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Universities across Europe are facing a challenging and complex financial situation in which traditional modes of funding have been transformed and continue to evolve.

Alternating quantitative and qualitative data analysis, the Public Funding Observatory series has been monitoring the evolution of public funding and sector expectations for over a decade. In its latest editions, the Observatory detected widespread concerns over rising inflation levels and possible austerity measures in some European countries. European funding, such as NextGenerationEU, was outlined as a relevant scheme to support universities in becoming more digital, green and sustainable. 

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In a context of constraint and competition for public resources, funding efficiency and accountability of public spending are highly important. Linking public funding to institutional performance is an idea that often features in discussions on university funding policy at both the national and European level. Policy makers often see performance-based funding as a useful tool in connecting funding to measurable indicators.

 The DEFINE project explored strategies for efficient funding of universities in Europe, and revealed that expectations towards performance-based funding are often too high and concluded that this funding mechanism should be used with caution and considered in the wider context. 

In 2022, EUA updated this work, focusing on the main mechanisms used to determine block grants received by universities, including the types of indicators used by public authorities currently or in upcoming reforms. 

Considering the constant activity around funding models in the past years, discussions focused on funding mechanisms and tools rather than objectives, and recurring questions around the “ideal” funding model, EUA found it necessary to lay out basic principles for the design of sound funding models.

The European funding landscape has become increasingly complex, driven by policy goals in different areas such as green and digital transformation. EUA strongly advocates for building synergies between European funding and promotes a holistic approach to the wider funding ecosystem, with greater alignment between EU and national funding programmes.

Universities need sustainable, simple and reliable public funding, delivered in the most efficient possible ways. EUA’s vision is one of meaningful simplification of funding rules based on a broader acceptance of national and institutional accounting practices, greater compatibility of national auditing practices and integration of audits by national funding agencies into EU reporting. The European Universities initiative also poses questions on their long-term financial sustainability.

EUA’s work has shown that actors interpret efficiency in different ways, but efficiency, effectiveness and value for money are intertwined and equally important for the complex mission of universities.

The USTREAM project concluded that efficiency is the collective responsibility of all higher education stakeholders. Efficient and effective universities and frameworks can only be achieved through continuous policy dialogue and the joint action of policy makers, universities and their networks.

Recent EUA studies have analysed the question of funding for greening university operations and have underlined the crucial role of leadership in steering institutional transformation, which include a strong financial dimension. 

EUA has also helped a university funding community emerge at European level, including university leaders and senior managers, funders and partners, through the rolling out of different member-oriented activities such as its recurring Funding Forum. This biannual event is a unique platform where stakeholders can discuss trends in university funding at a strategic level.

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