Why invest in teaching and research?

In Finland, the Ministry of Education and Culture finances the universities through state-allocated core funding, which is used for both education and research. However, state funding does not cover all costs. For instance, at Aalto University, the funds from the Ministry of Education and Culture account for less than 60% of the university’s annual expenses. 

The remaining share is funded by various types of project funding, grants from the Academy of Finland, as well as foundations, companies and private donors. 

The relative share of donations will increase each year, as the political wrangling over public funding continues.

What is the impact of donations?

While the state funding keeps our core operations running, we need donations to open new avenues of research and make scientific breakthroughs. For instance, the Aalto University Bioinnovation Center is developing cellulose packaging to replace plastic, and researchers involved in a collaborative effort between engineering geology and art ceramics are looking into the possibilities of using clay as a replacement for concrete. We are also furthering research and technological innovations that allow the development of life-saving smart textiles and digital games to improve national health. Without donations, much would remain undone, unexplored, and undiscovered.

Generally speaking, American universities receive donations from their own alumni, while Finnish (and Swedish) universities get most of their donations from foundations, organisations and companies. When universities discuss donations with these stakeholders, it is also a question of broader societal discussion, shared responsibility and impact.   

Research and teaching need maximum support

As part of their societal impact and networking, Finnish universities want to promote a culture of donating not only among their alumni but also among other private donors. The university offers a wide selection of opportunities for making donations of different sizes depending on the giver’s life situation. 

Naturally, not everyone’s financial situation allows for donating. That said, every donation matters. Aalto University has altogether 100 000 alumni. If each of them donated, say, 10 euros, we would have a total of one million euros in donated funds.

On the Aalto University donation website, you can now choose to donate to Aalto University or to any of its particular areas of education, to Aalto University Junior, to students who have fled the war in Ukraine and have come to study at Aalto, or to exchange studies and promoting the internationalisation of our students.

While we have listed a number of good reasons to give to Aalto University, the answer to the underlying essential question, ‘Why donate’, is that research and teaching need maximum support. Climate change challenges, for instance, can be solved in three ways: through consumption choices, state-level action, and breakthroughs in science and technology. 

Donations support the last item on the list. A donation is an investment in a brighter future.

Why donate to a university that receives tax money?

While fundraising has grown to become a normal part of the everyday life of Finnish universities, giving to universities is sometimes frowned upon: it is considered a new, and possibly unnecessary, American export. Unlike in the United States, the core funding for Finnish universities comes from the state, so why should you donate to a university?

In fact, donating to universities is not a new phenomenon in Finland: Finnish universities have a several funding sources, some of them dating back centuries. Typically, the money from the funds is allocated to a specific purpose and used to disperse grants, for instance.

What is relatively new in modern fundraising is its systematic nature and oversight. Donations are one constituent in the ever-diversifying funding base of universities, which, alongside state funding, includes competitive research funding and business–academia collaboration. 

The different sources of funding together provide a more secure financial basis and secure the long-term work of universities for the benefit of society. New innovations are always the culmination of long-term research; the next generation of business influencers, forerunners in technology, multidisciplinary experts and developers of system-level solutions does not emerge overnight.

A Finnish specialty: state matched-funding scheme for universities

The fundraising of Finnish universities has a special feature that you can only dream of in the United States or elsewhere in the world: the matched-funding scheme of the state. So far, the state has organised three campaigns where it has allocated funds to each university in proportion to the funding they have raised from other sources during a specific campaign period. 

In practice, this means that the government has matched the amount raised by universities with a certain coefficient – donate €50, and the university receives €100 – thus significantly increasing the impact of private donations.

We have currently no information of any future matched-funding schemes.

Tax-deductible donation

When comparing the American and European cultures of giving, it is often said that donating is more popular in the United States, because donations are tax-deductible there. But the same is true in Finland, too: if you donate 850 euros or more per year to any university, your donation is tax-deductible. What is more, you can deduct your donation to Aalto University from taxes you may have to pay in the United States.

Both the state matched-funding scheme and the tax deductibility are exceptional in comparison with other European countries.

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