Alternative Sources Of Funding Universities

ALTERNATIVE SOURCES OF FUNDING UNIVERSITIES

Along with rise in tuition fees the problem of funding comes up as a
more urgent issue of public concern. Obviously, limited state funding
can cover only a very small part of operation of universities. Tuition
fees remain the dominant source of revenues of universities. It is
equally evident that funding required for normal functioning and
development of universities is not something static and grows over
time which inevitably leads to rise in tuition fees.

These issues make us focus on the search for alternative sources of
funding universities. One option could be endowment. An essential
difference of endowment from other benevolent foundations is that
the university does not spend the donated sum but profit that it
generates. Nobel Fund is the best-known example of endowment. Awards
are paid from interest earned on shares and investments. The endowment
foundations for universities of the United States and England are
sometimes amazing, they may even exceed our country’s state budget.

Such endowment foundations cover a significant part of the annual
budget of such famous American universities as Princeton (47% of
the annual budget) or Harvard (38% of the annual budget). In some
countries of Eastern Europe, such as the Czech Republic had a law
according to which 5% of each privatization deal was directed at any
of the foundations established for meeting the needs of the given area.

The experience of our post-soviet peers which inherited similar
education systems and had to face adjustment to the new conditions
shows that they also understood the opportunities that this option
will open up and take steps.

For example, in Russia the law on target capital of non-commercial
organizations adopted in 2007 provided legal grounds for introducing
this mechanism of funding. Hence, currently there are 40 endowment
foundations with a threshold of 3 million rubles (about 900,000 USD).

Thanks to good management of financial flows endowment foundations can
cover up to 50% of the annual budget of universities. The state tax
policy is highly important to ensure effectiveness. In many countries
endowment foundations are exempt from tax.

I think this brief overview is enough to understand that development
of such foundations may be a good choice to identification of
alternative mechanisms of funding of the universities of Armenia,
especially considering that universities all over the world view
such foundations as a way of development of research. Meanwhile,
the traditional funding schemes hardly save any money for research.

Zhanna Andreasyan, candidate of sciences in
sociology 14:49 29/08/2013 Story from Lragir.am News:

http://www.lragir.am/index/eng/0/society/view/30756

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