European research funds & the financial sustainability of universities
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1 European research funds & the financial sustainability of universities EUA 2012 Annual Conference The sustainability of European universities Thomas Estermann Head of Governance, Autonomy and Funding Unit European University Association
2 Overview Financial sustainability Funding Trends Challenges of European research funding 2
3 Financial Sustainability Identifying costs of all activities and projects EUIMA - Full Costing Towards full costing Diversification of income streams EUDIS Sufficient and sustainable public funding Public funding observatory Performance-based funding systems HORIZON 2020 debate Universities Funders Public authorities
4 Funding Challenge 1: Reliance on Public Funding Sources On average, almost ¾ of universities funding comes from national/regional public funding sources 5% 4% Public funding (national and regional) 6% 3% Student contributions Funding coming from contracts with business sector International public funding 73% Philanthropic funding Service-related income 9%
5 Funding Challenge 2 Impact of the economic crisis on public funding of higher education in Europe (as of June 2011)
6 Funding challenge 3: Changing modes of public funding Competitive funding Increasingly relevant for universities in context of stagnating budgets success rate may even be criterion for funding formula Requires universities to invest in their support capacities Often co- funding requirements Targeted funding Some authorities tend to cut in block grants and re-introduce targeted funding geared towards the achievement of specific objectives => restricts auonomy Increased use of output criteria influences university s strategic choices
7 Funding challenge 4: Increasing co-funding 1% 15% 16% 28% Only for funding coming from European schemes / other international sources For a minority of the funding coming from public sources For most of the funding coming from public sources For the funding coming from private sources 39% Both for public and private funding, this is common practice Increase in competitive funding sources with co-funding requirements Do not cover the full costs of an activity Widens the FUNDING GAP!! Universities need to fill the gap using other vital sources
8 Expecations on income streams evolution 50% 45% 40% Public funding in its different forms is most widely expected to decrease: 43,04% 35% 30% 25% 30,77% 28,57% 26,53% 20% 15% 18,18% 16,36% 10% 5% 0% Teaching: national public funding Infrastructures / facilities: national public funding Research: national public funding 8 Teaching: regional public funding Infrastructures / facilities: regional public funding Research: regional public funding
9 Expectations related to EU funding Universities largely expect to get more EU funds in the coming years 80% 70% 60% 50% 40% 30% 20% 10% 74,07% 67,31% 65% 62,82% 61,25% 56,92% 0% EU funds Alumni donations Contracts with business sector International fees Continuing/adult education Charities/Foundations
10 Complex financial management
11 Issues with current EU research funding Diversity of instruments within FP7 and variety of eligibility criteria, participation requirements, diverse financial and administrative rules High entry barrier for universities, in particular from the new member states. Excessive bureaucratic costs (application, management and control) deter more and more universities from keeping up their level of participation (including highly renowned technical/research-oriented universities) However, many universities seeking EU funding because of reduced national public budgets will apply even to unattractive funding models. Two worrying developments: quality of applications and broadened funding gap for the universities research activities.
12 Horizon 2020 Sustainability? All Funding schemes need to take full account of the long-term financial sustainability of university-based research. Positive development to fund 100% of the direct costs +VAT Negative to reduce the indirect cost rate to 20% and abandon the possibility to recover the real full indirect costs Lower cost recovery widens the funding gap Negative signal to national research funders to continue increase of indirect cost reimbursement Reduced incentive for universities to develop full costing
13 Horizon 2020 Simplification? EUA calls for further real simplification for the beneficiaries of the rules Positive: reduced necessity of time sheets, reduction of time to grant Change of reimbursement rate from 60% to 20 % is not a simplification but a reduction of the indirect cost flat rate Real simplification can only happen in subsequent rules and implementation Real acceptance of national and institutional accounting practice is key need of acceptance of diversity of costing methods Need to change audit procedures EUA is currently addressing the European Parliament on these issues.
14 11-12 June 2012 Salzburg, Austria In times of austerity... Can we build sustainable funding models for Europe s universities? What balance between public and private funds? What role for European funding? Tourismus Salzburg Tourismus Salzburg
15 THANK YOU! For more information please contact: Follow on
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