Trust Issues

Universities struggle to grow their endowment funds as a multitude of regulations and bureaucratic roadblocks keep potential donations and gifts from compounding

- Nabodita Ganguly

In the 1990s, founder of IT giant Infosys NR Narayana Murthy offered IIT Kanpur shares worth ₹8 crore.

Regulations at the time, though, barred equity-based donations. Earlier this year, Murthy said that had the institute accepted and held those shares, they would today be worth nearly ₹2,000 crore, in addition to ₹500 crore in dividends over the past eight years.

This was not an isolated case.

In the early 2000s, a well-known physicist sought to gift 15 acres of land for a new institute at his alma mater, another premier IIT.

But the transfer required a ₹40 crore stamp duty, which the state government refused to waive. Since the law mandates that stamp duty be paid to the state where the land is located, political wrangling between the state and Centre stalled the process. After eight years, the donation was abandoned.

What Murthy and others were attempting was endowment funding—donations of assets or capital intended to provide universities with long-term financial support.

Such funds have existed for centuries in the West. They provide patient, long-duration capital and recycle returns into high-risk R&D. Harvard University, for instance, set up its endowment in the 17th century, making it one of the earliest in the world.

In India, the endowment model is relatively new. It was formally introduced in 2019, when IIT Delhi launched the country's first structured endowment fund with commitments of ₹250 crore from alumni.

In 2022, the Ministry of Education asked central universities to set up endowment funds, run by boards chaired by vice-chancellors, with rules specifying how much could be spent annually.