Budgeting at the institutional level: responding to internal pressures and external opportunities

Just like any organisation in a private enterprise economy, universities and other institutions of higher education have to obtain a certain share of the GDP in order to survive. By exchanging educational and research services for resources from the rest of the community, these organisations earn their income. This income takes on several forms: block grants from the government, specific government grants, revenues from investments, sale of educational and research services, and income from charity (OECD 1990: 10). Here a first (superficial) comparison with profit-oriented business organisations would end, since in most countries income earned directly from the market does not play a dominant role in university funding. Most higher education institutions depend substantially upon contributions from public funds, that is, upon the share of tax revenues allocated to them by government. One could maintain, however, that universities and colleges in this respect compete for public money with each other, and with other fields of expenditure, and operate, too, upon a market in which representatives of the general public spend funds on academic services. Hence, universities and colleges are in a position that does not differ substantially from that of autonomous business organisations in a private enterprise economy. To secure their budget they have to compete and react to claims and conditions laid upon them, not just by government.