Endowments and Tertiary Education

The issue of university endowments is quite an interesting one, especially in a time of highly publicized donations and charities, such as the one we live now. Unlike the late 19th and early 20th century when magnates and wealthy industrialists chose to set up or substantially fund their own universities,  the 21st century challenges of setting up and establishing a new university, have altered the field.

Those that seek to make a difference in education today, choose to make a donation to the institution of their choice which adds to the university’s endowment, i.e. a set of assets whose investment yields an annual principal amount for income purposes. This is in contrast to another popular option, the gift, which is treated as income and not an investment. These investments are professionally managed on behalf of the university and the annual proceeds are dispensed according to the will of the donors.

Even modest annual returns of 4% or 5% could correspond to a substantial and dependable income for universities with large endowments; therefore, the option of setting up an endowment scheme is an exceptionally appealing option for universities that want to plan their long term financial security.

The donor’s also can regulate how the endowment will be spent, if they so choose. A part of the annual return could be spent on scholarships based on merit or need, or for aiding freshmen from a specific geographical region or be funnelled towards a specific type of research the university engages in. Another popular option is for the income from endowments to be used in order to recruit and support world class researchers and educators.

In the United States[1], according to the National Association of College and University Business Officers, there are approximately 70 institutions with endowments of over1 billion USD. In Europe the numbers are significantly smaller, perhaps due to a tradition geared towards gifts and annual donations, as well as having more foundations that may not be always linked to tertiary education institutions but offer funding for scholarships and research more broadly. On the other hand, Universities in the Middle East are quickly making their mark in this category, with notably KAUST from Saudi Arabia[2], already holding an endowment of approximately 20 billion USD.

Harvard University tops the relevant list with an endowment of approximately 30 billion USD[3], followed by Yale with 20 billion USD in 2013. Cambridge tops the European list with approximately 5 billion Euros and is closely followed by oxford at 4.2 billion, whereas the ETH in Zurich is the top continental endowment holder with 1 billion Euros in assets.

Endowments represent a useful tool in securing the finances of Tertiary education institutions and their income can be used to raise the research profile, the recruitment outreach and create opportunities for underprivileged students to join their ranks. However, creating a substantial endowment structure that will ensure the above requires a solid marketing of the university’s strengths and a network of alumni and partners that will seek to contribute to it in the near future.


The philanthropic legacy of Sir Run Run Shaw (Part One)

Sir Run Run Shaw, the Hong Kong media mogul died on 7th Jan 2013 at the age of 106. In the  48 hours after the news about his death, there were more than 500 pieces of news in English on the subject, and 3,500 in Chinese. Most western media associated the legacy of Sir Shaw with his success in the entertainment industry, especially his work in introducing Kung Fu movies to the west. But instead of adopting this approach, most of the Chinese media featured detailed discussion of his philanthropic activities in the education sector.


According to the official statement from the Ministry of Education of the People’s Republic of China, Shaw has donated more than $ 4.75 billion HK dollars (370 million GBP) since 1985 to create more than 6013 education projects covering 31 provinces and cities throughout mainland China. This endowment, benefited tens of millions of students from primary school to university. If we also include the figure of his donation to the healthcare in mainland China, it is a staggering total of more than $ 10 billion HK Dollars (785 million GBP)


On 7th January 2013, a picture demonstrated the distribution of Sir Run Run Shaw Buildings around China become a media sensation in mainland China, it is said that a search for his name in Baidu map, the Chinese google, there are more than 30,000 education, hospital and research buildings in mainland China that are named after him. This picture was named by the Chinese netizens as the picture that “Touched the heart of China”. On day after his death, there are more than 2.5 million results of weibo discussion on “The Sir Run Run Shaw Buildings” in Sina Weibo, the Chinese twitter. A current trend is for people to take photos of the lecture halls, and libraries donated by and named after Shaw, where they have spent years studying. The idea is to show their respect to this philanthropist, who is widely considered as PRC’s greatest private contributor to the education sector ever.


What could the rest of the world learn from the role of Sir Run Run Shaw in his philanthropic activities in the education sector?


Figure 1:

A search for “Yifu”, the Chinese name of Sir Run Run Shaw in Baidu, there are more than 30,000 results. A picture that is considered “Touched the Heart of China”.

Sir Run Run Shaw Map

Public-private Collaboration

The Sir Run Run Shaw Foundation will only consider fundraising proposal recommended by a selected pool of experts employed by the Ministry of Education in the PRC. Also higher education institutions which submit proposal for endowment are required to commit to fundraise three times the funds donated by the foundation. So once a university submits a proposal to the foundation, it will already have official backup from the municipal or provincial governments who will be committing to finance the rest of the project to make the submission eligible, or alternatively, the institutions themselves will need to finance the rest.


For example, in 1986, Sir Shaw donated HK$110 million to 11 Chinese universities. Each of those 11 Chinese universities either gets another HK$30 million from its municipal or provincial government, or manages to finance the rest itself.



Possible Actions for national policy makers:

  1. A model, varying in detail from country to country,  could be developed between the public and the private sector to establish a joint partnership to finance the country’s education sector;
  2. Governments, and national organisations for the education sector, might consider a more open-minded and flexible approach to encourage private sector involvement in education endowment.



Life-Long-LearningLifelong, Comprehensive, Unbiased Endowment:

Universities are widely considered to be the phase of education with the biggest potential returns for individual venture capitalists, investors or entrepreneurs. The majority of fund receiving by the education sector goes to higher education, rather than to schools or further education.


However, further education has played a crucial role in the upgrading of some of society’s most deprived communities. For example, it is a central part of the European Commission’s life-long learning agenda.


In the case of Shaw, 80 per cent of his endowment went to schools, special schools and technical institutions, and only 20 per cent to universities.



Possible Actions for national policies makers:

  1. HEFCE published a report entitled Philanthropy to UK Universities (the Pearce Report) in 2012. It sets the target of £2 billion a year in charitable gifts to UK universities by 2022.  The relevant national bodies could undertake a similar review process to boost schools and further education. . The recommendations of these reviews could be amalgamated to form a coherent UK national strategy for philanthropic endowment in education. Other nations could adopt the same approach.


Please click here to read Part 2 of this article.




HE News Brief 01.2.11

by Abby Chau

  • The Ukraine Education Minister Dmitriy Tabachnyk recently criticised the higher education system as inefficient and that the 1000 universities in the country are too many for a population of 45 million. Tabachnyk said that institutions should be more regulated and mergers of smaller universities would help alleviate the problem. This announcement comes as students protested a new higher education law which would reduce the number of places at universities as well as a planned reduction of funding for student government.
    Full Story: RIA Novosti
    More: Interfax

  • Despite budget cuts and tuition fee hikes, the UK government is pressing on with their policy of tighter visa restrictions. Business schools are reacting to a plan that would disallow graduates from working in the country. Previously graduates were able to apply for a post-study visa which would allow them to work in the UK for up to two years. The government is planning to cancel the post-study visa in April 2011. In 2009, 38,000 visas were issued under this category. At the moment, the UK is the second most popular destination for international students. Policy makers in Europe are looking at positioning itself as a higher education destination as the UK falls out of favour with international students, and particularly, MBA graduates.
    Full Story: FT
    Read more