Clare Coterill

With total assets of £4bn, the University of Cambridge is Britain’s richest university, and in the top ten richest academic institutions globally. Divided up among the staff and student population of 30,000 people, this results in an  average value of more than £130,000 per head.

As of June 2011, when its most recent financial report was published, the University made £1.25 billion in that year alone. The University’s sources of income fall into several categories. Firstly, the government provides a block grant for teaching and a grant determined by the quality and volume of research. Then student fees, research income, benefactions, donations and investment income from the University’s accumulated endowment and other assets make up the remainder. Together, this produces a combined education and research income of £757m. Additionally, in 2011 the Cambridge 800th Anniversary Campaign raised a total of £1.172 billion in donations.

Further income is also generated from services such as Cambridge Assessment (£274m) and Cambridge University Press (£235m) as well as, increasingly, from the commercialization of intellectual property. With such considerable and varied sources of income, Varsity wants to know why the University of Cambridge still trails other sectors when it comes to paying staff the living wage (see page 9) as well as what actually happens to our tuition fees (see page 4) and why St John’s used to have almost £4 million worth of shares in an arms manufacturer (see page 3).

The discrepancies in how this money is distributed amongst colleges is also a serious issue for students (page 8).

clare coterill

The main investment pool generating endowment and investment income is the Cambridge University Endowment Fund (CUEF). The CUEF is managed on a total return basis, with an investment objective of RPI (retail price index) plus 5.25% in the long term. Colleges and other charities linked with the University are permitted to invest in the CUEF. As of 31 July 2011 the CUEF had a market value of £1,550m (2010: £1,141m) and its investment performance was 16.1% over that year, exceeding the target by more than ten percentage points. The preceding year, the Cambridge fund’s performance was stronger than Harvard’s, the richest university in the world, which achieved an 11 per cent return over the same period between June 2009 and June 2010.

With regards to expenditure, the education and research activities of the University group take the lion’s share, accounting for £793m of the £1,261m spent in total. This resulted in a deficit within this category of £36m. Around three quarters of the total staff costs fall within the University’s education and research activities, with the rest being divided between administrative and service staff. Staff costs comprise 48% of the University’s expenditure.

In recent years the University has started major capital expenditure projects in the form of new buildings. These have been funded by a combination of sources, principally government funding through HEFCE and external donations. Among the projects are the Sainsbury Laboratory which was completed this year, the Alison Richard Building, and further office expansion for Cambridge Assessment. More recently, the University has announced a building project in North West Cambridge. The plans include University housing for letting to staff, market housing for sale and letting, a supermarket and retail units, a hotel, a primary school, and outdoor sports facilities (see page 3). The Council responsible is convinced that the site is necessary to satisfy the “strategic need of the University to provide affordable and high quality housing for post-doctoral research staff and others at the beginning of their careers with the University”.

The University says that it can safely afford the projected capital investment required, and that it should not impair its ability to continue to invest appropriately in academic budgets. Over the next few years the University will have several financial challenges to face. Firstly, governmental funding from HEFCE for undergraduate teaching is being reduced substantially from 2012-13 onwards. This is offset by a corresponding increase in home student tuition fees. Further cuts to government support are, however, possible.

On a more long-term basis, the University is concerned to maintain and develop its research activities, attract the best staff and students, and maintain and renew its facilities. All of these factors affect the funding that can be secured. This dependency on money from charities and foundations that sponsor research will in itself always constitute a certain degree of risk. Additionally, the activities of Cambridge Assessment and the University Press are subject to the pressures of international competition, which has increased significantly over the past few years.

However, the University’s income and expenditure balance remained broadly at break-even in 2010/11 due to the conscientious controlling of all its operating costs. Unforeseen financial surprises aside; it seems that UK’s richest university is still a long way from losing that position.