July 20, 2016
Regarding Brexit, the messages from Graham-Pelton so far are essentially to keep calm and carry on fundraising. If I were still a University Financial Director, what would I be thinking and doing right now? We FDs are naturally a cautious bunch who are trained to always take the glass-half-empty approach. There is still precious little real information and data emerging from Brexit and it will take years, if not decades, for the impact to be really measured.
A number of immediate questions have arisen around the status of EU students and staff, and quite rightly the messages from the government and other bodies such as Universities UK have been that nothing has changed at all as yet. Some of the financial impacts of Brexit will be direct (for example, if the status of EU students is changed in the future) and some will be indirect (for example, the impact on the economy and hence the levels of funding).
In that scenario, the default position of many FDs will be to assume the worst and recommend caution in setting budgets and long-term plans. The financial sustainability of Universities is paramount and was already a hot topic before the referendum. This is, possibly, one of those rainy days for which Universities should have been building up reserves and cash to weather.
If you do find that financial constraints are introduced, then is there anything that you can do to protect your budget or even get increased investment? It will be the natural assumption that corporates, individuals, and trusts will be less inclined to invest, but the evidence does not support that. Nevertheless, there may be genuine constraints which can be countered by arguments such as:
- Consistent long-term investment in fundraising delivers results.
- Other sources of funding are less certain/predictable at the moment.
- Overseas funders will see greater value from their gifts with a weak pound.
The danger at this very early stage is over-interpretation of each item of information as it emerges. The markets have recovered from their dip, the drop in the value of the pound was not nearly as bad as had been predicted, and the base rate has not been further cut. The Department for Business, Innovation & Skills is to be disbanded, Higher Education moves to the Department for Education, but hours later, we learn we still have the same minister for Universities and Science.
All of this uncertainty and possible resultant caution indicates to me that this is a time to re-double fundraising efforts and, especially, to push forward the message that the UK is a worldwide leader in Higher Education.
-Melvyn Keen, Senior Counsel