Most Oxford University colleges are receiving a worse rate of return on their investments than they would get by depositing their money in a high-street bank account, independent financial analysts have claimed.
The 36 colleges managed on average to earn just 3.8 per cent income from their combined assets, which were worth more than £1.6 billion at the start of 2002-03.
The performance of the colleges' assets in land, property, shares and cash deposits has been described as "lamentably poor" in a report on the first independent analysis of the audited college accounts.
The report claims that many colleges are "trying to bail themselves out of investment blunders" by building ever-bigger portfolios of lucrative student housing.
College bursars, however, have hit back, dismissing the analysis as "codswallop". They argue that the report is "conceptually flawed" because it ignores 6.7 per cent growth in the value of endowment assets by the end of the year. Combined with income, this brings the total return on investments up to a more impressive 8.9 per cent, the bursars say.
The report has been posted on the internet, together with the full college accounts, by Andrew Malcolm, a philosophy writer involved in a long-running contractual dispute with Oxford University Press.
An analysis of the accounts - which was conducted by a chartered accountant whose clients include local authorities, a water board and British Gas - says the colleges earned £61.9 million income on endowment assets worth more than £1.6 billion at the start of 2002-03, which amounts to an average 3.8 per cent return.
The report says that 25 colleges managed to reap less than a 4 per cent return, with four gaining less than 2 per cent, and two - Harris Manchester and Keble - registering virtually no income at all.
The report is written by an anonymous author, who uses the nickname "Scout".
Although 15 colleges show operating deficits in their accounts, the report argues that these figures are "largely irrelevant" because "they often include (under endowment return) substantial transfers from the endowment, which can apparently be used at will to massage the college into apparent surplus or deficit".
College bursars, keen to show that their institutions are meeting government demands to generate more income of their own, say the analysis fails to follow accepted modern methods of working out returns on investments, which take capital growth as well as income into account.
Frank Marshall, bursar of University College, sits on a university investment working group. He said: "Normally when you are considering investment performance, you look at both income and capital returns. The reason everyone does that is that some investments will produce just income, while some will produce just capital gains. If the issue is the quality of investment performance, then you must look at it the way the investment industry looks at it."
Fram Dinshaw, bursar of St Catherine's College, said: "What we have done is supplied the information that the accounting standards body says should be supplied if you are a higher education institution.
"To argue that by doing so we are trying to hide things is just misguided.
The guy who did this analysis is trying to have his cake and eat it."
* Oxford University must raise more cash from fundraising and from better exploiting intellectual property if it is to maintain its position as a world-leading institution, according to the university's new corporate plan.
More money is needed to meet various "financial challenges" - including sustaining expensive libraries and museums and supporting top-quality academic activity - that will protect Oxford's international standing in the face of growing global competition.
The report looks ahead only one year to give Oxford's incoming vice-chancellor, John Hood, the chance to develop a more far-reaching version in the coming academic year.