Philanthropy Impact

Inspiring philanthropy and social investment across borders, sectors and causes

Universities 2030: Their Future and Their Funding

Philanthropy and Social Investment in the Middle East

Magazine article

Universities 2030: Their Future and Their Funding

by Sir David Nicholas Cannadine


Philanthropy played a fundamental role in the creation of many UK universities. Given the current and future challenges universities now face the role for philanthropy in all its forms is even more important. This is a rallying call.

For some years, I have been deeply interested in the subject and the practice of philanthropy. In 1988, I moved from a rich, publicly funded UK university (Cambridge) to a very rich but largely private university in the USA (Columbia), and this opened my eyes to a different way of resourcing higher education, one more attuned to giving and fund raising, and less dependent on the state. On my return to Britain in 1998 as Director of the Institute of Historical Research at the University of London, part of my job was to re-energise the organisation and we raised over GBP £10m to help achieve that objective: petty cash by American standards of university fundraising but a significant sum by English standards. My biography of Andrew W.Mellon, the American banker and benefactor of the National Gallery of Art in Washington DC, and my work as a Trustee of the Wolfson Foundation have further convinced of the continuing and enhanced importance of philanthropy in many areas of life, especially in the realm of higher education.

To my mind, philanthropy is vitally important for the English university sector now and in its future, and I should like to discuss it under three headings. First, I want to explore the role of private giving in the original establishment of English universities (I am leaving out Scotland and Ireland). Then I want to look at the role of enhanced philanthropy in American university sector and the growing dependence of English universities on state support: two very different funding stories and trajectories which have become increasingly divergent. Finally, and in the light of recent developments, I shall consider the challenges and opportunities facing English universities today and in the challenging future that is rapidly heading our way.


1. Philanthropy and university growth throughout the UK: a short history

From medieval times to the mid-nineteenth century, the collegiate Universities of Oxford and Cambridge remained essentially privately funded institutions, tied very closely to the Church of England rather than to the English government, and offering what was termed a ‘liberal education’, which was much beloved of John Henry Newman, John Stuart Mill and Walter Pater among others. University College, Kings College London, and the University of Durham (all established between 1826 and 1832) followed, and these were the models available when the city fathers of the great provincial towns of mid-nineteenth century England began to focus on providing higher education for their own children.

Liverpool provides an instructive case study. During the eighteenth century, the town had grown rich on the slave trade and on shipping, and during the nineteenth century, thanks to the nearby development of chemical industries and food processing, Liverpool had a long tradition of civil philanthropy and cultural engagement. Among the voluntary societies were the Lyceum, the Literary and Philosophical Society, the Botanical Garden and the Liverpool Institute and School of Art. In 1814, the Royal Institution was established by the banker William Roscoe and John Gladstone, father of the future Prime Minister; and in 1848 the Liverpool College of Chemistry was set up by James Muspratt, the founder of the local alkali industry. As in other cities such as Manchester and Birmingham, these men from the city’s entrepreneurial and civic elite were often nonconformists and they created an array of voluntary societies that compared well with any in the great towns of provincial Britain.

Between 1866 and 1881, colleges of higher education were established in Manchester, Leeds, Bristol, Sheffield, Birmingham and Liverpool which, perhaps surprisingly, was the last in this sequence. All of them were founded and funded by local entrepreneurs, and from the beginning, Liverpool University College depended on support from the Merseyside business community, including prominent mercantile dynasties such as the Rathbones and the Muspratts. Many of these initial donors gave money to endow professorships and to pay for the earliest buildings.

In 1883, Liverpool University College became part of the Federal Victoria University, which also included Manchester and Leeds; the flow of private gifts continued from donors such as Sir Henry Tate, the sugar refiner, for the Library; Sir Andrew Walker, a local brewer and also benefactor of the Walker Art Gallery, for the engineering laboratories; and from the chemical manufacturers Sir John Brunner and William Gossage. This support enabled Liverpool to break away from the Victoria Federation in 1903; and with renewed pride in its independent status, and with local businesses booming, there was a second surge in giving from, among others, Sir William Hartley, a jam manufacturer, William Lever, who produced soap and detergents, and the ship-owners Harrison and Hughes. By 1914 Liverpool had become, after Manchester, the second best endowed of all the English redbrick universities – a position which it retains today. 

Why did these Merseyside men give to Liverpool University? The answers were many and varied.  The nature of Merseyside industries meant its leaders were drawn to supporting science: Muspratt, Brunner and Gossage were interested in chemistry and Harrison Hughes in engineering. But their concerns were broader: Alfred Booth was a ship owner, but financed the study of classical history; Brunner also gave money for archaeology and Egyptology; while the Rathbones supported English literature. Religion also played a part: in many of these families, the Unitarian influence was strong, and Sir William Hartley had long believed in systematic philanthropy. Social ambition may also have been significant: Tate, Brunner, Walker and Hartley were all knighted; Walker was suspected of using his giving to help him obtain a baronetcy; and Lever would eventually advance from a baronetcy to a peerage to a viscountcy.

This is a uniquely Liverpudlian story, but it was also part of a more general trend: for all of the turn of the century redbrick universities in England depended on the involvement of their local industrialists. Manchester relied on the largesse of the cotton-ocracy; Leeds was supported by engineers such as Sir Andrew Fairburn and the Kitson family; Sheffield was funded by the steel-masters and the cutlers; Birmingham was backed by Joseph Chamberlain, the brewers and the metal manufacturers; and Bristol was lavishly endowed by the Wills family. The result was that these redbrick universities were largely independent, and even after the creation of the University Grants Committee (UGC), its budget was so tiny that the redbricks continued to be largely autonomous, in terms of both their financing and their governance.

Yet as such, these redbrick universities were not so much another successful expression of a rich, powerful and triumphant middle class, but rather they were from the outset inadequately funded. In 1904, the University of Liverpool’s endowment income was less than L1,500.00 a year, and in 1913 it boasted fewer than one thousand students. It is one of the ironies of English history that while the provincial middle classes were both the creators and the beneficiaries of the Industrial Revolution, they rarely achieved the sort of prodigious wealth enjoyed by aristocratic landowners, or by London-based bankers and financiers, or by the late nineteenth century plutocrats such as Guinness, Pearson, or the Harmsworths. And as a result, the universities they created were far from rich – and least of all by comparison with the United States, where the story was very different.


2. Universities and philanthropy: some Anglo-American comparisons

During the late nineteenth and early twentieth centuries, the United States was transformed from being an essentially localized and agrarian nation into a vast imperial realm; and as it expanded and industrialised it became the most successful wealth generating economy in the world. As a result, a small group of entrepreneurs accumulated prodigious fortunes on an unprecedented scale: Vanderbilt and Stanford in railroads, Frick and Carnegie in steel, Morgan in banking, Astor in real estate, Rockefeller in petroleum, Mellon in many things, Ford in automobiles, and so on. Here was a new breed of super-rich plutocrats, all of them were at least multi-millionaires, and John D. Rockefeller was the world’s first billionaire: and even though there were five US dollars to the British pound, their Himalayan accumulations of money towered far above those of the richest men in Britain, and they overwhelmed the relatively modest wealth of the English provincial middle class.

What did they do with it? Some of them endowed universities: in 1873, Cornelius Vanderbilt gave one million dollars to found the university that still bears his name; in 1890, John D. Rockefeller began giving money to establish the University of Chicago, which would eventually amount to forty million dollars; and a year later, the Stanfords began giving large sums to set up their university in California. These were far greater sums than the English provincial middle classes could ever have lavished on their redbrick universities at around the same time. Some of them also created foundations: among them Rockefeller with an initial endowment of one hundred million dollars, Carnegie with one hundred and twenty five million. And these American foundations, like American universities, were far greater in number and richer in resources than their few British equivalents – Leverhulme, Pilgrim, and Wellcome – could rival.

After the Second World War, the Anglo-American university scene changed drastically, with rapid expansion from the 1950s to the 1970s, and so did the part played by philanthropy. But the expansion took very different forms. In the United States, some universities were generously funded by the state governments, as in California, Texas and Virginia; while the Ivy League universities began to raise unprecedented sums from their alumni. Across the higher education sector, enormous sums were invested in science, usually via various federal government agencies, and there were massive, unprecedented grants from such foundations as Rockefeller, Carnegie, Ford and Mellon. But many American universities and colleges remained private institutions, which means they were not, and are not, subject to intrusive government control, and they have become prodigiously rich.

In England, the years from the 1950s to the 1970s also witnessed the unprecedented expansion of the university sector. This was true for Oxford, Cambridge and London and the red-bricks; they were joined in the 1950s by Southampton, Hull, Exeter, Leicester and Keele; and in the 1960s, ‘new’ universities were created at Sussex, York, Kent, Lancaster, East Anglia and Warwick, while some colleges of advanced technology were also upgraded to university status.

But while the trajectory of English university expansion paralleled the contemporary American experience, the taxonomy of funding did not. Most of this expansion was financed by government, via the UGC which became, along with the state sponsored research councils, the major means whereby universities were paid for, along with local authority maintenance grants available to undergraduates. Whilst the redbricks were products of local initiative and local funding, and were located in great industrial cities; the ‘new’ universities, by contrast, were the products of state initiative and state funding, and were located in cathedral cities and county towns.

By the 1960s, England’s universities had effectively ceased to be the private organisations and had morphed into public (and publicly-accountable) institutions, which were overwhelmingly dependent on government funding. However, this period also saw the increased creation of London-based trusts and foundations; and as the names Nuffield College Oxford, Wolfson College Oxford, and Wolfson College Cambridge suggest, they began to give significantly to English universities.  Such was the position of English universities – their philanthropic origins largely forgotten, overwhelmingly funded by the state, and with a growing but still limited input from organized philanthropy – when Margaret Thatcher won the general election in 1979.


3. Recent, current and future challenges – and opportunities

Since the late 1970s, the English university system has faced a variety of challenges.  The first came during the Thatcherite 1980s when state funding was repeatedly cut and control increased. The arms’ length UGC was replaced by the more hands-on Higher Education Funding Council for England (HEFCE), and the allocation of funding was determined on the basis of the Research Assessment Exercise (RAE). Here, in the name of public accountability, was a massive increase in government regulation of universities.

One result of this sterner financial and political regime was that some universities re-discovered, and some recognised for the first time, that they should seek alternative sources of funding. Hence, from the late 1980s, there was a proliferation of Development Offices, of conversations with trusts and foundations, of appeal campaigns, of alumni cultivation. Such endeavours have met with a certain a degree of success. In 2011, the endowment of Cambridge University (excluding the colleges) was over one billion pounds, and of Oxford (also excluding the colleges) was somewhat less. Then came Edinburgh, Manchester, Glasgow, Kings College London and Liverpool, descending from almost £250m to £120m. Altogether there are fewer than twenty British universities with endowments of more than £50m: compare that with sixty American colleges and universities with endowments of more than one billion dollars apiece. However successful fundraising has been in English universities, we have started very late in the day, and compared the other side of the Atlantic, there is a huge amount of catching up to do.

But as English universities sought to claw back some freedom and independence by raising money from philanthropists and the private sector, they were being subjected to more change. In 1992, thirty polytechnics and thirty colleges of education were upgraded into universities in England and Wales; and seven years later, Tony Blair set a target of fifty per cent of young adults going into higher education by the dawn of the twenty first century. Here was, and remains, the most profound revolution in English universities. Yet when this commitment was made, no one seems to have had any idea as to how it would be funded. Not by government: even before 2008 it lacked the resources, and it seems highly unlikely it will ever have the resources in the future. Not by shifting the cost on to the undergraduates themselves: student fees do not cover the full economic cost of undergraduate education. And not by philanthropy: because there are not enough rich foundations and people to provide the billions of pounds which would be required for English universities ‘to go private’ on the American model.

Yet the current challenges facing English universities do not stop there: for they no longer function in a local or even a national environment, as higher education has become increasingly globalized – and increasingly competitive. One indication of this change is the growing number of overseas students attending English universities, and the increased efforts that are being made to attract them. Many come from the Middle East, South Asia and China – parts of the world where the rate of economic growth is far greater than it is here. A second sign of this globalisation of higher education is the increase in the number of English universities entering into agreements with overseas universities.

But as the Middle East and South Asia and China (and Singapore and Malaysia and Indonesia) get richer, they are beginning to build their own world-class universities; and while great universities decline slowly, they can also rise very rapidly. This means that thirty years from now, English (and American) universities may well face unprecedented global competition from the new universities being established in the Middle East and Asia; and this in turn means they will also be confronted by an inexorable decline in the numbers of overseas students coming from these parts of the world, who in future will be able to get at least as good an education in their own country as they would get by going abroad.

The IT revolution is also far from over, and this, too, presents an array of opportunities -- and challenges. Today the technology exists for the entire contents of one of the great university libraries to be contained virtually (think Cloud) and be fully accessible, and university lectures are being streamed which means that faculty and students need no longer be ‘on campus’. Does this mean the end of university libraries, the end of undergraduate lectures, the obsolescence of halls of residence, and, indeed, the end of history or sociology departments in many universities, as students stay at home and get their lectures and read their books and take their exams on line? Does it spell the end of the conventional campus university as we know it, at least in some subjects, and its replacement by an IT version of the original Open University, with spectacularly reduced costs and no-less spectacularly increased access?

Does it mean that many of the post 1992 universities, and many of more venerable age, will disappear altogether, and just become web portals? Does it mean that just a few universities – say the Russell Group and Oxbridge – will survive as campus universities, with their libraries and departments intact and with students still living on campus? And does this mean that they will be able to levy massively increased fees as a result, with parents willing to spend a fortune to get for their children what may again become a highly-restricted but still-authentic university education available only to a few?

I have no idea as to the answers to these questions: and there are many more like them that should be posed, and ought to be posed, if there is to be an open and serious debate on the future of universities in this country – a debate which, in recent times has become more urgent and necessary, but which has been inexcusably and unconscionably lacking. And I do not envy vice-chancellors who are struggling on a daily basis with many of the issues to which these questions draw attention.

But however much the future of higher education in this country is uncertain, this much, at least seems clear. In years to come, English universities are going to be more than ever dependent on gifts and giving: from their (increasingly global) alumni, from foundations and trusts in this country and overseas, and from individual businesspeople and philanthropists, perhaps with local connections, perhaps not. During the last quarter century, fundraising has become increasingly important to English universities, and it can only become even more important in the future. That is certainly a challenge; it may also be a consolation.

This article is tagged under:

  • Civil society
  • Family philanthropy
  • History of philanthropy
  • Government, legal and tax issues
  • Inspirational donations
  • Philanthropy stats & trends
  • Promoting philanthropy
  • Trusts & foundations
  • Understanding philanthropy