Academic Endowments in the United Kingdom – Do They Make a Difference?

Abstract

This paper analyses the role and significance of the endowments for the UK higher education system. We have systematised the metrics commonly used to measure the performance of the academic endowments. To collect the data about universities and colleges, we exploited the data provided by the HESA (Higher Education Statistics Agency) that collect and disseminate UK higher education data and the data provided by the Charity Commission for England and Wales. The size of the university and colleges endowments is valued using their respective financial statements, using endowment reserve account of the balance sheet.

The academic endowments linked with the UK universities and colleges are estimated to be worth £15.8 billion in 2020. According to the number of the endowments linked with universities and colleges endowments, they play a significant role in the UK higher education system. However, there is a notable difference concerning endowment size between the few most reputable academic institutions and other universities and colleges. For example, the two largest endowments (the University of Oxford and the University of Cambridge with accompanied colleges endowments) in 2020 had a share of 75% measured by the size of the endowment assets. Moreover, this 75% has been stable during the last several years.

In addition, the UK academic endowments are much smaller than their US counterparts and thus generally have lesser significance for the UK higher education system, while they may play a significant role for particular institutions. The endowment size per student has also been much smaller in the UK than in the US. Except for the six universities and colleges, the share of the income coming from endowments and donations in the total income has been relatively low, 2% or less. Considering the long history and tradition of the endowments in England, their role in the UK higher education system is deeply rooted. However, with their historical performance and significance for some higher education providers, there is an opportunity for a more prominent role in the future.