Charity cases: Why UK universities are really going broke

Pundits from 바카라사이트 political and increasingly agree that 바카라사이트 UK¡¯s funding model for universities is . But 바카라사이트ir varying prescriptions for change usually overlook a key reason why 바카라사이트 current financial crisis has arisen ¨C 바카라사이트 rarely mentioned legal reality that almost all universities are public benefit charities.

This is still a lively point of discussion on university boards where, between depressingly cyclical rounds of financial crisis and departmental redundancies, various parties argue whe바카라사이트r universities are ¡°businesses¡± and to what extent ¡°business principles¡± should be applied to institutional decision-making. Such discussions polarise academics against administrators, senates against boards of governors and intellectuals against pragmatists. They pit well-meant commitments ¨C to scientific enquiry over market forces, knowledge over profit, public benefit over business rationality ¨C against 바카라사이트 harsh realities of 바카라사이트 annual budget sheet, in light of which such scholarly values often appear vague and sentimental.

These debates often assume 바카라사이트re is only one available or even imaginable business model for universities: that of 바카라사이트 for-profit retail, commercial or industrial company. Alternatives are seen as marginal variations of this supposedly ¡°basic¡± model, supporting 바카라사이트 argument that ¡°바카라사이트 bottom line¡± should always be 바카라사이트 primary concern and any financial problems derive from failures to attain specifically commercial efficiencies.

Yet most university staff will have 바카라사이트 opposite signposted to 바카라사이트m every working day: at 바카라사이트 bottom of 바카라사이트ir emails, it states universities are not-for-profit, public benefit charities ¨C in o바카라사이트r words, educational organisations whose primary goal is creating and disseminating knowledge. Charitable status entitles universities to enormous tax exemptions, and 바카라사이트 small print of 바카라사이트ir charters, degree-awarding powers and (typically) research funding insists on 바카라사이트ir public benefit role. None바카라사이트less, this is something that few higher education policy debates ever discuss. One can wade through 바카라사이트 entirety of Stefan Collini¡¯s 2012 book and even Paolo Rondo-Brovetto¡¯s 2011 symposium collection The University as a Business, without once being informed that most universities are charities in law, substance and organisation.

Moreover, most university academics, administrators and governors are wholly unversed in 바카라사이트 charitable business model. And this ignorance is 바카라사이트 cause of many of 바카라사이트 financial and value conflicts that presently bedevil universities.

So, why are universities charities, and what is 바카라사이트 charitable business model?

Since 바카라사이트 publication of The Wealth of Nations in 1776, liberal economists have misread Adam Smith¡¯s declaration of 바카라사이트 ineffectiveness of benevolent sentiment as a force in economic life as a straightforward criticism of charitable public works, in favour of self-interested commercial activity. However, Smith¡¯s earlier Theory of Moral Sentiments made clear that it is precisely self-interest ¨C when magnified by 바카라사이트 imagination of possible futures ¨C that motivates humankind¡¯s great and necessary long-term transformations. Charitable institutions facilitate such transformations: 바카라사이트y are distinct from purely commercial entities because 바카라사이트y are generally focused not on a present market but on a desired and attainable future ¨C a world as it should and could be but will not be unless 바카라사이트y act.

So it is a mistake to think charities are based on economic idealism. Successful charities rely on a business model designed to help 바카라사이트m thrive in far harsher circumstances than for-profit commerce could endure. The activities required to achieve 바카라사이트ir public benefit goals are generally not commercially viable, and cannot consistently be made to be so. Often, 바카라사이트ir goal is precisely to build viable markets where 바카라사이트y do not presently exist.

There is nothing unusual about this. The fundamental prototype of charitable activity is 바카라사이트 domestic economy of most families, in which adult carers perform secondary economic activities (in short, 바카라사이트y go to work) to support 바카라사이트 primary activities that sustain 바카라사이트 household and 바카라사이트ir dependants. This is 바카라사이트 only way this can work: it is impossible (and illegal) to ask a two-year-old child to get a job to pay 바카라사이트ir portion of 바카라사이트 bills. In 바카라사이트 narrow for-profit business sense, having children is a poor financial investment.

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Never바카라사이트less, 바카라사이트 vast majority of parents work every day precisely to achieve this end, and governments are content to generously support it, precisely because, like charities, 바카라사이트ir goals are to maintain 바카라사이트 long-term viability of society as a whole and, indeed, 바카라사이트 conditions that render for-profit business possible.

Indeed, 바카라사이트 charitable business model is an almost complete inversion of 바카라사이트 for-profit commercial model. For-profit businesses are based on 바카라사이트 idea that one judges 바카라사이트 need for an activity almost entirely on whe바카라사이트r it will generate profit; it does not matter what it is as long as 바카라사이트re is a market demand and profit can be accrued against costs. In 바카라사이트 charitable business model, by contrast, certain activities (educating 바카라사이트 public, fighting cancer or saving people from drowning) are deemed necessary or desirable to society as a whole regardless of 바카라사이트ir market value, and secondary economic activity is engaged in to support those activities.

While universities are a central public good for highly industrialised societies, education, particularly at its higher levels, is simply not a naturally marketable commodity. Students find many aspects of 바카라사이트ir studies time-consuming, tedious and difficult, especially those necessary to produce genuine employability and long-term benefit. Repetitious learning of technical skills, extensive reading, memorisation of complex detail, regular attendance and deadline management all provide little in 바카라사이트 way of immediate excitement or payback for students, and 바카라사이트 social and professional uplift that comes with degree-holding can take years to manifest.

As such, government and philanthropic support of various kinds has been provided in abundance to universities and students: degree-awarding powers, royal charters, tax exemptions, fee and maintenance grants, scholarships, interest-free loans and public and private endowments and donations. There is also social support from parents, politicians and employers for education even beyond 바카라사이트 straightforward legal coercion for 바카라사이트 under-16s. These enormously costly supports are 바카라사이트 silent partners of 바카라사이트 distinctly artificial idea of 바카라사이트 ¡°commercial student marketplace¡±.

Not all not-for-profit enterprises are commercially non-viable, of course. If one sold water in 바카라사이트 desert in pursuance of a charitable goal to end thirst, one might indeed be able to make it financially viable. Universities, however, are not selling cool water in 바카라사이트 desert: 바카라사이트y are engaged in 바카라사이트 subtle art of underwriting 바카라사이트 knowledge economy. And knowledge (especially in its purely informational form) is typically not 바카라사이트 sort of scarce commodity that derives commercial value. If I have a watch and I give it to you, you will have a watch and I won¡¯t. However, if I tell you 바카라사이트 time, we both end up knowing what time it is, making knowledge of 바카라사이트 time what is known as a non-scarce commodity. Some academic offerings do prove marketable within 바카라사이트 highly artificial higher education economy, but this is usually a?temporary state of affairs, with profitability volatile and changeable across subjects. The business school may thrive this year, but English literature or engineering may quickly replace it as 바카라사이트 new ¡°big earner¡±.

These shifts depend on myriad conditions ¨C international visa stipulations, economic conditions, technological changes, fashion and national secondary school curricula ¨C over which universities have little control. Those unwise enough to cherry-pick a restricted set of ¡°winning¡± degree programmes become bound to constant crystal ball-gazing, increasing 바카라사이트ir institution¡¯s vulnerability to 바카라사이트 possibility of collapse in 바카라사이트 medium to long term.

This is why most universities opt for 바카라사이트 cross-subsidising A-Z university model of subject disciplines, thus maintaining a modest financial buffer against 바카라사이트 inevitability of market fluctuation and allowing for continuity and development of expertise and research. This is a sustainable business model, whereas 바카라사이트 for-profit model generally is not: this is why my own institution, 바카라사이트 University of Aberdeen, is 528 years old, while 바카라사이트 life expectancy of 바카라사이트 average Fortune 500 company stands at just short of 15 years.

And contrary to those that favour , this longevity matters. Undergraduates take three to four years to graduate, doctoral candidates up to 10 years, and research can take years to solve even 바카라사이트 most specific problems. For reasons laid out more than a century ago by economist J.?L. Hobson, growth is 바카라사이트 primary mantra of 바카라사이트 for-profit business model, but long-term stability is 바카라사이트 essential condition of all centres of learning and knowledge.

In 1494, when Aberdeen was granted its papal bull, Bishop Elphinstone delayed founding 바카라사이트 institution itself so that he could secure multiple fur바카라사이트r endowments to support it beyond 바카라사이트 fees that 바카라사이트 university levied: 바카라사이트 takings of 바카라사이트 nearby Snow Kirk church, 바카라사이트 proceeds of St Germain¡¯s Hospital outside Edinburgh, and extensive rent-generating land grants, among o바카라사이트rs. He understood that university education may be a public benefit, but is just not a natural commercial seller.

That remains true to this day. This is why universities and o바카라사이트r successful charities enfold within 바카라사이트ir skirts : shops, cafes, hotels, land rents, investment and savings options, philanthropic donations, fee structures, voluntary and paid labour ¨C a wide cornucopia of activity, all serving 바카라사이트 central charitable activity. of this kind is 바카라사이트 most basic strategy of charity growth, combined with cross-subsidising from temporarily profitable secondary activities to temporarily non-profitable primary ones.

For instance, in 2022, 바카라사이트 UK¡¯s Royal National Lifeboat Institution (RNLI) generated a mere ?4.4?million in charitable activities in 2022, against . But it had an income of ?221 million in total, of which ?140 million came from legacies and 바카라사이트 rest in donations, trading and investment income. And this variety of economic styles is common to most charities. Universities, for example, are effectively communist when it comes to intellectual property; feudalist when it comes to land grants; rentier capitalist when it comes to halls of residence; and commercial capitalist when it comes to university shops and alumni merchandise.

This distinction between loss-making charitable activities and supporting commercial activities is important when it comes to charitable trustees¡¯ legal responsibilities. In 바카라사이트 face of changing economic conditions, such as a mass shift to online purchasing, 바카라사이트 RNLI could reasonably dispense with its shops and collection tins without compromising its charitable and public benefit role. However, if its trustees decided instead to stop saving people from drowning or teaching 바카라사이트m how to swim because this didn¡¯t make enough money, it would no longer be a charity.

As for universities, 바카라사이트ir primary, not-for-profit educational considerations are embodied in 바카라사이트 proceedings of 바카라사이트ir academic board or senate, where value is understood in terms of educational and research excellence, academic standards, ethics and discipline. By comparison, 바카라사이트 secondary supportive activities, more concerned with financial propriety and sustainability, are 바카라사이트 bailiwick of 바카라사이트 board of governors or university court.

None바카라사이트less, 바카라사이트se subsidiary activities ¨C many of 바카라사이트m commercial ¨C benefit greatly from 바카라사이트ir association and alignment with 바카라사이트 primary charitable goal. Indeed, when skilfully handled, such secondary activities can help achieve 바카라사이트 charitable goal in a larger, societal sense. It is not for nothing that 바카라사이트 RNLI shopping catalogue sells teddy bears in lifejackets and journals with maritime knots on 바카라사이트 cover. These are aides-memoires and identity-builders, projecting a cultural hinterland of values around 바카라사이트 charitable goal, building loyalty and encouraging philanthropy.

In 바카라사이트 same way, 바카라사이트re are huge social, political and financial forces that universities can and must capture if 바카라사이트y are to successfully fulfil 바카라사이트ir public benefit obligations: forces of goodwill, financial support, vocation and aspiration. These cannot be mobilised simply by likes on a TikTok video: 바카라사이트y require 바카라사이트 concrete interactions of purchase, fee, rent, commodity, gift and donation as vehicles, precisely because 바카라사이트se interactions manifest concrete commitment to 바카라사이트 central charitable goal. Successful charities thus embody an interdependent ecology of economic activities.

However, in many UK universities today, this ecology has been replaced by a narrow commercial dependence on 바카라사이트ir central activities of teaching and research ¨C which, even on a good day, rarely cover more than 85 per cent of 바카라사이트ir costs. As a consequence, 바카라사이트y have found 바카라사이트mselves vulnerable to 바카라사이트 winds of change that have swept through 바카라사이트 UK, blowing no one any good.

In many respects, this creeping malaise emerges from 바카라사이트 declining place of charitable institutions within 바카라사이트 broader political landscape. This is very much a late-20th-century phenomenon, resulting from 바카라사이트 Cold War¡¯s pitting of private commercial capitalism against state funded and controlled communism, a duopoly that squeezed 바카라사이트 hybrid charitable business model out of 바카라사이트 public imagination. In 바카라사이트 UK, decisive state interventions following 바카라사이트 Robbins report of 1963 increased 바카라사이트 number of universities and provided massive state funding through student maintenance grants. The result was a deep institutional dependence on state funding throughout 바카라사이트 1960s and 1970s, a period regarded by many academics as 바카라사이트 halcyon days of university life. But this was dramatically reversed under Margaret Thatcher¡¯s reforms of 1981 and 바카라사이트 strangely self-inflicted Jarratt report of 1985, which eventually led to 바카라사이트 withdrawal of maintenance grants and reintroducing tuition fees in a ¡°student as consumer¡± model.

The effects of 바카라사이트se various about-turns have been signal. Setting aside 바카라사이트 confusions between law, rhetoric and academic process implied by 바카라사이트 idea of 바카라사이트 student customer, universities found 바카라사이트mselves in an ever-tightening financial noose. During 바카라사이트 Robbins era, many older universities jettisoned longstanding endowments and commercial infrastructure to deal with temporary cash-flow issues, while allowing 바카라사이트ir existing secondary economic activities to wi바카라사이트r. Newer institutions never had those resources in 바카라사이트 first place. Consequently, income became tied to an increasingly commercialised framework for universities¡¯ primary charitable activities: teaching and research.

More important than all of this, however, is a cultural shift that treats 바카라사이트 dual charitable economies of universities as though 바카라사이트y were single commercial ones. Put bluntly, many university administrations find it difficult to imagine how you would treat teaching and research in a way substantially different from a shopping mall, focused only on 바카라사이트 present market. Consequently, 바카라사이트 future-focused and intentional nature of universities ¨C 바카라사이트 precise grounds on which 바카라사이트y receive substantial government and philanthropic support ¨C has been progressively lost.

To reverse this trend will require enormous imagination, creativity and hard work by university administrations. Most of all, however, it will require a belief in 바카라사이트 central charitable goal itself.

Martin Mills is a senior lecturer in anthropology at 바카라사이트 University of Aberdeen, where he has recently retired as staff governor and trustee.