How universities build sustainable funding strategies

Are European universities preparing to face the potential economic threats they could encounter in the next years? Are they developing appropriate mitigation strategies? These and other strategic issues were discussed at this year’s conference of the European University Association (EUA) in Riga, Latvia, themed ‘Connecting the dots on sustainability and resilience’.

The case of the University of Turin, in northwest Italy, was presented and highlights the main challenges and possible action to be taken. Founded in 1404, the University of Turin today serves over 83,000 students and employs more than 4,700 academic and administrative staff.

Over the last five years, it has recorded steady growth: +10% in student numbers, +20% in staff, and +25% in overall revenues – which now total over €620 million (US$726 million) annually. Despite these positive indicators, like many other universities in Europe, Turin is aware that future developments require, on the one hand, that we keep operational costs under control and, on the other, that we diversify income sources.

Perspectives on the traditional sources of income

For most European universities the government is the first source of income, accounting for almost 60% of their budget on average, based on recent EUA research.

The level is higher for Italian universities at around 70% of their income. That dependency can be risky in an era marked by political flux and economic caution. Public funding, though substantial today, faces long-term threats from budget reprioritisations, inflation and shifting national agendas.

Add to this the problem of tuition fees, which represent almost 15% of Turin University’s revenues, a little more than the European average. These, too, are under pressure. Demographic stagnation in Italy and much of Europe means there will be simply fewer young people entering the system.

Other income sources – such as competitive research grants, support from philanthropic institutions, and technology transfer activities in partnership with private companies – are not only subject to external competition, donor priorities and economic trends; but they are also exposed to increasing political or ethical control, especially from students and the academic community, due to the potential outcomes of scientific research, such as a direct or indirect military use or geopolitical implications.

Taken together, these dynamics highlight the need to identify potential compensation strategies. Let’s discuss some of them, taking a look at the case of the University of Turin.

Fees and demographic challenges

In the area of tuition fees, we are all aware of the demographic stagnation in Italy and much of Europe. The facts are clear: in 2040, in Italy, there will be 500,000 fewer young people aged 18-21 than today, falling from 2.3 million to 1.8 million.

Shall we just give up and accept a reduction in the scope of our work, thus reducing the social impact of our institutions? The answer is no. In Italy we have huge margins to increase the rate of students from secondary school who take a university course. It is currently just above 50%.

Then, the dropout rate from university courses needs to be reduced. Today it is above 40%. These two factors are behind the very low percentage of young adults who have a university degree in Italy. It’s less than 30%, compared to 43% in Europe.

Also, attracting international students is a common strategy used by most universities to raise revenue, and there is much room for increasing that income. Consider, for instance, expected growth in the African population over the next decades and the fact that one in four young people in the world will be African by 2050.

But demographic analyses in Italy also show other interesting data: in 2040, while the number of potential young students is likely to decrease, the number of citizens of working age will reach 17 million. That means a huge potential target of people needing high-quality reskilling and upskilling courses who could become additional students for higher education institutions, showing the great opportunity that lifelong learning presents for universities.

Funding through ecosystem development

In the field of technology transfer, the focus is on scaling efforts. In parallel to traditional point-to-point contracts between a research team and a single company, universities aim to create innovation ecosystems that facilitate structured partnerships.

This can be complemented by organisational solutions provided by EU programmes like the Joint Research Platforms (JRPs), which can be established between universities and private players from the same sector.

This is the case, for example, with Turin University’s ‘City of Science and Environment’, the new campus under construction for departments focused on sustainability and the circular economy, which will include the so-called ‘Butterfly Area’, a ‘company on campus’ area that will host joint laboratories run by the university and private players.

Before construction is completed, 101 memoranda of understanding with private companies have already been signed and 60 joint initiatives have been launched.

Taking a long-term perspective

One thing is certain. Universities must reflect on their own future in a timely and structured way. They have to keep one eye on the global trends that impact their activity and one on their specific territories to identify the threats and opportunities that they face.

At the University of Turin we chose to launch the ‘Innovation Workshops’ programme, a structured series of internal think tanks that brought together 300 staff and faculty across disciplines to tackle six of the most pressing global trends impacting higher education.

Each working group was centred around a key theme: Demography and Lifelong Learning, AI and Digital Transformation, Flexibility of Sites and Working Places, Internationalisation Strategies, Research and Infrastructures and Competencies for the Future.

The goal? To tap into internal expertise, connect with external thought leaders, and reimagine the university’s administrative services with a long-term lens.

Two key features of the programme were to go beyond the barriers between internal communities, mixing together professors, directors, and staff with the voluntary participation of the whole community: these two ingredients contributed to a highly engaging experience for participants and brought the identification of a set of potential innovation paths that could be adopted by the university’s leadership.

And there was another precious by-product: the strengthening of the invisible threads of informal, personal connection and collaboration within the university community, which will prove crucial to ensure the future resilience of the ancient and forward-looking institutions that our universities are.

Andrea Silvestri is general director of the University of Turin, Italy.

This article is a commentary. Commentary articles are the opinion of the author and do not necessarily reflect the views of University World News.