British Universities Try to Enlarge Coffers

In a move aimed at bolstering British higher education, the British government announced plans this week to increase the endowments of elite schools like Oxford and Cambridge Universities to rival the savings of their American counterparts.

Under the plan, every two pounds donated to a university by alumni, philanthropists or businesses will be matched by one pound from public funds, up to £2 million ($3.9 million).

British government and higher education officials hope the scheme will entice universities to more aggressively solicit donations from private sources, including alumni—largely considered an untapped resource. Presently, even elite schools in Britain rely heavily upon the government for their funding.

In developing a new model for higher education funding, British officials have taken U.S. state universities—many of which have amassed sizable endowments of their own—as their examples, and are citing the endowments of institutions like Harvard and Yale as their goal.

Ultimately, the plan aims to cultivate a “culture of giving” to provide a new funding source for university programs and financial aid.

Such a culture of philanthropy has been essential to American institutions’ ability to create endowments, said Donella M. Rapier, Harvard’s vice president for alumni affairs and development.

“Certainly all institutions are hoping to engender that same kind of culture all around the world because it will serve all of us,” Rapier said.

She attributed Harvard’s present success in building its endowment to its past efforts in building a strong alumni community and network.

“They recognize how important the network is, and many of them want to make sure that the kind of experience they had [in college] is available for the young from everywhere,” she said.

With the government historically being the primary funding source for British universities, there had been less need to build a similar alumni network.

Despite their endowments, few American schools have large enough savings to significantly offset general operating costs, according to Bridget T. Long, an assistant professor in the Graduate School of Education who studies the economics of higher education.

Helping to offset costs, many American schools receive a portion of their funding from government sources as well, in the form of direct appropriations, tax benefits, and federal student aid, according to Long. Tuition and sales of products and services generally help to make up the other portion.

As a result, “American institutions have much more diversified revenue streams,” Long said.

While Harvard and Yale have the largest endowments of any private institutions in the United States or world, the University of Texas system has the largest endowment among public universities with $11.6 billion in savings, followed by the University of California with $5.7 billion and the University of Michigan with $5.6 billion, according to the National Association of College and University Business Officers.