Income Generation Strategies

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Income Generation Strategies

• Financing Reforms for Tertiary Education in the
  Knowledge Economy
• Seoul, 6-8 April 2005

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outline of the presentation...

• the need for income diversification
• the range of income generation sources
• the challenges ahead

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outline of the presentation...

• the need for income diversification

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reasons to seek additional resources

• shrinking public budgets
• desire to reduce dependence
• increased competition
• entrepreneurial culture
• implementation of strategic plan

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outline of the presentation...

• the need for income diversification
• the range of income generation sources

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Resource Diversification Matrix
Category of income Source of income Source of income Source of income Source of income Source of income
Category of income Government (national, state, municipal) Students and families Industry and services Alumni and other philanthropists International cooperation
Budgetary contribution General budget Dedicated taxes (lottery, tax on liquor sales, tax on contracts) Payroll tax X X X
Fees Tuition fees Degree programs Non-degree programs Advance payments Chargeback Other fees (registration, labs) Affiliation fees (colleges) X X X X X X X
Productive activities Sale of services Consulting Research Laboratory tests Patent royalties, share of spin-off profits, monetized patent royalties deal Operation of service enterprises (television, hotel, retirement homes, malls, parking) Financial products (endowment funds, shares) Production of goods Agricultural products Industrial products Rental of facilities (land, classrooms, dormitories, laboratories, ballrooms, drive through, concert halls, mortuary space) Sale of assets (land, residential housing) X X X X X X X X X X X X X X X X X X X
Fund raising Direct donations Monetary grants Equipment Land and buildings Scholarships and student loans 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) Concessions (products sold on campus, names) Lotteries and auctions X X X X X X X X X X X X X X X X X X X
Loans Regular bank loans Bond issues X X X X
Source Compiled by Jamil Salmi.
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main categories of revenues

• budget
• tuition fees
• productive activities
• fund raising
• loans

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tuition fees

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

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University of Leicesterincome from fees (37m)
Source John Fielden
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productive activities

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

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fund raising

• direct
• monetary grants
• equipment
• land buildings
• Scholarships
• indirect (credit card, gas sales, of stock
  exchange trade)
• tied (access to patents)
• concessions, franchising, licensing, sponsorship
  partnerships
• lotteries and auctions

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(No Transcript)
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toll university
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loans

• loans from commercial banks
• loans from development banks
• bond issues

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scope

• fees 10-30
• other revenues 10-50
• USA (public institutions 25, private
  institutions 50)

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Sources of Revenues, Public 4-year Institutions
in USA Year 2000
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University of Leicester income in 2003
Source John Fielden
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outline of the presentation...

• the need for income diversification
• the range of income generation sources
• the challenges ahead

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the challenges ahead

• favorable regulatory environment
• enhancement of academic mission
• adequate management
• level-playing competition

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favorable regulatory environment

• budget incentives
• tax advantages for donations
• flexible financial procedures
• legal status

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preserving the academic mission

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

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management requirements

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

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unfair competition?

• public institutions using public subsidies
• private institutions indirectly subsidized by
  public institutions

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conclusion
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what is the best method?
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it depends
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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.

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it depends on

• country / local circumstances
• type of institution
• promising fields
• strategic or ad-hoc?
• linked to academic orientation