Aalto University: Aalto University endowment provides EUR 28 million funding to university operations in 2021

During the first half of 2021, Aalto University endowment portfolio return was 10.9%. At the end of June 2021, the average return of the Aalto University endowment portfolio since inception in 2010 was 5.7% per annum and market value of the endowment portfolio was EUR 1293 million.

The Aalto University endowment provides EUR 28 million funding to university operations in 2021. This partially compensates the Ministry of Education and Culture funding cuts made during the past 10 years. These cuts have reduced the university government funding by 50 million euro on an annual level, when comparing the year 2021 funding to the year 2011 funding.

‘EUR 28 million has a significant impact on research and teaching. The amount corresponds to eight percent of the total annual operating budget of the university. It could cover, for example, the activities of 164 professors per year, 176 doctoral degrees or 1330 scientific publications’, says Aalto University’s CFO Marianna Bom.

Donated funds are used both for the long-term development of the university and for immediate operative needs. If desired, donations can be directed towards a specific field of science or professorship.

The Finnish government will capitalize the universities with matching funding
Donations allocated to Aalto University in general are eligible for matching funding despite of the amount of the donation. Instead, a donation allocated to one of Aalto University’s three fields of science must be at least EUR 10 000 in order to be eligible for matching funding. With the matching funding the Finnish government provides additional capital to universities in proportion to the private donations they collect.

The donations to Aalto University can be either capitalizing or expendable. The capitalizing funds and the government’s matching funding increase the university’s endowment.

‘The return on capitalizing funds is used for the university’s long-term development. Only the real annual return is used for education and research. This preserves the value of the donations over time,’ explains Bom.

Donations in expendable funds are used for the university’s short-term needs in a manner agreed upon with the donors. Donations in hybrid funds and the return from them are used to finance professorships for a specified longer period of time. Such donations can be used, for example, to establish a 20-year tenure track professorship.

‘Aalto is constantly striving to develop different opportunities for donors from a wide range of groups to participate in the development of the university. This year, a new donation option will become available. It will allow to donate to the university on a regular basis, such as once a month. We believe that this will be an interesting option for our alumni as well as for other Aalto University friends’ says Teppo Heiskanen, director of advancement and corporate engagement.