The pitiful size of UK universities' endowment funds compared with those enjoyed by their US counterparts was exposed today in a new report.
The Sutton Trust research shows that even the two best-endowed UK universities, Cambridge and Oxford, with estimated total endowments worth about £2 billion each, would come 15th in a league table of US institutions.
The next nearest UK university, Edinburgh, with endowments worth £160 million in 2001-02, would come 150th in the US. Surrey University, which makes it to a respectable tenth place in the UK, with endowments worth £59 million in 2001-02, would be in 305th place in the US.
In 2001-02, the endowments of the top 500 US universities fell in value by £5.8 billion - an amount greater than the endowments of all UK universities combined, according to the Sutton Trust.
But the report does contain a glimmer of hope for UK institutions. While Cambridge and Oxford have taken nearly 800 years to amass their endowments, the best-endowed US university, Harvard, increased its endowment value from $1.7 billion in 1981 (on a par with Cambridge and Oxford) to $18 billion in 2002, a tenfold increase in 20 years.
Trust chairman Peter Lampl said: "The relatively short time frame of these changes suggests the gulf is bridgeable, but it will take substantial increases in unit funding and a revolution in our attitudes to, and mechanisms for, charitable giving."
The recent higher education white paper says that institutions should diversify income streams and exploit new ones, including endowments.
The trust's report proposes a move to a US system where the donor claims all the tax relief on the donation, instead of the UK situation where the donor and the recipient share the tax refund. It also calls for a more professional approach to fundraising within universities.
But the report shows how far UK universities have to go. Princeton, with 6,400 students, boasts a total endowment value per student of the equivalent of £812,500, at Yale it is £592,500 per student, at Harvard £550,300 per student and at Stanford £357,800.
By comparison, Cambridge boasts endowment per student of £119,800, Oxford £119,000, Edinburgh £9,000, King's College London £6,700 and Glasgow £6,500.
The income-generating capacity of endowments reveals how much UK universities are missing out. The report says that, assuming a sustainable rate of return from endowments of 5 per cent a year, a world-class UK institution such as Imperial College London, with total endowments of £49 million in 2001-02, would receive just over £2.4 million in income.
Yale, a world-class institution of comparable size, would receive £330 million a year, nearly three times Imperial's grant for teaching and research for 2003-04.
Overall, charitable giving in the US is 2 per cent of gross domestic product. In the UK, it is 0.5 per cent.
Between 1994 and 2001-02, the endowments of the top ten endowed UK universities rose by an average of 86 per cent, excluding the worth of Cambridge and Oxford. The average rise between 1994 and 2001-02 in the top ten US institutions was 150 per cent.
Falls in stock market performance have cut millions of pounds from university endowments on both sides of the Atlantic.
LEAGUE TABLE OF ENDOWMENTS
Both Cambridge and Oxford's figures are approximate. † King's figures are for 2000-01, UCL figures are for 2001. ‡ Manchester's own figure for endowments as of July 31 2002 is £86 million.
Source: Sutton Trust.