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Concerns raised over corporate cash channelled to Swiss universities

The University of St Gallen campus, as seen in 2019 Keystone / Gian Ehrenzeller

The news that banking giant Credit Suisse is to invest millions in the University of St Gallen has once again raised the thorny issue of private funding and academic independence.

This content was published on June 6, 2021 - 10:00

Credit Suisse and the University of St Gallen (HSG), well known for its business and law studies, announced in March this year that they were entering into a strategic partnership, in which the bank would contribute CHF20 million ($21.6 million) over the next ten years.

This includes CHF10 million towards establishing the HSG Center for Financial Services Innovation, which focuses on “interfaces between finance, management and law” as well as several professorships. 

“In addition to our essential basic public funding, cooperations of this nature with external partners facilitate international research, teaching, and training at HSG at the very highest level,” said university president Bernhard Ehrenzeller in a statementExternal link at the time.

The university was at pains to point out that the partnership with Credit Suisse would not affect the freedom of research and teaching and that this had been enshrined in the contract agreements. And it addedExternal link at a press conference that it was not worriedExternal link about the bank’s woes – Credit Suisse is currently reeling from the financial impact of its exposure to two failed firms including Greensill – affecting HSG’s reputation in this case.

HSG is by no means the only Swiss institution looking further afield for funding – on the same day in March the Swiss Federal institute of Technology Zurich (ETH Zurich) and tech company ABB announcedExternal link they had expanded their partnership into robotics research.

In fact, almost all of Switzerland’s ten universities and two federal institutes of technology have business sponsorship (and other sources of private funding) in some form. And the trend is on the rise.

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Lack of funding options

So why are Swiss universities increasingly looking for alternative funding options? Swiss higher education institutions have a good international reputation and regularly attract students and staff from around the world. But their core funding comes from the cantons or the government and their tuition fees are low.

And therein lies part of the problem. Public funding is no longer sufficient for certain areas of academia, as the HSG itself said when announcing the Credit Suisse tie-up (other sponsors are expected to join in the project later.) Experts addExternal linked that strategic partnerships allow universities more autonomy to set their own priorities.

Lessons learned

HSG has made its contract with Credit Suisse public, and many other Swiss universities have done the same in the name of transparency. This follows the lessons learned after the University of Zurich was obliged to publish its once secret sponsoring contract with UBS in 2013.

The deal between the two, dating from 2012 and worth CHF100 million, put the spotlight on the private funding of state-run universities and the issue of transparency. Since 2019 the university has published a list of third-party donations.

Risks remain

But risks remain says Markus Müller, a public law professor at the University of Bern and one of the original founders of the Zürcher AppellExternal link – an online petition calling for the protection of academic independence established in the wake of the UBS/UZH deal.

It’s not just the obvious risks to research that’s the main problem in cases of sponsorship, he arguesExternal link. It’s also the long-term undermining of the institution’s reputation.

When Credit Suisse, for example, a bank important on the international financial market, makes a substantial financial contribution to a research institution doing research in precisely this area, an impression of dependence is created, he explains. This cannot be dispelled by assurances of independence by the sponsor or the university.

“What is written in contracts is one thing, the impression the public gets is something else. For the credibility of research, the latter is crucial,” Müller told SWI swissinfo.ch via email.

There may well not be enough public money for such research institutions. “But this does not justify raising funds and attracting private sponsors that compromise the integrity of the research area,” Müller said. “In my opinion, there are only two options: either you do without this research facility or you solicit funds that are not ‘toxic’ in the way I mentioned.”

Chances

Others still see “large untapped potential” in the area of sponsoring, to quote part of a title of a 2018 position paperExternal link on the issue by Swiss Business Federation lobby group economiesuisse. Private funding of universities in Switzerland (17% in the graphic below, up from 14%External link in 2013) is still far behind other countries. In Japan, the United States and the United Kingdom, the practice is much more established.

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Key in the debate about independence is having a clear understanding of roles in such business-university deals, said the organisation’s chief economist Rudolf Minsch.

“Private sponsors have to accept that the research outcome cannot be planned and that the researchers are bound by good scientific practice,” he told SWI swissinfo.ch.

“Universities have to accept that their knowledge is important for the innovation in this country which is the basis for our prosperity. The goal is not always to set up a [income-generating technology] spin-off [firm]. Often, a knowledge-transfer or a collaboration with existing firms are more promising.”

(Edited by Virginie Mangin)

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