How is Robert Gordon University funded as principal warns of ‘major threat’ to sector?

The principal of Robert Gordon University sounded the alarm over the “major existential threat” facing universities due to severe underfunding.

Steve Olivier warned funding pressures mean all institutions are “feeling the pinch”.

His own university, in Aberdeen, is trying to save millions while a redundancy consultation has put more than 130 jobs at risk.

Meanwhile, the SNP government had to step in to throw Dundee University a potential £15 million lifeline to stay afloat after the crisis-hit university faced a £30m deficit.

The recent troubles turned the spotlight on how these private institutions, which do rely on a large portion of public funding, are funded.

We take a look at RGU’s most recent accounts in 2023-24 to break down exactly where their income of £126.7m came from.

Tuition fees – 41.4%

Tuition fees were narrowly where most of the university’s overall income came from, bringing in £52.4m in total or 41.4%.

However, this represents a decrease of £6.9m, or 11.6%, following two years of significant growth.

The most significant decline was in international fees which suffered a £7.3m or 19.6% decline compared to 2022-23.

Mr Olivier said last year that RGU’s significant financial challenges are in part due to a “steep drop” in foreign students.

It’s understood immigration rule changes, including a ban on international students from bringing dependents to the UK, have made the UK a less attractive education destination.

This trend looks likely to continue as international student numbers fell overall by more than 10% in the first semester of the 2024-25 academic year compared to the first semester of the year previous.

Public cash – 40.8%

The latest available accounts (2023-24) show around 40.8% of RGU’s revenue came from Scottish Funding Council grants, representing around £51.7m. 

Grants are awarded to universities in Scotland using public cash in order to fund Scottish students who pay no tuition fees.

These grants decreased by £0.3m, meaning it cost the university more to educate Scottish students than they received.

The accounts state there has been a “sustained decline” in public funding.

Research grants and contracts – 3.3%

Research grants and contracts accounted for 3.3% of RGU’s income in 2023-24, adding £4.2m to the university’s coffers.

But this has decreased by £0.5m, or 10.4%, compared to the previous year.

The money came from research councils, UK-based charities, the European Commission and the UK Government, as well as a variety of other sources.

In their accounts, the university says it continues to focus on its strategy for research with a “realistic” forecast research income of £4.1m in 2024-25.

Other income – 9.1%

RGU received funds of £11.5m from miscellaneous “other” income during 2023-24, accounting for 9.1% of its turnover.

This represented an increase of £1m compared to the previous year.

Sources of other income include income from the university’s sport facilities, university accommodation and catering.

Investment income – 5%

A total of £6.2m of the university’s income comes from investments which is an increase of £4.1m compared to 2022-23.

This has been generated by increased interest on the North East Scotland Pension Fund of £2.7m.

The remaining £1.4m increase is additional interest income earned from the university’s short-term investments.

Donations and endowments – 0.4%

Finally, £0.5m of donations and endowments made up 0.4% of RGU’s income during 2023-24.

This is a drop of £0.2m when compared to the year before.

Donations can include support from graduates who wish to give back or endowments made after someone dies.