We refer to Mr Tan Boon Huat's letter (NUS should explain why it needs billion-dollar reserves, Aug 22).
The Ministry of Education (MOE) is the largest contributor of funds to the National University of Singapore (NUS), in the form of annual operating grants to subsidise education for students.
In addition, MOE contributes to the endowment funds by matching donations raised by the university. Hence, a significant part of the income from endowed funds goes towards funding operating expenditure for education, and forms part of the education subsidy.
However, activities in a university go way beyond education, including research and entrepreneurship, and overseas exchanges of students and professors. Like many universities, NUS raises funds to support these activities. We also receive many donations to set up private scholarships and bursaries to support deserving students.
For the financial year that ended on March 31 last year, NUS' total funds and reserves stood at $9.5 billion. Of this, $5.9 billion are endowed funds, which means that NUS cannot spend the principal, and can only use the income generated; $0.8 billion are non-endowed donations for specific purposes, and the remainder are accumulated operating surpluses over the years.
For both the endowed and non-endowed donated funds, the large majority of donors specify how the funds are to be used, typically for research, bursaries and scholarships. NUS therefore has no flexibility to change their usage.
To put this explanation in numbers: NUS' endowment target payout is at about 4 per cent per annum. In the financial year that ended on March 31 last year, NUS spent close to $230 million in endowment investment returns and non-endowed donations; 60 per cent was spent on operating expenditure for education and related programmes like overseas exchange, 22 per cent on bursaries and scholarships, and the rest on professorships, research and enterprise.
As we leverage the strong support from Government and our donors, we welcome more community participation in supporting the provision of education for all strata of society. This will allow the generous spirit of self-help demonstrated by our forefathers to be passed on to future generations.
Bernard Tan Cheng Yian (Professor)
Senior Vice-Provost (Undergraduate Education)
National University of Singapore