1. Income Generation Strategies Income Generation Strategies Financing Reforms for Tertiary Education in the Knowledge Economy Seoul, 6-8 April 2005

2. outline of the presentation...  the need for income diversification  the range of income generation sources  the challenges ahead

3. outline of the presentation...  the need for income diversification

4. reasons to seek additional resources shrinking public budgets shrinking public budgets desire to reduce dependence desire to reduce dependence increased competition increased competition entrepreneurial culture entrepreneurial culture implementation of strategic plan implementation of strategic plan

5. outline of the presentation...  the need for income diversification  the range of income generation sources

6. Resource Diversification Matrix Source: Compiled by Jamil Salmi. Category of income Source of income Governme nt (national, state, municipal) Student s and families Industryandservices Alumni and other philanthropists Internationa l cooperation Budgetary contribution General budget Dedicated taxes (lottery, tax on liquor sales, tax on contracts) contracts) Payroll tax XXX Fees Tuition fees Degree programs Degree programs Non-degree programs Non-degree programs Advance payments Advance payments Chargeback Chargeback Other fees (registration, labs) Affiliation fees (colleges) XXXXXXX Productive activities Sale of services Consulting Consulting Research Research Laboratory tests Laboratory tests Patent royalties, share of spin-off profits, Patent royalties, share of spin-off profits, monetized patent royalties deal monetized 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) Production of goods Agricultural products Agricultural products Industrial products Industrial products Rental of facilities (land, classrooms, dormitories, laboratories, ballrooms, drive through, concert halls, mortuary space) Sale of assets (land, residential housing) XXXXXXXXXXXXXXXXXXX Fund raising Direct donations Monetary grants Monetary grants Equipment Equipment Land and buildings Land and buildings Scholarships and student loans Scholarships and student loans Endowed chairs Endowed chairs Indirect donations (credit card, percentage of gas sales, percentage of stock exchange trade) Tied donations (access to patents, share of spin-off profits) profits) Concessions (products sold on campus, names) Lotteries and auctions XXXXXXXXXXXXXXXXXXX Loans Regular bank loans Bond issues XXXX

7. main categories of revenues budget budget tuition fees tuition fees productive activities productive activities fund raising fund raising loans loans

8. tuition fees activities activities –degree / non degree programs –labs, exams, etc. –affiliation fees (colleges) clients clients –in state / out of state –domestic / foreign timing timing –discounted advance payments –charge back payments

9. University of Leicester income from fees (£37m) Source: John Fielden

12. productive activities Financial Products (endowment funds, shares) Financial Products (endowment funds, shares) Services Services –Consulting –Research –Laboratory Tests –Patent Royalties –Operation of Service Enterprises (hotel, retirement home, mall, parking, driving school) Production of Goods (agricultural & industrial products) Production of Goods (agricultural & industrial products) Themed Merchandises Themed Merchandises Rental of Facilities (land, buildings, laboratories, dorms, driving-through, mortuaries) Rental of Facilities (land, buildings, laboratories, dorms, driving-through, mortuaries) Sale of Assets Sale of Assets

13. fund raising direct direct –monetary grants –equipment –land & buildings –Scholarships indirect (credit card, gas sales, % of stock exchange trade) indirect (credit card, gas sales, % of stock exchange trade) tied (access to patents) tied (access to patents) concessions, franchising, licensing, sponsorship & partnerships concessions, franchising, licensing, sponsorship & partnerships lotteries and auctions lotteries and auctions

15. toll university

16. loans loans from commercial banks loans from commercial banks loans from development banks loans from development banks bond issues bond issues

17. scope fees: 10-30% fees: 10-30% other revenues: 10-50% other revenues: 10-50% –USA (public institutions 25%, private institutions 50%)

18. Sources of Revenues, Public 4-year Institutions in USA Year 2000

19. University of Leicester income in 2003 Source: John Fielden

20. outline of the presentation...  the need for income diversification  the range of income generation sources  the challenges ahead

21. the challenges ahead favorable regulatory environment favorable regulatory environment enhancement of academic mission enhancement of academic mission adequate management adequate management level-playing competition level-playing competition

22. favorable regulatory environment budget incentives budget incentives tax advantages for donations tax advantages for donations flexible financial procedures flexible financial procedures legal status legal status

23. preserving the academic mission insufficient alignment with institutional and academic mission insufficient alignment with institutional and academic mission teaching staff too busy to teach or do untied research teaching staff too busy to teach or do untied research loss of institutional control loss of institutional control –what taught –what researched –access for sons or daughters ethical dimensions ethical dimensions

24. management requirements generation of new net returns generation of new net returns clear and transparent income distribution rules (and related human resources incentives) clear and transparent income distribution rules (and related human resources incentives) fund raising professionals fund raising professionals investment specialists investment specialists cash-flow management cash-flow management contingent planning contingent planning

25. unfair competition? public institutions using public subsidies public institutions using public subsidies private institutions indirectly subsidized by public institutions private institutions indirectly subsidized by public institutions

26. conclusion

27. what is the best method?

28. it depends…

29. Alice in Wonderland Lewis 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.

30. it depends on… country / local circumstances country / local circumstances type of institution type of institution promising fields promising fields strategic or ad-hoc? strategic or ad-hoc? linked to academic orientation linked to academic orientation