Will big spenders desert campus for city lights?

As city academies offer donors more bang for their benefaction, universities could lose out, says Mike Smithson

A university development officer scans the City pages for news of alumni and discovers that a former student is about to become very rich. Immediately, moves begin to engage the individual and, after prolonged solicitation, he accepts an invitation to dinner with the vice-chancellor. The evening goes well and they discuss the possibility of a major benefaction.

Within days, a formal proposal is sent to the former student. But after that the university hears nothing. Then, some months later, a news story notes that the fundraiser's target is going to fund one of the Government's new city academy initiatives. Not too long afterwards, the alumnus figures prominently in the honours list "for services to education".

This is a story I have heard more than once. Despite encouragement from one part of the Government, university fundraising has become much harder because another part of the Government is pushing to find donors for the expanding city academy programme. And those who back city academies can expect to get much more for their money than donors to universities. If recent news stories are to be believed, they have more chance of a knighthood or peerage than university donors.

Of greater concern, however, are the terms under which the Government is prepared to accept gifts for the city academies. For, as has been widely reported in the Gateshead Emmanuel Foundation "creationism" case, in a school a donor appears to get a far greater say over what is taught than even the most cash-strapped university could stomach - and this for a gift amounting to less than 10 per cent of the cost of the new academy. In the university world, you normally need to give 50 per cent of the cost of a building just to get your name on it.

Unfortunately, there is a large overlap in the pool of potential major donors to universities and schools. So it is perhaps understandable that sometimes an individual being courted by both would conclude that a gift to a city academy will buy much more for much less than a gift to a university. And, of course, they might also end up in the House of Lords.

Last week's announcement that there has been a surge in endowment income implies that the fundraiser's future is rosy. That story is actually a reflection on fund management and capital disposals, not a growth in donations. But the problem goes beyond an increasingly challenging fundraising environment.

In the push to secure private funding for city academies, the Government is in danger of changing the whole relationship between donor and education institution. This has serious implications for universities, which increasingly look to private gifts to fund scholarships, posts and new buildings. I fear that the city academy initiative is creating an expectation among some donors of a level of return that universities would find difficult to reconcile with the concept of academic freedom.

This is made worse because universities, it should be said, have a reputation for not honouring the desires of donors. In almost every discussion concerning a possible major gift, I hear tales of huge benefactions being "hijacked" for other purposes by recipient institutions.

Academics, I am told, are happy to take the cash but not to follow the terms attached to it.

In the effort to secure multimillion-pound benefactions, a lot of effort goes into forging an agreement with which both donor and institution are comfortable. Agreeing on the donor's role after the gift has been made can be critical to this. Should a donor have a right of veto over, say, who is appointed to a chair that he or she has endowed?J Can he or she have a say when the person is in post? When the gift is paid in instalments, how does the university ensure continued payment if the donor thinks that his or her initiative is going "off message"?

These can be tricky questions, and my worry is that the expectations of involvement and influence generated by the city academy fundraising programme could spill over into higher education. Will this mean universities having to consider the sort of active involvement with donors that city academies are pioneering?

What price will some be prepared to pay to secure funding? How long will it be before a university announces the opening of an "Emmanuel Foundation department of biology"?

Mike Smithson is director of development at York University.