Income Income Generation Generation StrategiesStrategies

Financing Reforms for Tertiary Education in Financing Reforms for Tertiary Education in the Knowledge Economythe Knowledge Economy

Seoul, 6-8 April 2005Seoul, 6-8 April 2005

outline of the presentation...

the need for income diversification

the range of income generation sources

the challenges ahead

outline of the presentation...

the need for income diversification

reasons to seek reasons to seek additional additional resourcesresources

shrinking public budgetsshrinking public budgets

desire to reduce desire to reduce dependencedependence

increased competitionincreased competition

entrepreneurial cultureentrepreneurial culture

implementation of strategic implementation of strategic planplan

outline of the presentation...

the need for income diversification

the range of income generation sources

Resource Diversification Resource Diversification MatrixMatrix

Source: Compiled by Jamil Salmi.

Category of incomeCategory of income

Source of incomeSource of income

GovernmGovernment ent

(national, (national, state, state,

municipalmunicipal))

StudenStudents and ts and familiefamilie

ss

Industry Industry and and

servicesservices

Alumni and Alumni and other other

philanthropisphilanthropiststs

InternationInternational al

cooperatiocooperationn

Budgetary contributionBudgetary contributionGeneral budgetGeneral budgetDedicated taxes (lottery, tax on liquor sales, Dedicated taxes (lottery, tax on liquor sales, tax on tax on contracts)contracts)Payroll taxPayroll tax

XX

XXXX

FeesFeesTuition feesTuition fees Degree programsDegree programs Non-degree programsNon-degree programs Advance paymentsAdvance payments ChargebackChargebackOther fees (registration, labs)Other fees (registration, labs)Affiliation fees (colleges)Affiliation fees (colleges)

XX

XXX X XX

XX

XX

XX

Productive activitiesProductive activitiesSale of servicesSale of services ConsultingConsulting ResearchResearch Laboratory testsLaboratory tests Patent royalties, share of spin-off profits, Patent royalties, share of spin-off profits, monetized patent royalties dealmonetized patent royalties deal Operation of service enterprises (television, Operation of service enterprises (television, hotel, retirement homes, malls, parking)hotel, retirement homes, malls, parking)Financial products (endowment funds, shares)Financial products (endowment funds, shares)Production of goodsProduction of goods Agricultural productsAgricultural products Industrial productsIndustrial productsRental of facilities (land, classrooms, Rental of facilities (land, classrooms, dormitories, laboratories, ballrooms, drive dormitories, laboratories, ballrooms, drive through, concert halls, mortuary space)through, concert halls, mortuary space)Sale of assets (land, residential housing)Sale of assets (land, residential housing)

XXXXXX

XXXXXX

XX

XXXX

XXXXXX

XX

XX

XX

XX

XX

XXXX

Fund raisingFund raisingDirect donationsDirect donations Monetary grantsMonetary grants EquipmentEquipment Land and buildingsLand and buildings Scholarships and student loansScholarships and student loans Endowed chairsEndowed chairsIndirect donations (credit card, percentage of Indirect donations (credit card, percentage of gas sales, percentage of stock exchange gas sales, percentage of stock exchange trade)trade)Tied donations (access to patents, share of Tied donations (access to patents, share of spin-off spin-off profits)profits)Concessions (products sold on campus, Concessions (products sold on campus, names)names)Lotteries and auctionsLotteries and auctions

XXXX

XX

XX

XXXX

XXXXXX

XX

XXXX

XXXXXXXXXX

XX

XX

LoansLoansRegular bank loansRegular bank loansBond issuesBond issues

XX XXXX

XX

main categories of main categories of revenuesrevenues

budgetbudget

tuition feestuition fees

productive activitiesproductive activities

fund raisingfund raising

loansloans

tuition feestuition fees

activitiesactivities– degree / non degree programsdegree / non degree programs– labs, exams, etc.labs, exams, etc.– affiliation fees (colleges)affiliation fees (colleges)

clientsclients– in state / out of statein state / out of state– domestic / foreigndomestic / foreign

timingtiming– discounted advance paymentsdiscounted advance payments– charge back paymentscharge back payments

University of University of LeicesterLeicester

income from fees income from fees (£37m)(£37m)

0

2

4

6

8

10

12

14

Homestudents

Int'lstudents

part timestudents

Distancelearning

£m 2003

Source: John Fielden

productive activitiesproductive activities Financial Products Financial Products (endowment funds, (endowment funds,

shares)shares) ServicesServices

– ConsultingConsulting– ResearchResearch– Laboratory TestsLaboratory Tests– Patent RoyaltiesPatent Royalties– Operation of Service Enterprises (hotel, Operation of Service Enterprises (hotel,

retirement home, mall, parking, driving retirement home, mall, parking, driving school)school)

Production of GoodsProduction of Goods (agricultural & (agricultural & industrial products)industrial products)

Themed MerchandisesThemed Merchandises Rental of FacilitiesRental of Facilities (land, buildings, (land, buildings,

laboratories, dorms, driving-through, laboratories, dorms, driving-through, mortuaries)mortuaries)

Sale of AssetsSale of Assets

fund raisingfund raising

directdirect– monetary grantsmonetary grants– equipmentequipment– land & buildingsland & buildings– ScholarshipsScholarships

indirect indirect (credit card, gas sales, % of (credit card, gas sales, % of stock exchange trade)stock exchange trade)

tied tied (access to patents)(access to patents)

concessions, franchising, concessions, franchising, licensing, sponsorship & licensing, sponsorship & partnershipspartnerships

lotteries and auctionslotteries and auctions

toll universitytoll university

loansloans

loans from commercial loans from commercial banksbanks

loans from development loans from development banksbanks

bond issuesbond issues

scopescope

fees: 10-30% fees: 10-30%

other revenues: 10-50%other revenues: 10-50%– USA (public institutions 25%, USA (public institutions 25%,

private institutions 50%)private institutions 50%)

32.2%

21.7%

19.4%

1.3%

21.3%

4.0%

Government budget

Tuition and fees

Research contracts,grants and donationsEndow ment income

Sales and services

Misc

Sources of Revenues, Public 4-year Institutions in USAYear 2000

University of Leicester University of Leicester income in 2003 income in 2003

0

5

10

15

20

25

30

35

40

Govt Grants Fees Research Other

% of £155m.UK

Source: John Fielden

outline of the presentation...

the need for income diversification

the range of income generation sources

the challenges ahead

the challenges the challenges aheadahead

favorable regulatory favorable regulatory environmentenvironment

enhancement of enhancement of academic missionacademic mission

adequate managementadequate management

level-playing competitionlevel-playing competition

favorable regulatory favorable regulatory environmentenvironment

budget incentivesbudget incentives

tax advantages for tax advantages for donationsdonations

flexible financial flexible financial proceduresprocedures

legal statuslegal status

preserving the preserving the academic missionacademic mission

insufficient alignment with insufficient alignment with institutional and academic missioninstitutional and academic mission

teaching staff too busy to teach or teaching staff too busy to teach or do untied researchdo untied research

loss of institutional controlloss of institutional control– what taughtwhat taught– what researchedwhat researched– access for sons or daughtersaccess for sons or daughters

ethical dimensions ethical dimensions

management management requirementsrequirements

generation of new net returnsgeneration of new net returns

clear and transparent income clear and transparent income distribution rules (and related distribution rules (and related human resources incentives)human resources incentives)

fund raising professionalsfund raising professionals

investment specialistsinvestment specialists

cash-flow managementcash-flow management

contingent planningcontingent planning

unfair competition?unfair competition?

public institutions using public institutions using public subsidiespublic subsidies

private institutions private institutions indirectly subsidized by indirectly subsidized by public institutionspublic institutions

conclusionconclusion

what is the best method?

it depends…

Alice in WonderlandLewis Carroll

Alice

Would you please tell me which way I ought to go from here?

Cheshire Cat

That depends on where you want to get to.

it depends on…it depends on…

country / local circumstancescountry / local circumstances

type of institutiontype of institution

promising fields promising fields

strategic or ad-hoc?strategic or ad-hoc?

linked to academic linked to academic orientation orientation