1. Developing alternative income streams: An Overview Valerie Marshall Chair of Council, University of Kent and Deputy Chair, Committee of University Chairs (CUC)

2. An option or an imperative? Key = Councils must ensure sustainability of the institution

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. Opportunities for alternative income streams A. Philanthropic B. Transaction based

10. 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

11. 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

12. 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

13. 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

14. 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!

15. 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

16. Risks in developing new income streams 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

17. 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

18. The Pay off Establishes a virtuous circle which increases the income and sustainability of the institution It should be a ‘win-win’ situation