Wednesday, November 02, 2005

Endowments :-) and corpus funds :-(

From Inside HigherEd:

Yale University's School of Music has received an anonymous $100 million gift that will, among other things, result in free tuition for students, starting next year.
You can read a longer report at Yale Daily News.

Everytime I see such news stories, I certainly feel happy for the recepient universities. At the same time I feel so sad for Indian universities and other institutions of higher education.

Anyone who kept his/her eyes open during the during the last 10 years knows that quite a few industry bigwigs and entrepreneurs who made it big (and there were many during the dot-com boom) donateed big money to the IITs (and probably to other colleges as well, but the news about IITs was really prominent). For example, IIT-B benefited from gifts from its alumni such as Kanwal Rekhi and Nandan Nilekani.

The IITs that received these donations used them to start new programs, notably in management, and for other purposes such as sprucing up their facilities, including their hostels. Everything was going great, until the then Minister of Human Resources Development, Murli Manohar Joshi, intervened, and the rest, as they say is history.

In this case, it was a truly sad history. One particularly dark episode is recounted by Urmi Goswami:

In the summer of 2003, Gururaj Desh Deshpande, co-founder of high-end optical technology company Sycamore Networks, tried in vain to donate $10 million to his alma mater IIT Madars. The purpose of this grant was for his alma mater to undertake an optical research project. His grant was rejected by the ministry of human resources development. Deshpande finally took his money where it was wanted — to the Massachusetts Institute of Technology. The MIT received a grant of $20 million to set up the ‘Deshpande Centre of Technological Innovation’.

Why? Because, gifts to individual institutions became impossible in the new, warped regime imposed by M.M. Joshi. From the same report by Goswami:

In January 2003, a fund -- Bharat Shiksha Kosh -- was set up. All donations made to educational institutions or for educational purposes were to be routed through the BSK. Set up as the brainchild of Murli Manohar Joshi, the Bharat Shiksha Kosh was meant to help channel funds — especially from smaller contributors — to the education sector, particularly the institutes of higher education.

All right. That was then, and this is now. How have things changed? When the regime change took place in May 2004, Arjun Singh, the new minister at the helm at MHRD, immediately changed the rules back to those that existed earlier. Now, people can make donations directly to the institutions of their choice.

However, this year, in an announcement about the new scheme (called 'block-grant' schme' -- I don't even know what it means!) for funding IISc, IITs and IIMs, I found this interesting passage:

...The modified scheme will provide a matching contribution to the corpus equalling the net income of the institute, that is income after all expenditure has been met. The scheme would be implemented in all these institutions with the stipulation that the level of corpus may be allowed up to Rs 100 crore in the case of IITs and IISc and Rs 50 crore in respect of other institutions [IIMs].

Please correct me if I am wrong, here. Isn't this passage saying that the corpus (which is the term equilvalent to 'endowment' used in the US) cannot grow to more than 100 crores? Why should there be a cap at all -- except perhaps a cap on the government's contribution?

The US universities get big gifts all the time, and universities build fairly huge endowments with them. Harvard is truly well endowed with some $25 billion in its kitty! Other universities such as Michigan, Cornell and UCLA have endowments of about $3 billion each (info from Satya). Remember, Michigan and UCLA are state universities! They have been using it for all kinds of purposes, such as a new building, new academic programs, establishing a scholarship program, etc. The gift to Yale's School of Music seems to break new ground in that it will go towards waiving the tuition fees for all the students in that school! In times of distress, an endowment is a great stabilizer. One can go on and on, but I am sure you get the point.

I am sure there are still many people who would be willing to donate big money to the corpus funds of higher ed institutions -- IIMs and IITs in particular. A corpus of some 1000 crore (10 billion) rupees should be quite easy to build in a short time for an IIT if it makes a concerted effort; such a corpus would help it become financially independent. In principle, the government can either reduce or even stop its funding of those institutions with big corpus funds, and use the money thus saved to create new IITs, IIMs and so on.

Sure, the corpus funds may not be large now. However, by removing the cap on them, and by encouraging institutions to tap their alumni and other philanthropists, our universities too can benefit from all the good things made possible with a big corpus.

Aren't we missing out on all of this good stuff?


  1. Anonymous said...

    this is something i've often worried about.....why on earth can't indian universities accept endowments??

    this is especially maddening when i see what's happening in universities here. Bill gates and paul allen have given ~200 million $ to the University of Washington....and many many more happen all the time.


  2. Anonymous said...

    It seems to me that there is too much of
    dwelling on just money. The Ambani Univ.
    in Gandhinagar, the Ramaiah Institutes
    in Bangalore have no shortage of funds.
    Does it mean that their academic profile
    is going to rival that of JNU or Visva-Bharati?
    I think that money is definitely a problem,
    which can be sorted out by funding agencies.
    Just saying that this or that is happening
    in the US is no argument. There is plenty
    of interference by powerful oligarchs in
    affairs of Universities. One good reason
    for keeping out private donors is because
    Universities will turn into propaganda
    instruments for them. These are all old
    fashioned notions of private patronage of
    knowledge. The real problem of course is
    that in India there is no longer the
    perception that education is something that
    is important in itself. The most talented
    individuals end up in Sycamore and Infosys.
    If they, instead, chose to go to academe
    affairs would have been much better. It is
    because success is measured in terms of
    dollars that matters are what they are.
    It is the human capital that is really
    missing in education. Enough said.

  3. Anonymous said...

    Dear Anant,

    That was a well articulated comment that you have placed here and I agree with the part that funding alone is not the issue.

    As you righly point out, extravagant funding comes attached with strings. It is time we stopped comparing the happenings in US to indian situations. Every situation has associated with it a history.

    When India moves into a knowledge based economy such things like educational philanthropy will happen in the right perspective.

    All the talk of endowment happens only with respect to higher education, that too IIT and IIM because they have been successful. Talking about a successful system doesn't obviate the need for the real issues on hand. Nobody is really talking about the primary school system which is the foundation for any knowledge based economy and that has absolutely no support from private sector and the so called endowments. Who do we have to enter our colleges?

    With Regards

  4. Anonymous said...

    Perhaps MHRD, without being explicit about its intentions, wants to keep an eye on the third party funding of Madarasas in view of the new global situation and IITs just happen to come under the same Department.

    Perhaps the above suggestion is a rumour spread by the MHRD itself but actually it is the control-freak big wigs at the centre that do not want these institutes to take off and be independent.

    All this reminds me of a popular situation found in several Indian movies. A middle class father has an intelligent son who gets hold of some merit scholarship and passes out of a great college. The son gets a proposal from a rich girl who loves him a lot and promises that he can really shine if he goes abroad for a while and comes back - she can help him out with the cash. The father does not like the idea because he feels he is losing his son forever. The son has this dilemma - to take off or to stay back. The perception is that taking off means being sold off and staying back means being loyal. The son actually takes off leaving his grudging father behind, weeps in the middle of the night about the misunderstanding, misses his dad a lot and is waiting to bring all together. The father ends up in a big trouble and the son comes back and helps out with his love filled cash, blood donation etc. The misunderstanding is gone, and the whole family lives happily together ever after.

  5. Abi said...

    Sunil, Anant, Narasimhan, Anon: Thank you all for commenting here.

    Anant and Narasimhan: Just what do you think ails Indian universities? If it is not money, what is it? If it *is* money, where is it going to come from? Certainly not from the government!

    Right now, our current budget provides only for some poor quality of education in our numerous colleges and universities; even then, this education is available only for about 6 % of the relevant population (some 12+ % of higher secondary school graduates). When everyone is sure that more and more people should be able to access college education, and when the government is not willing to put in the required money, we leave it to shady private operators.

    Under these circumstances, doesn't it make sense for those who can stand on their own -- the IITs and IIMs -- to build up a big endowment and save some money for the government to use elsewhere -- for example, starting new institutions?

    About propaganda and other stuff: If a donor makes a gift that doesn't conflict with the institution's mission, I really don't know what is wrong in accepting the gift. If you are worried about the donors trying to peddle their own ideology and stuff, well, I can say that the government under NDA did precisely that, and it was using public money!

    Finally, do you really think our major institutions so short of confidence that when a generous donor comes along, they simply bend over, drop their pants, and show their readiness to be ... spanked? Come on!

  6. Anonymous said...

    In my first comment I did mention that
    lack of money is a problem. My question
    was whether money alone will solve the
    problems [and I provided some garden
    variety examples]. I also emphasized that
    the shortage that we face is one of human
    capital. What are your views on this?
    How shall we attract the best talent into
    academe? To my mind this remains a/the
    burning question.

  7. Abi said...


    Thanks for visiting again and commenting. Sure, the human capital is something that we have a huge shortage of. But, if you think about it, it still takes you back to money. In an earlier post, I spoke about how the unsuccessful faculty applicants to IISc, IITs etc (i.e., research oriented places) don't choose to work anywhere else in India. If they are already abroad, they choose to continue there; if they are in India, either they choose to work in the industry or go abroad. In engineering -- about which I have better knowledge, one would think that they should be willing to go to other places which are lower in the pecking order. And, they certainly would, if only the difference between the top-tier institutions and the next level is small. Everyone knows that it is HUGE, in perception as well as reality.

    IMO, places like NIT's should be spruced up not only with more research infrastructure, but also governance structures. Thankfully, they have begun, but I feel the progress has been very slow.

    It is almost a tautology to say that academically oriented people's first choice would be to stay in academics, other things being equal. But, we know that other things are not equal; and IMO, money is the main issue, and as academics, we cannot afford to shy away from dealing with this issue.

    It is easy for us to say the government should provide all the necessary funds. Well, it's not going to happen. There are other more pressing priorities (such as -- sigh! -- developing weopons technology). So, those in academic institutions must seek ways of becoming as independent of government finances as possible. In any case, it is always a good idea to diversify one's revenue sources; you don't have to look deep into the past for bad times -- the period between 1990 and 93 would do!

    I am talking about good institutions whose progress is hampered by lack of funds. Your examples (Ramaiah College and Ambani Univ) belong to a different category; I don't know your specific examples, but there are many entities offering professional courses that seem to exist only as a business. For them, education is a means to making money.

  8. Anonymous said...

    Dear Abi,

    [No need to thank me for visiting. It
    is a pleasure and I hope I will not drag
    it down to the level of sci!]
    Thanks for your comments.
    A couple of clarifications: I have not
    argued that Universities do not need money.
    In this regard, it is a matter of concern
    for me for where the money comes from and
    with what strings (if any) attached. I am
    sure this is a concern for you too as
    you have mentioned in one or another context.
    You have the confidence that our academics
    have the integrity to not be influenced by
    donors, and perhaps the benefit of the doubt
    should be given to them. So let me, for
    the sake of argument, say that I do not
    oppose endowments, although I will not
    suspend my worry about indiscriminate

    All this does not answer the question of
    where is the human capital today in the
    Universities. Perhaps they all deserted
    long ago. For the moment, let us think
    about subjects that do not require very
    intensive capital inputs. Let us not
    think about physics, where a person may
    require NMR, squids, STMs, or material
    scientists who need all sorts of expensive
    state of the art equipment. How about
    the others? What is their excuse for
    not putting out any worthwhile research?
    How about humanities departments? Except
    for a small number of well-established
    Universities, nothing goes on these
    departments: no research, practically no
    teaching. How would giving money to
    these departments help them come out of
    their present state of suspended animation?
    [As a aside, a physics dept. in a major
    University received a grant to invite
    several speakers from the DST's TPSC
    program, along with many other institutions.
    It was found that year after year their
    grant lapsed simply because they could
    not be bothered to invite anybody.]
    There are many other ways in which
    departments can get out of their stupor
    by coming up with creative and attractive
    programs, which cost no money. They could
    offer new electives, offer evening courses,
    etc., etc.. Now all this is general
    academic activity. If the members of
    departments want to do nothing and are
    already so demoralized and feeling so
    hopeless, do you think endowments could
    inspire them? If yes, then I am for it!
    But it must be noted that no one will
    give endowments to completely inactive
    institutions and indifferent administrations.
    What I am trying to say is that individals
    and departments must first try and strive
    to do their best, even with shoe string
    budgets, before they can say that lack of
    money is their real problem.
    Enough said.

    Best regards, Anant