IITs, IIMs think beyond govt funds and tuition fee

Having multiple sources of income, apart from the ministry funds make an institute economically flexible

Money is very important to be able to create a world-class university. You need money practically for everything - from paying competitive salaries to attracting and retaining good faculty members. Developing outstanding research facilities to ensure a healthy learning environment also requires adequate funding. However, while the source of funding is secondary, increasingly, institutes are working towards ensuring reduced dependence on any one source of funding.

At Indian Institute of Management Calcutta, for instance, the largest share of funding comes from tuition fee. (Hindustan Times)

At Indian Institute of Management Calcutta, for instance, the largest share of funding comes from tuition fee. The other sources of income include research consultancies, management development programmes and long duration programmes, says a source.

However, across most institutes, while public money continues to be the primary source of funds, they are also finding various ways to add more to their funds.

“Having multiple sources of income, apart from the ministry funds make you economically flexible, thus allowing you to take extra steps to nurture your institutes. It allows toy get better guest lecturers from abroad, filing for patents, thereby enhancing the institute’s global repute,” says Professor Krishnan Balasubramanian, dean- industrial consultancy and sponsored research at the institute.

IIT Bombay too, receives a considerable amount of money through research and development (R & D) projects. The R&D revenues for 2014-15 are Rs 243 cr. External grants received for R&D activities in 2014-15 were Rs 249.182 cr. This includes grants received in the year for the new projects sanctioned and the ongoing projects, a spokesperson of the institute informed.

Across institutes, alumni and corporate social responsibility (CSR) funding is a good source of income, though the contributions keep varying, year-on-year. At IIT Madras, alumni and CSR funding contributed approximately Rs 55 cr last year. At IIT Bombay, Rs 48 crores was received by the institute through donations from alumni and corporations in 2014-15.

“The source of funding is less important, as long as there is plenty of cash. Those funded by a high level of public funding can be victims of political change or changing national economic circumstances. In general, the leading public universities have worked hard to reduce their dependence on public money, and have become more entrepreneurial in their approach – more business-like. It protects them and secures a sustainable future,” says Phil Baty, editor, Times Higher Education rankings says.

Some private universities in India too, are thinking beyond just tuition money. For instance, Ashoka University is being funded philanthropically by business leaders, corporates and professionals. In fact, the entire capital expense for making the university is funded through donations. “The operational expense is funded by tuition fee and through scholarship donations made by corporates and individuals. The university also tapped into CSR funds to get scholarships for students. Scholarships have also been given by individual donors,” says Vineet Gupta, founder and trustee, Ashoka University.

So, how do institutes abroad fund themselves? As Baty says, Private institutes like Stanford and Harvard, which have a large proportion of their income generated from private endowments, tuition fees and philanthropic donations, and great public institutions like UC Berkeley or Oxford and Cambridge, or LMU Munich, which tend to be more dependent on public funding from the general tax payer, and charge low, or in the case of Germany no tuition fees, stand shoulder to shoulder in this ranking of the world’s most prestigious universities. Some of the fastest rising universities in the list, notably in China, have been fuelled in their success by very powerful levels of financial support from government and the public purse.

Does self-sufficiency and reduced dependence on public funds or tuition money factor in the way an institute features in the global rankings? The world university rankings do look at the overall resources going into a university, adjusted for purchasing power parity, but we do not judge the source of that investment. This would make a fascinating additional analysis, as would an analysis of efficiency and return on investment, Baty adds.