New research by the Association of University Directors of Estates (AUDE) reveals, UK universities continue to tackle sector funding challenges with innovative new routes, such as commercial deals, strengthening their position as hubs of local communities.
In 2018, the annual report on Education Spending in England by the Institute of Fiscal Studies recorded that public expenditure on education in the UK hit a whopping £90 billion, which equated to 4.3% of national income, and with this in mind the opportunity for universities finding new revenue streams is a possibility, since the public are willing to spend.
The expenditure of Higher Education providers also directly effect university revenue as profit margins are squeezed.
Capital expenditure reached a record high of £2.75bn per annum, as the sector continues to improve its estate and facilities in the knowledge that students and staff expect high quality and attractive facilities. To address this, the higher education sector has created additional income of £4.4 billion through non-traditional income sources, including a growing amount of commercial deals, over the past year to support these activities.
The research also celebrates the excellent work undertaken by university estate teams in providing world class learning spaces, despite many challenges. The figures show universities gained an increasing percentage of their revenue through ‘other’ income, with one of the main sources of this being property deals and intellectual property rights. Within the context of major changes in funding of the sector, it has been seeking alternative sources of revenue and in the last decade, commercial partnership deals with businesses such as Ocado, Regus and Santander have been completed.
Capital expenditure reached a record high of £2.75bn per annum, as the sector continues to improve its estate and facilities in the knowledge that students and staff expect high quality and attractive facilities
The Teaching Excellence Framework, which recently introduced a scoring model with the potential to affect government investment (dependant on the university’s teaching performance), has increased this pressure, creating a more competitive market. Universities face a challenge of securing such income in order to create and sustain high quality facilities and world class institutions to attract staff and students alike from both the domestic and international markets.
Mike Clark, AUDE chair, said: “Despite a period of policy upheaval, UK universities are continuing to deliver world-class facilities and engage with communities through innovative routes. Our mandate, to attract and retain the finest students and staff from across the UK and internationally, is more important than ever in increasingly changeable political times. Making sure we have the funds to provide these facilities is of paramount importance to the sector.”
In response to the challenge to secure a sustainable future for students, the data, gleaned from (the annual Estate Management Report), found that commercial deals, property shares, rental space and business investments are on the rise.
Estate management is continuing to add value through the different efficiencies among higher education institutions. Across the sector, the report documents examples of universities utilising its estate in order to secure alternative funding streams outside of traditional routes. The University of Hertfordshire embarked on a strategy to boost income by securing commercial deals with businesses such as Ocado and Regus for office space, as well as commercial leases with bank Santander and the NHS which runs a GP clinic on campus. The university’s income rose to £1,477 per square metre in 2014/15, an increase of 6% from 2012/13.
Providing the best possible student experience is crucial to attracting staff and students both from the UK and internationally, and in order to do this we are investing across a number of areas to give our students the industry-standard environment and facilities they need
Ian Grimes, Director of Estates from the University of Hertfordshire said: “Providing the best possible student experience is crucial to attracting staff and students both from the UK and internationally, and in order to do this we are investing across a number of areas to give our students the industry-standard environment and facilities they need. Creating a university which is integral part of the local community is key to this, which is why we’re pleased to be exploring different commercial deals with local businesses.”
The sector continues to work more closely with business and communities to drive local and regional economic growth. The University of Sheffield built workshops, laboratories and office space in Catcliffe near the M1 in a business park. The capital expenditure in Sheffield Business Park will deliver 4,000 jobs and generate over £210m per annum to the regional economy when fully developed.
Mike Clark, AUDE chair, continued: “A real feature of the evolution of the higher education estate in recent years has been how the local community is able to use the estate, or in which developments are a part of the community. Imaginatively developed facilities can support and enhance higher education’s contribution to the economy and to society. But in this landscape, there is no room for complacency and it is exciting to see higher education institutions engage with communities in a multitude of exciting ways.”
For more information please visit www.AUDE.ac.uk
Alternative Revenue Streams for Colleges & Universities
Increasing tuition fees isn’t an option due to the lower costs of courses available online for a fraction of the cost of going to university, however university and college costs have increased by 63% since 2006, which is well above inflation, so existing profit is being squeezed from both ends leaving universities and colleges to source alternative revenue streams
Revenue stream 1: Food
Whilst wanting to keep costs subsidised for students, there is profit to be found in food offering. Students are willing to pay for good quality food and with the rise of healthy eating, gym going and veganism, healthy food trends are on the rise, and universities can cash in on this trend.
Stocking and producing good quality food on site is a convenient solution for most students, so ensuring that you offer enough variation in food types will reduce loss of revenue for your business as you are able to cater for everyone.
Alternative revenue streams for developing your in house food offering is to commission partners to sell on campus for a ground rent. This offers a low operational burden whilst generating a steady revenue stream for your university or college.
Revenue stream 1: Corporate training
Many universities and Harvard University has been growing their continuing and executive education programs — offering shorter business school programs for executives who make over $10 million a year for instance. In the last 10 years, revenue from these programs doubled, providing the university with significant funds to fill the gap from under performing endowments. Most schools don’t have the branding or access necessary to appeal to millionaire executives and business leaders. However, setting up corporate training or career enhancement training with local companies provides additional funds and increases your reach to nontraditional students.
Revenue stream 2: Secondhand sales
Holding a second hand sale for students to bring belongings, from home furnishings, to technology and equipment, secondhand sales prove a popular event for students and universities and colleges can add to their revenue streams by charging a small fee to have a stall.
With current trends towards sustainability, the ethics act as great PR, and leaves a positive taste in the mouths of participating students.
This is often overlooked by educational institutions, but aids students to raise money after they finish and enables new students to save money whilst starting their education.
Revenue Stream 3: Online shop
Students have a lot to buy when they start, from living belongings to course and study equipment. Providing a shop with specific items required, universities can earn affiliate commission for sales they generate for the providers.
Alternatively, if you are willing to put more resource into the revenue stream, you might consider a drop shipping option. Some companies specialise in helping universities and colleges to set up their own shop, such as: Promoversity.
Revenue stream 4: Crowd funding
If you are looking to develop your student well being with initiatives, set up sports teams or new campus facilities, you can turn to crowd sourcing websites to raise funds for your project with little cost to your institution.
Revenue stream 5: YouTube
Creating a you tube channel that provides lesson notes, hands on living and financial advice, local things to do advice etc is a great way for universities to earn extra money and engage with their students on a more personal level.
You can even recruit student volunteers to make some of the videos
Having a presence on YouTube will also help you recruit new students who are more likely to relate to your institution.
Blockchain in Education
Universities have become under threat from a great force of huge economic change, technological advances and social changes. The future of universities in a block chain world is explained brilliantly in this Tedx talk by Professor Diane Sieber.
Universities have been central to intellectual and creative discourse for a millennium, and yet during the last two decades, powerful economic, technological and social forces have increasingly challenged their survival.
Diane discusses the changes to curriculum needed to survive the other options within the landscape. That universities will need to lend themselves to more flexibility in course commitment and use technology and blended learning to begin to personalise their teaching.
Furthermore the introduction of block chain technology being used to personalise even further using a library of different online resources that enable students to create bespoke degrees and higher education qualifications is on the horizon. In short, universities need to adapt or risk being eliminated as alternative education methods continue to rise.