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Trading and Subsidiary Companies

There has been increasing pressure on higher education institutions in recent years to develop ‘third stream’ funding, in addition to their income derived from teaching and research. Many institutions have developed various trading activities, including:

Academic services (eg short courses, consultancy).
On-campus services (eg bookshops, gift shops, catering).
Social and community services (eg arts centres, sports facilities).
Spin out companies, designed to exploit the intellectual property of staff, perhaps with injections of capital from banks or other investors.
Collaborative arrangements with industries and commercial organisations, eg science parks.
Conference centres (whether building on vacation occupation of student residences or purpose built).
Overseas ventures.

Governors will need to:

Make sure that robust governance arrangements for trading activities are in place to ensure effective risk management, monitoring and control;
Avoid the institution becoming over-reliant on commercial revenue; and
Test that the executive has the necessary skills to support commercial ventures.

It is also important that tax issues are clearly understood. Also the relationship between commercial ventures and the core business of the institution is important and overseas ventures require particular care

The governing bodies of some institutions have set up specialist committees to oversee commercial activities, and some have co-opted external members to provide expertise not already available on the board / council.

See also the section on Commercialisation and Enterprise.

More information [PDF, 45Kb ]

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