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Diversifying Funding Sources for Higher Education, 5th Matching Grant Scheme launched
(08-07-2010)

In November 2002, the Government accepted the UGC's recommendation in the "Higher Education Review" that the funding source for higher education should be diversified by strengthening the fund-raising capability of institutions. The institutions would be in a better position to fulfil their strategic roles and compete at the international level. From 2003 to 2009, the Administration launched four rounds of Matching Grant Scheme (MGS) each of $1 billion. The first three rounds were open to the eight UGC-funded institutions, while the fourth also included two self-financing universities, namely Open University of Hong Kong (OUHK) and Hong Kong Shue Yan University (HKSYU). About $10.8 billion, comprising around $3.9 billion of government matching grants and some $6.9 billion of private donations, was secured in the four rounds of MGS. The UGC has reviewed the effectiveness of the scheme; and come to a view that, in light of the wide diversity of donation sources and channels, the MGS encouraged the community to be more generous in supporting the tertiary institutions and fostered the emergence of a philanthropic culture.

Support transitioning into a knowledge-based economy

Given the positive and encouraging results of the MGS, the UGC and the Administration see merits in providing further support to institutions' fund-raising endeavours, so as to keep up the momentum of the philanthropy cultivated by the Schemes. Therefore an allocation of a further $1 billion was proposed in the Budget 2010-11 and was approved by LegCo to launch the Fifth MGS.

The Chief Executive has laid down in his 2009 Policy Address the policy objective of developing education services. The objective is to enhance Hong Kong's status as a regional education hub and nurture talents for other industries, with a view to boosting our competitiveness and facilitating our long term development. One of the important tasks in this process is to diversify the higher education sector, which will benefit our school leavers by providing them with more education opportunities and a wider range of choices. Apart from the existing support schemes (such as Land Grant Scheme, Start-up Loan Scheme and Quality Enhancement Grant Scheme) for the self-financing higher education sector, we consider that extending the MGS to non-UGC-funded degree-awarding institutions can diversify their funding source and also enhance the development of higher education to buttress Hong Kong's position for transition into a knowledge-based economy. Therefore, apart from the eight UGC-funded institutions, OUHK and SYU, this new round will also include two other degree-awarding institutions, namely the Hong Kong Academy for Performing Arts funded by the Home Affairs Bureau, and the self-financing Chu Hai College of Higher Education.

Match on a first-come, first-served basis

The Fifth round adopts essentially the same basic principles and conditions of the Fourth MGS and again invites the UGC to administer the Scheme. The Scheme started on 1 June this year and will end on 15 March next year. The matching grant is disbursed on a dollar-for-dollar matching basis up to the "floor" amount of $45 million, beyond which $1 is granted for every $2 donation, up to a ceiling of $220 million of grant on a first-come-first-served basis. The "floor" amount has been set aside for matching by each institution, as a guaranteed minimum in the first nine months after the Scheme was open for application. By the end of the nine-month period, "unmatched" funding under each institution's guaranteed minimum will be opened up for application by all institutions which is also based on the first-come-first-served principle.

A rich philanthropic culture is evident in most advanced education systems around the world. In order to take forward their strategic development plan, many prestigious universities and institutions have shifted their funding reliance from government to non-government sources, of which private donations contribute a good share. The UGC looks forward to the generous support from the community to this new round of MGS, thereby further deepening the philanthropic culture in Hong Kong, and sustaining a stable source of additional funding for institutions, for supporting their long-term strategic development built upon their respective roles and areas of strength.

The Hon Laura M.Cha, GBS, JP
Chairman, University Grants Committee