is that institutions don't do well enough to achieve the match."

One member of the Ross Group of top fundraising institutions said: "It does appear that there are more institutions interested in top tiers than we might have expected ... which could lower the caps available for those tiers."

Both experts said it was excellent for the scheme's overall success that institutions were being ambitious about the philanthropic funding they thought they could attract.

Commenting on whether institutions without a strong fundraising background would be opting for the second tier, Les Ebdon, the vice-chancellor of the University of Bedfordshire and chairman of the think-tank Million+, which represents post-1992 universities, said institutions were playing their cards close to their chest at the moment.


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