The news that banking giant Credit Suisse will 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

June 6, 2021 – 10:00 AM

Isobel Leybold Johnson

Credit Suisse and the University of St. Gallen (HSG), well known for their business and legal studies, announced in March this year that they were entering into a strategic partnership, in which the bank would contribute up to $ 20 million. CHF ($ 21.6 million) over the next ten years.

This includes 10 million Swiss francs for the creation of the HSG Center for Financial Services Innovation, which focuses on “interfaces between finance, management and law” as well as several chairs.

“In addition to our essential core public funding, cooperations of this nature with external partners facilitate international research, teaching and training at HSG at the highest level,” said University President Bernhard Ehrenzeller in a statement.External link at the time.

The university insisted that the partnership with Credit Suisse would not affect the freedom of research and teaching and that this had been enshrined in the contractual agreements. And he addedExternal link at a press conference that he was not worriedExternal link on the bank’s woes – Credit Suisse is currently reeling from the financial impact of its exposure to two failed companies, including Greensill – affecting HSG’s reputation in this matter.

HSG is by no means the only Swiss institution to seek funding further – on the same day in March, the Swiss Federal Institute of Technology Zurich (ETH Zurich) and technology company ABB announcedExternal link they had extended their partnership to robotics research.

In fact, almost all of Switzerland’s ten universities and two federal polytechnics benefit from corporate sponsorship (and other sources of private funding) in one form or another. And the trend is on the rise.

Lack of financing options

So why are Swiss universities increasingly looking for other funding options? Swiss universities have a good international reputation and regularly attract students and staff from all over the world. But their core funding comes from the cantons or the government, and their tuition fees are low.

And this is where part of the problem lies. Public funding is no longer sufficient for some areas of academia, as the HSG itself said when announcing the merger with Credit Suisse (other sponsors are expected to join the project later.) Experts addExternal linked that strategic partnerships allow universities more autonomy to establish 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 lessons learned after the University of Zurich was forced to publish its once-secret sponsorship deal with UBS in 2013.

The agreement between the two, dating from 2012 and amounting to 100 million francs, highlighted the private funding of public 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, professor of public law at the University of Bern and one of the founders of the Zürcher AppellExternal link – an online petition calling for the protection of academic independence established as a result of the UBS / UZH agreement.

It’s not just the obvious research risks that are the main problem with sponsorship cases, he says.External link. It is also the long-term degradation of the reputation of the institution.

When Credit Suisse, for example, a major bank in the international financial market, makes a substantial financial contribution to a research institute carrying out research in precisely this area, a feeling of dependence is created, he explains. This cannot be dispelled by assurances of independence from the sponsor or the university.

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

Public funds may not be sufficient for such research institutions. “But that does not justify raising funds and attracting private sponsors who compromise the integrity of the research field,” said Müller. “In my opinion, there are only two options: either you do without this research center, or you seek funds that are not ‘toxic’ as I mentioned.

Odds

Others still see ‘great untapped potential’ in sponsorship, to quote part of a title from a 2018 position paperExternal link on the issue by the pressure group of the Federation of Swiss Businesses economiesuisse. Private funding of universities in Switzerland (17% in the graph below, compared to 14%External link in 2013) is still far behind the other countries. In Japan, the United States and the United Kingdom, the practice is much more established.

The key to the independence debate is to have a clear understanding of the roles in such agreements between companies and universities, said the organization’s chief economist, Rudolf Minsch.

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

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

(Under the direction of Virginie Mangin)