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VSNU

Funding

In university funding, three flows of funding (geldstromen) are distinguished, defined by their origin. The first flow concerns direct government funding, the second consists of research project funding awarded by Dutch research councils NWO and KNAW, and the third is money coming from third parties, both public and private (such as companies, the EU etc.).

Three flows of funding

The first flow, government funding, is a lump sum payment by the Dutch Ministry of Education, Culture and Science (in the case of Wageningen University and Research Centre by the Dutch Ministry of Economic Affairs, Agriculture and Innovation). The universities are free to decide how to spend that money. The first flow is divided into a part for teaching and a part for research. The part for teaching is based on the number of diplomas which a university awards per year. The VSNU is currently negotiating with the Ministry of Education, Culture and Science to base the teaching part of funding not only on the number of diplomas, but also on enrolment. The research part of the first flow constitutes the largest part of research funding – about 60% of all research funding (1647,8 million euros in 2007) – and its only structural basis.

Money coming in via the second and third flows – together accounting for 40% of university funding for research, the second flow being about half the size of the third – consists of temporary funds. Moreover, tuition fees form a small source of teaching-related income of the universities. It is a matter of debate whether tuition fees belong the first or third flow of funding.

The VSNU estimates that the budget of the Dutch research universities amounts to about 5.7 billion euros in 2010. The first flow accounts for 1.7 billion euros for research and 1.6 billion euros for teaching and learning. Student fees amount to 0.4 billion euros, funding by the Dutch research council (NWO) to 0.3 billion euros and other sources, including private funding, to 1.7 billion euros.

"Matching" and the first and second flows

Research project funding, that is money belonging to the second flow of money, is allocated on a competitive basis by the Dutch research councils to individual researchers and research projects. Such research projects have to be co-financed by the universities at which the researchers are employed. For every euro coming in via the second flow of money, universities have to invest 84 cents of first flow money (see the Dutch-language report “De prijs van succes” by the Advisory Council for Science and Technology Policy). This process is called “matching”, and it gives rise to the paradoxical situation that universities which are particularly successful in competing for second flow research funding are also faced with a higher financial strain.

In 2007, the Dutch government decided to transfer 100 million euros from the first to the second flow, thus reducing the structural funding of universities in favour of extended funding for research projects. However, the cut in their structural funding is not the only financial strain under which the transfer puts the universities. More money for the second flow also means more need for “matching”, that is, even more money of the (reduced) first flow money needs to be spent on co-financing research funding.

After consultation with the universities, the minister of Education, Culture and Science has made three concessions. First, there will be no extra “matching” for the 100 million euros which will be transferred from the first to the second stream; second, the transfer will proceed in steps of about 25 million euros each; and third, there will be extra money for certain parts of the first flow.