Finance crisis: IITs fear dip in endowment funds

In August this year, the founder of Symphony Group, Romesh Wadhwani, gifted his alma mater -- the Indian Institute of Technology-Bombay (IIT-B) -- $ 5 million (around Rs 25 crore or Rs 250 million) for a bio-science centre. The feeling among the IITs then was that Indian institutes were slowly on their way to creating a significant endowment fund like their counterparts in the US.

Less than two months later, the global economic slowdown has made institutes wary of a possible cut-back on endowment funds.

"Funds received from alumni and companies are usually meant for specific projects. These funds pour in between October and December every year. Current projects will not be affected despite the economic slowdown, but new projects might take a hit," said T K Ghosal, deputy registrar (finance), the Indian Institute of Technology-Kharagpur.

IIT-Kanpur, which receives Rs 5 crore (Rs 500 million) to Rs 6 crore (Rs 600 million) through endowment funds every year, expects a similar slowdown. "Unlike every year, the October-December quarter could see a 5 to 10 per cent fall in funds from abroad," admitted Mohammad Shakeel, assistant registrar, IIT-Kanpur.

The chief concern is that companies from the US have been major contributors to endowment funds. For instance, around 5,000 of the 23,000 alumni from IIT-Kanpur are based abroad, most of them in the US. Around 1,000 projects are running at IIT-Kanpur on the funds received. Shakeel added that while funds from alumni based in India will continue to flow for some time, funds from alumni and corporations, especially those from software and finance companies abroad, might have second thoughts.

Although the IITs and some of the Indian Institutes of Management receive annual funds from the HRD ministry for their functioning, the institutes have recently begun canvassing corporate houses and alumni aggressively. Not only do the funds serve the purpose of expansion, they help institutes like the IIMs maintain financial autonomy.

IITs and IIMs typically utilise endowment funds towards student scholarships, infrastructure and technology upgrades, research chairs and labs and sponsoring students and faculty for conferences abroad. An official of IIT-Guwahati said the institute had utilised funds from corporate houses to sponsor faculty for presentation of research papers in conferences abroad. In the absence of corporate support, the institutes will now have to dip into their corpus.

IIT-Madras is learnt to have received around Rs 60 crore (Rs 600 million) so far from corporate and alumni donations as its endowment fund, which has been utilised to set up various technology centres.

Bhaskar Ramamurthi, dean of planning at the institute, pointed out that with the government funds far outnumbering those from private sources, IITs would not face a cash crunch like that in universities in the US. Indian institutes are likely see a fall in endowment funding for the next year or two, he added.

The IIMs, meanwhile, aren't all that perturbed by reduction in endowment funds. Samir Barua, director of IIM-Ahmedabad, said since the IIMs function through government grants, corpus funds and fees from their programmes, the institutes do not depend on endowment funds. Shobha Mishra, joint director and team leader for education and health at Federation of Indian Chambers of Commerce and Industry, said the effect of global slowdown will be restricted to premier institutes like IITs only.

"Endowment funds are less prominent in a country like India unlike western countries. They might be affected at select institutes like IITs, especially those funds coming from the finance and IT sectors. For the overall education sector it will not make much difference since it mostly depends on government grants and tuition fees," she added.