Sound financial principles

Another week brings another round of cuts in the spending review for 2015-16.

The Department for Business, Innovation and Skills was the last to settle with the Treasury. Holding out until the 11th hour has spared universities some pain in the past – think of the money found for science at the last in the spending review held in 2010. The tactic may have paid small dividends again but the cuts are nevertheless significant, with thoughts now turning to the dangers that lie beyond the 2015 general election.

In this context, universities are working harder than ever to diversify their income, and the area that has long held the most promise – albeit promise that is fiendishly difficult to realise – is that of philanthropic giving and other forms of fundraising.

The US shows what is possible, but also how far the UK has to go.

While hard-and-fast rules are difficult to delineate, clear guiding principles are not: scrutiny, transparency and independence should be non-negotiable

After the universities of Oxford and Cambridge, the largest endowment in the UK last year was the University of Edinburgh’s at £238 million; the US equivalent was 50 times that figure (the University of Texas system’s £12.1 billion).

This isn’t likely to change any time soon. The Organisation for Economic Cooperation and Development published its annual Education at a Glance report this week, which finds that the proportion of gross domestic product spent on higher education in the US rose from 2.6 to 2.8 per cent in 2010 thanks to rising private funding (mainly tuition fees). The corresponding figure for the UK inched upwards from 1.3 to 1.4 per cent, compared with an OECD average of 1.6 per cent.

But simply giving in to the green-eyed monster is not an option for our universities, which are being pushed to pursue funding opportunities wherever they lie.

Writing in this week’s Times Higher Education, Chris Higgins, warden of Durham University, offers one vice-chancellor’s view of what this means in terms of fundraising.

Higgins argues that universities must “raise money wherever possible to help them fulfil their objectives”, and that as long as a clear process and protocol is in place to ensure academic freedom and integrity, there “is nothing wrong with an institution accepting a grant or a gift from a source of which some disapprove”.

He is right that there are few absolutes, but while hard-and-fast rules are difficult to delineate, clear guiding principles are not: scrutiny that is properly representative of the university, transparency within and without, and intellectual independence as an unassailable axiom should be non-negotiable.

Even then there will be legitimate concerns raised that by accepting donations from, say, an autocratic government, you tacitly endorse it and bolster its position. Similarly, should universities take money from companies that profit from the sale of tobacco or arms, even if they are best placed to put it to good use? Where does one draw the line, how is that line drawn, and what will be the effect on the university, the donor and academic staff (who are human after all and may find it difficult not to be influenced to some degree by where funding is coming from)?

Such questions have got universities into very hot water in recent years, so it is vital that they are debated freely and openly – particularly as the state’s inclination to provide direct funding recedes.

john.gill@tsleducation.com