Transcript Slide 1

Developing alternative income
streams: An Overview
Valerie Marshall
Chair of Council, University of Kent and
Deputy Chair, Committee of University Chairs (CUC)
An option or an imperative?
Key = Councils must ensure sustainability of
the institution
Background (1)
Direct Government action via cuts to:
• teaching funding – 60% by 2014
• capital grants -? (possibly 60%+)
• research funding -? esp. arts and humanities
• Fairer Access and Wider Participation pressure
• Access Agreements to justify fees> £6k
Background (2)
Other factors
• Pensions + potential staff unrest from pay restraint
policies
• Timing issues from mismatch of Government cuts with
receipt of increased tuition fees
• Increasing competition between existing institutions for
students, research grants and from new , private
sector entrants
• Possibilities of mergers etc but minimal Hefce funding
to smooth the way
Background (3)
Changes on the student side:
• Potential lower numbers of overseas ( non-EU)
students due to visa changes
• Increased expectations of home students paying
higher tuition fee
• Need to enhance the student experience, but:
- staff/student ratios may deteriorate
- constraints on fees may not allow great
improvements to facilities to be made
Impact on incomes of HEIs
• Caps on home and EU student numbers –
student loans to meet increased fees
• Increased competition for reduced research
grants from UK and EU public sources
• Smaller numbers of home and EU students
Impact on expenses of HEIs
• Staff Pensions – the elephant in the room!
• Higher maintenance of buildings
• Increased expectations of students for teaching +
availability and standards of facilities
Staff costs = av. 60+% of total costs, even if pay frozen
• Increasing utilities costs and moves to reduce carbon
footprint
Raising new income streams is an
imperative
• Government wants to move nearer to a market economy in
HEIs, but :
• higher tuition fees mean higher initial contribution from
Exchequer through higher student loans
• it has to devise a means of controlling student numbers,
but wants WP and FA
• cannot directly order HEIs, but must go through OFFA
to try to influence level of individual tuition fees
• Government prefers fee waivers rather than bursaries
Opportunities for alternative
income streams
• A. Philanthropic
• B. Transaction based
A. Philanthropic opportunities
• From alumni – continuous or ‘one off’e.g. potential around ‘anniversaries’
• From major donors – with or without
any specific link to the institution
• Trusts
• Legacies
Implications
Need to:
• develop a strategy - general v specific focus
• need good alumni data, regularly updated databases, and
good research
• invest time and money - in systems, experienced people to
manage campaigns, training students
• get to know potential donors interests e.g. Music, arts
• encourage potential (major) donors e.g. invitations to
events, dinners etc
Don’t underestimate lead times
Audit issues
• Ensure good auditing established at the start + high
ethical standards in holding donated monies
• Separate bank accounts -‘client accounts’ from general
revenues
• Determine whether a gift is for specific or general
purposes and ensure it is only used for that purpose
• Account to donors for: a) investment of funds and
b) how donations are spent
• Need oversight from a Council Committee
Transactional income streams (1)
• Research grants from private and public organisations
at home and abroad
• Training /CPD for external organisations
• Greater use / efficiency of existing or new facilities e.g.
student accommodation for vacation income, land
lease
• Sharing sport and leisure facilities with non-HEI users
Transactional income streams (2)
• Licensing intellectual property (IP) created in the HEI
• Spinning out new companies around IP created in the
HEI - shareholdings /royalty income + potential capital
return e.g. Imperial, LBS
• Overseas students- (but immigration caps may bite) or
overseas campuses
• Possible innovation centres, but be careful they are not
too high cost!
The approach to developing new
income streams
• Do your SWOT analysis/determine where the
expertise/USP is in the HEI
• What is your focus going to be?
• Who owns the IP created by staff? Get it sorted early
• Set up systems which can respond quickly to donors
and transactional partners
• Involve Council members who have expertise,
contacts, but identify any conflicts of interest
Risks in developing new income
streams
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Insufficient homework – do research!
Poor strategy
Long term payoff, but needs up front investment
Need new skills – may have to recruit new staff
Change attitudes -must start at the top
Poor auditing and accountability run risk of fraud
Major risk is to the institution’s reputation
Aims
• Develop a long term strategy for raising other
income streams with clear focus and targets
• Approach as an investment on which you
should earn a return
• Be creative
• Involve your Council
The Pay off
• Establishes a virtuous circle which
increases the income and sustainability
of the institution
• It should be a ‘win-win’ situation