A new report from the ACU finds that while income diversification is becoming the global norm, the most successful higher education systems are those where governments actively enable universities to build sustainable and resilient funding models.
As governments seek to strengthen economic resilience and drive innovation, universities are under growing pressure to do more with less. The new ACU report, Alternative Higher Education Financing: Global Trends and Commonwealth Policy Insights, examines how universities across the Commonwealth are responding to growing financial pressures by developing new funding models that complement, rather than replace, public investment.
Drawing on evidence from 152 academic studies, international reports and government policy documents across the Commonwealth and beyond, the report identifies the policy conditions that enable universities to diversify income while protecting equity, quality and public trust.
Commissioned by the ACU Higher Education Taskforce's Finance and Funding Working Group, the report builds on the Working Group's earlier collaboration with London Economics, which demonstrated that increasing tertiary education attainment by just one percentage point could increase Commonwealth GDP by an estimated US$28 billion by 2029.
Together, the two studies present a compelling message: investing in higher education delivers significant economic returns, while smarter funding frameworks can help universities become more financially resilient and better equipped to support national development.
Combining financing models for financial sustainability
Rather than advocating a single financing model, the report concludes that successful higher education systems increasingly combine sustained public investment with a diverse mix of funding sources, enabled through government policy. It highlights examples from across the Commonwealth and internationally, including public-private partnerships, executive education, research commercialisation, philanthropy, transnational education, shared services and innovation funding, alongside fiscal measures such as tax incentives, matched funding schemes and performance-based funding.
The role of governments as strategic enablers
The review also finds that governments play a critical role not only as funders, but as strategic enablers. While universities are increasingly diversifying their income, success depends heavily on supportive policy environments, regulatory flexibility and targeted incentives that encourage collaboration with industry, philanthropy and development partners.
Safeguarding access while strengthening resilience
At the same time, the report cautions against viewing diversification as a substitute for public investment. Over-reliance on tuition fees or other individual funding mechanisms can increase inequity and place greater financial pressure on students unless accompanied by robust financial aid systems. Instead, diversification should be seen as part of a broader strategy that strengthens institutional resilience while safeguarding access and affordability.
Equipping universities to support national economic priorities
The report also identifies significant opportunities for governments to better align higher education funding with wider economic priorities, including industrial strategy, workforce development, digital transformation, climate resilience and innovation. It argues that closer coordination between ministries responsible for education, finance, industry and innovation will be essential if universities are to fulfil their potential as engines of national growth and resilience.
The aim of the ACU Finance and Funding Working Group, which brings together higher education leaders from across the Commonwealth, was to examine through this report the implications for future policy and identify practical examples of successful funding innovation from different national contexts. The findings will inform the Working Group's ongoing engagement with Commonwealth governments and contribute to discussions ahead of future Commonwealth ministerial meetings and the Commonwealth Heads of Government Meeting (CHOGM)