Money matters

Here’s an interesting statistic: Harvard University, with an enormous endowment of over $30 billion, hands out more annually in student scholarships than my university gets in income from all sources. Its overall annual income is over 20 times that of Robert Gordon University. In fact, its endowment could pay the full running costs of the entire British higher education sector for a full year; and its annual income is nearly twice that of the entire Irish university sector.

This tells us a number of things. First, however fast other university systems are developing, they won’t catch up with the US any time soon. Secondly, Harvard’s wealth is largely a product of the generosity of its graduates, and on this side of the Atlantic universities must also engage much more closely with the alumni community. Thirdly, financial support for those from a disadvantaged background is a vital part of a successful university system, and I suspect we’ll find that Harvard is paying out more for this than is made available in all of Britain and Ireland put together.

Of course Harvard is not typical in every respect of the US university sector. But even if it were a complete outlier (which it is not) its financial strength should give us pause for thought. There is a real risk that the relatively modestly resourced universities in Europe will lose out to the powerful US ones and the emerging institutions in Asia.

The funding of higher education is, at some level, a social contract. It is an expression of how society wants its universities to develop, and what role it wants them to play. It is unlikely that many universities over here will rival Harvard for money any time soon, but we must start to plan for the longer game. Set against the fees-and-funding chaos in England and the great funding uncertainties in Ireland, Scotland is having a much more stable experience as the government keeps to its promise to close the funding gap between England and Scotland. But at some time here too there will need to be a larger debate about the future: about what we expect of universities, how they will be paid for it, and what contribution they can make to society beyond education.

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10 Comments on “Money matters”

  1. Martin Says:

    A while back it was estimated that Harvard’s endowment was worth more than the entire Australian higher education sector!

  2. Vincent Says:

    If we suppose a return of 5% on the 30Bil =1.5. And say they aren’t going to use all of that so they grow the investment. They have 800-1Bil of operating cash. It’s that figure you need to go on not the 30Bil.
    What I do think might be worthwhile would be the Governments borrowing enough to endow you with a similar amount to Harvard pro rata. Dumping the nightmare of your fees, pay and pensions directly into your own lap.

  3. It is always a popular solution to a problem; “Throw more money at it”. Now we know what that has done to the public service in Ireland – it certainly doe not stimulate improvements in efficiency. (How many heavily funded initiatives in e-learning in higher education have failed?)

    Despite the affluence of may US, many believe that it is extremely inefficient? (Peter Thiel being most recently publicised critic). Perhaps, instead of whinging about how underfunded we are, we should try to spend the money we have more efficiently. (And I’m not talking about “directed diversity”)

    • Eddie Says:

      @ Brian Mulligan. Couldn’t agree with you more.

      “Set against the fees-and-funding chaos in England and the great funding uncertainties in Ireland, Scotland is having a much more stable experience as the government keeps to its promise to close the funding gap between England and Scotland”

      Let us revisit the above Scottish stable experience. Can’t see stability when universities in Scotland want to design 3 year courses just to attract English students to plug the funding gap, other universities fiddling with the tuition fee figures keeping the English students in mind, and the secretary for education forcing university mergers!!

    • The logic of your argument, Brian, is that governments should be able to keep cutting until they reach zero funding, at which point the ultimate ‘efficiency’ gain will be to do no teaching at all but just hand out degrees. If governments have cut, in real terms, by over 50 per cent in 10 years (as is the case in Ireland), then you do need to start asking whether efficiency savings have run their course.

      • Sort of, but not quite. Squeeze the money, but direct more of it to institutions who are reducing unit costs while keeping up measures of quality. In other words, real competition. You may say, “how will we measure this quality?” Indeed, unless we can precisely define what we want to achieve and be able to make a good fist of measuring it, we are in a bit of trouble, because it could result in a race to the bottom. Hoving said that, throwing money at people without being able to measure what you get for the money will not guarantee you get the outcomes you want.

  4. Ernie Ball Says:

    You forgot to mention that the university that inspires all that alumni largesse isn’t involved at all in providing the sort of narrow vocational training to undergraduates that is all the rage in universities on both sides of the Atlantic. Funny that: how can liberal arts graduates have the wherewithal to fund a university to the tune of $30 billion? The answer, that is foundational to universities like Harvard but blithely ignored by state universities everywhere, is that the liberal arts are the best way to prepare workers for a world where we cannot know where jobs will be even five years hence. It is also the best way of creating active citizens (the number of Harvard grads that go into public service is staggering) and fulfilled and worldly human beings. Yes, Harvard has professional graduate schools. But they don’t let the undergraduate experience be tainted by preprofessionalism.

  5. Is it truly fair to compare a private institution enjoying tax-exempt status with a public one which acts in part as an instrument of government policy? I suspect a government in Ireland would greatly fear an tier 1 level institution with the capacity to largely self-fund.

  6. Al Says:

    Surely one should also acknowledge that centuries of self governance has left them in their present position.

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