EUROPE: Universities' income sources diversify

European universities rely heavily on direct public funding, which represents about three quarters (73%) of their overall budgets. But many expect this percentage to decrease and are looking to other sources of income, according to a new study from a European university consortium.

The European Universities Diversifying Income Stream (EUDIS) draws on a European Universities Association online survey, which was completed by 150 universities in 27 countries as well as on site visits and workshops. The sample was diverse and included universities that were not allowed to charge students tuition and administrative fees as well as those that generated 25% of their income from fees.

Details were presented to a two-day conference of the EUA last week at the University of Bologna. University leaders and stakeholders were given an overview of alternate income streams:

* Contracts with the private sector: 5%-7% on average but with a wide range of up to 25%
* Philanthropic funding: 3%-4%
* Income-generating services: 4%
* Financial activities
* International public funding (mostly European Union)

The creation of spin-off companies and science parks were among the most common measures taken by universities to support income diversification (70.24% of universities), followed by orientation towards lifelong learning activities (65.48%).

Alternative sources represented over a fifth of income for just 15.71% of universities surveyed, they represented between 10%-20% for 44.29% surveyed and up to 10% for the remainder.

A surprisingly high number - three-quarters of the sample - indicated that they expected EU funding to grow, yet many were deterred from pursuing this type of funding because of the excessive administrative complexity involved.

Around two-thirds said they expected to generate more from philanthropic income from alumni and contracts with business, and 62.82% said they expected to generate more from international fee paying students.

University leaders also raised concerns about the growing trend towards 'co-funding' from public authorities, where institutions are required to self-finance part of the activity, often from their core budget.

About 70% of the universities surveyed said there were co-funding requirements for at least part of their national public funding.

Thomas Estermann, head of the governance, funding and autonomy unit at the EUA, said that governments had a crucial role to play in creating better regulatory environments and providing the necessary incentives to help universities respond to the economic crisis.

In particular, he called on public authorities to support leadership development and professionalisation of university management, and to simplify existing funding schemes in order to reduce the burden on universities.

"Governments should also grant more financial autonomy to universities, enabling them to develop partnerships, borrow from banks and thereby reduce dependence on state funding," he said.

Professor Jean-Marc Rapp, President of the EUA, which represents 800 leading European universities, said that 'new' funding could not be a substitute for public funding.

Rapp, a former rector of the University of Lausanne, said the findings of the EUDIS project showed this very clearly. Public authorities had a responsibility to ensure the financial sustainability of universities and therefore basic funding should come from the common budget.

However, to mitigate risks entailed by excessive dependency, it was important for universities to develop a funding portfolio spreading over different sources.

* The EUDIS project consortium includes EUA, the Heads of University Management and Administration Network in Europe (HUMANE), the University of Bologna and the Bavarian State Institute for Higher Education Research and Planning. The project is due to end in January 2011. It is co-financed by the European Commission under the Lifelong Learning Programme. Find out more about the EUDIS project here