Funding for UGC-funded institutions is composed of recurrent grants and capital grants. The former are to support institutions' academic work and related administrative activities. The latter are used to finance major capital works projects and the related detailed design studies, as well as minor campus alterations and improvements works.

• Recurrent Grants

  The bulk of the recurrent grants are disbursed to institutions on a triennial basis to tie in with the academic planning cycle, in the form of block grants to provide institutions with maximum flexibility. Once allocations are approved, institutions have a high degree of freedom in deciding on how the resources are to be put to the best use.

  Determination of the grants is largely based on a methodology developed by the UGC, which comprises four elements: Teaching (about 68%), Research (about 20%), Performance and Role Related (about 10%) and Professional Activity (about 2%). Nevertheless, the UGC also takes into account the special needs of individual institutions and other factors not captured by the funding formula and will introduce extra-formulaic adjustments where required.

• Capital Grants

  Capital projects carried out by institutions are supported by capital grants which are sought from the Administration on an annual basis by way of two avenues, namely the Capital Works Programme, and the Alterations, Additions and Improvements (AA&I) block allocation.

  The two avenues are characterized by a double-approval process through which all projects have first to be vetted by the UGC before the selected ones are put forward to the legislature for the seeking of funds. As regards the Capital Works Programme, there is an additional process for UGC selected projects to be subjected to a competitive selection process by the Administration.