Developing alternative income streams: An Overview

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Developing alternative income streams An
Overview

• Valerie Marshall
• Chair of Council, University of Kent and
• Deputy Chair, Committee of University Chairs (CUC)

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An option or an imperative?

• Key Councils must ensure sustainability of the
  institution

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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 feesgt 6k

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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

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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

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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

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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

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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

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Opportunities for alternative income streams

• A. Philanthropic
• B. Transaction based

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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

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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
• Dont underestimate lead times

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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

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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

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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!

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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

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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 institutions reputation

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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

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The Pay off

• Establishes a virtuous circle which increases the
  income and sustainability of the institution
• It should be a win-win situation