The UK has long been known for offering world-class higher education, but with their endowments being dwarfed by those of US institutions, many worry that British universities will not be able to hold their own for long.

Endowments have traditionally been provided for by donations and fundraising, and are used to buy resources, provide bursaries and fund research. While the government did acknowledge the importance of endowments in 2004 by launching a £7.5m fund matching scheme to help increase them, more recent budget cuts have had the opposite effect, with the University of Cambridge now receiving just one third of its funding from the government. In 2011, public expenditure on higher education for the UK was down to 1.2% GDP.

As a result, Britain is increasingly disadvantaged on a competitive level. American universities have substantially greater endowments, with more than 60 US university endowments valued at $1bn or more. In the UK, only Oxford and Cambridge have endowments of the same value. This means that, while American tuition fees are higher, with a Harvard education costing over $52,000 in the academic year of 2012-2013, there is also significant financial aid, and many students only pay around $18,000. Harvard also has a policy of free admission to all students from families earning less than $65,000.

This endowment gap poses significant problems for the UK. British universities have suffered for many years from underfunding and low alumni donations compared to their American counterparts, but the difference now threatens the universities’s standing in the academic world. Stephen Blyth, a British-born Harvard academic, reported to the Telegraph in 2013 that there were only 15 British students enrolled when he arrived at the institution in 1992. In 2013, the number had more than quadrupled. He claimed that Britain is losing its brightest students to better-funded universities abroad, potentially resulting in their permanent emigration and a British brain-drain. Furthermore, America is also becoming increasingly popular with international students who might once have opted for British universities.

Is there any way of halting this trend? Blyth suggests that universities must change their relationships with alumni to increase the donations culture, but some institutions are finding new methods of fundraising. Oxford Brookes staff told the Times Higher Education that they sought to be self-sustaining rather than rely on endowments, investing and cost-cutting to raise money. In 2009, our own Trinity College invested $24m on a 999-year, 32-acre lease of land in London, estimated to return 7% annually, and Trinity Hall have taken the radical move of entering the world of banking, buying a 50% stake in Cambridge & Counties Bank’s assets in the hope of significant returns.

Government cuts combined with fierce competition across the Atlantic threaten the world-class status of UK universities, and highlight the pressing need to obtain funding. Where the most talented staff and students once gravitated to institutions like Oxford and Cambridge without even considering the alternatives, it cannot be assumed that this will always be the case. As Professor Sir Leszek Borysiewicz said in an address given in October 2012, “As members of the University of Cambridge, we […] are in a global competition of Olympic proportions”.