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Income Generation Strategies

Financing Reforms for Tertiary Education in the Knowledge Economy Seoul, 6-8 April 2005. Income Generation Strategies. outline of the presentation . the need for income diversification the range of income generation sources the challenges ahead. outline of the presentation .

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Income Generation Strategies

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

  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 • desire to reduce dependence • increased competition • entrepreneurial culture • 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.

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

  8. 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

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

  10. 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

  11. 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

  12. toll university

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

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

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

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

  17. outline of the presentation... • the need for income diversification • the range of income generation sources • the challenges ahead

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

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

  20. 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

  21. 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

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

  23. conclusion

  24. what is the best method?

  25. it depends…

  26. 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.

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

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