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63rd IFLA General Conference - Conference Programme and Proceedings - August 31- September 5, 1997

Creative Financing of Academic Libraries in the Next Century

Hannelore B. Rader,
University Librarian
University of Louisville
Louisville, Kentucky, U.S.


University libraries in many countries are facing major funding problems due to a variety of reasons such as non-growing or even decreasing appropriations from their university administration and other funding agencies, continuing inflationary increases for journals and library materials, needs for new or improved facilities, increased costs for new technologies and networks and more demands for services. Yet library administrators on the other hand are expected to improve services and facilities, offer the latest electronic information in an-up-to-date network environment and provide the best teaching and research support for all academic programs. To address these funding problems, library administrators need to find ways to supplement their budgets through existing as well as new creative external funding strategies including grants, fund-raising, resource sharing, contracting, fees and others.



For almost a century research and university libraries have served as the major mechanism for organizing and disseminating published information. Economic changes and technical developments are substantially affecting the funding of academic libraries in all countries. The complexity and costs of operating university and research libraries have increased substantially during the last three decades. Better analysis of cost trends and performance measurements in academic libraries are quickly becoming requirements to allow for better planning and to provide satisfactory rationale for obtaining adequate funding. [1]

Funding for university and research libraries has become increasingly problematic and competitive during the last part of the 20th century. Academic libraries manage, collect and provide access to an ever-growing arsenal of information for an increasing number of users in an environment of growing financial constraints. Libraries employ highly trained and educated staff, need complex facilities and sophisticated electronic technologies in order to operate successfully. The economic issues facing libraries in the 1990s and beyond are complex, and new approaches are needed to address academic libraries’ financial dilemmas.

Current Financial Environment for Academic Libraries

Library budgets for university libraries around the world have become inadequate during this decade due to the influence of electronic information, new technologies, increasing costs for library materials and governmental funding restrictions as needs for social service programs increase. The following examples illustrate this.

In 1992 after unification of the two Germanies the Wissenschaftsrat accepted standards for German university library budgets, specifying that collection building in university libraries “ensures the supply of literature for universities.” Unfortunately, recommended standards and reality are miles apart due the incredible inflationary increases of library materials, the enormous need for collection development in the former East Germany and the need for new electronic materials. [2]

In Great Britain budget allocations for university libraries are being revised from a historic base line with periodic increases and a recommended standard for libraries of up to 6% of the university budget and allocation formulas, to an experimental process of “top slicing.” This would mean that the central university administration would fund central services including libraries in the range of 36% to 40%. Other parts of the funding would have to come from academic departments based on their particular library needs. The only certainty in this scenario is that budgeting for libraries will change. [3]

Australian university libraries are facing funding problems due to transformations occurring in the universities, the growth and continuing inflationary costs of scholarly publications, technology and increasing needs and demands from users. Library budgets currently range from 2.9% to 5.8% of their universities’ budgets. To contain costs and expand information access to their constituents, Australian academic libraries are utilizing CAUL (Council of Australian University Librarians) to share resources, particularly database access, networks, document delivery and electronic publications. [4]

In the United States funding models for academic libraries vary greatly, depending on whether the institution is private or public, a particular state’s budgetary regulations and funding formulas for higher education, and the overall budgetary situation of each university. The Association of College and Research Libraries (ACRL) Standards for College Libraries (1995) advocates that academic libraries “shall be at least six percent of the total institutional expenditure for educational and general purposes.” [5] Few academic libraries are funded at that level.

Usually, academic library budgets are allocated by the central university administration based on historic formulas or outdated needs, and libraries follow their institutional policies and mandates regarding budgets. Occasionally, an institution provides funding for its library through individual colleges and departments instead of centrally setting the library budget. In that case each department or university unit decides whether or not to fund the library each year based on satisfactory library service as well as need.

Based on the latest available U. S. statistics (1992), major components of the basic academic library budgets are the personnel budget (50%-60%), the serial budget (17.5%), the book budget (11.5%) while only a small part (10%-20%) is devoted to building maintenance, automation/systems and equipment. Academic library budgets in the United States have not grown enough during the last three decades to accommodate the annual inflation costs for library materials of 10% to 15%. This has resulted in smaller collection growths, although in 1991 the total number of volumes held in all academic libraries in the United States was about 749 million. [6]


Continuous inflationary cost increases of 10-15% for journals during the past decade have resulted in many cancellations of serial titles across the nation, increases in interlibrary loans, fewer book acquisitions and a shifting of funds from the book budgets to the serial budgets. During the last two decades materials budgets have generally shifted from a 50:50 ratio of books and journals to a 40:60 ratio and in extreme cases, even to a 20:80 ratio of books and journals. As libraries move into the Internet environment it is predicted that academic library budgets for materials will shift to a 30:30:40 ratio for access, serials and books. Rethinking library practices based on changing economic trends and growing competition will become a necessity for all academic libraries. Becoming involved in the digitalization of most print formats will become the way of the future for most academic libraries and will mandate changes in budgeting.


User demands for traditional and new library services have been growing during this decade. Electronic access to library materials through the World Wide Web and other networks has increased demands for document delivery each year. Users want more materials, faster and more conveniently. Demand for help with access problems, reference and technology issues, both locally and remotely, continue to grow at an exponential rate. The need for training and teaching of users has also grown immensely and continues to do so. User demands for more and better services have resulted in the need for more library personnel, increased staff training and development and updated technology. A new philosophy of service is emerging with a focus on library users, students and faculty, and their specific information needs. As higher education begins a rethinking process in terms of the learning society and contributions to economic development and growth in each country, libraries will need to become more involved in defining their new and important roles in this new environment.

Changes Affecting Library Budgets

As pointed out, tighter and more restricted funding from government agencies for universities has resulted in steady budgets or even budget reductions. At a time when academic libraries are in dire need of additional funding to balance print and electronic information, update technology regularly, provide more and better access to and delivery of information, hire more and better prepared staff, and provide much needed information literacy training for the campus population, they are faced with serious budget dilemmas.


Obtaining grants, whether from governmental or private sources, is an excellent method to supplement the academic library’s funding needs. Some libraries maintain their own grants personnel to write grant proposals on a regular basis. Others partner with university research and grant writing personnel to obtain grant funding. Grants can be especially helpful when the library partners with other type of libraries or groups outside the university environment for resource and information sharing as well as training.

Creative Ways to Raise Funds

Libraries can adopt various fund-raising strategies. They can do it as part of their own institution’s fund-raising efforts such as a special capital campaign. They can share fund-raising work with the University Development Office, create a position of their own or hire an outside firm to do it for them. They need to have a good financial plan for fund-raising, clear goals and a practical time table to succeed. [7] Libraries can take advantage of a variety of fund-raising ideas to raise additional resources. These include but are not limited to:

Annual Giving
for which various groups or individuals, alumni, friends, parents, students, staff, and faculty are solicited.

Major Gifts
constitute about 80% of the funds raised by libraries and are given out of principal assets rather than income.

Principal Gifts
result from long-term nurturing relationships with individuals who will give part of their lifetime resources through a direct or deferred gift program.

Corporate and Foundation Giving
requires work with corporation and foundations to obtain large gifts for the library.

Planned Giving
includes bequests, real estate, life insurance policies, investment portfolios and personal property and is a long-term commitment.

Examples of innovative fund-raising campaigns include working with university athletic departments to raise funds for libraries as is currently done at the University of Nevada with the basketball team, and at the University of Louisville with the football coach.

At North Carolina State University part of new increases in student tuition is allocated to the library. At the University of North Carolina/Chapel Hill students are taxing themselves at $2.50 per semester to build the Student Endowed Library Fund. In some universities students are assessed specific library fees per semester and/or per credit hour, or they pay a technology fee of which the academic library receives a percentage.

Another innovative idea is being tested at Louisiana State University where the state government allocated over $2 million in bond proceeds to the university for library materials purchases. [8]

At Cornell University the library is experimenting with pooled endowments to fund research periodicals in an innovative manner and to combine small endowment accounts into one large account for easier management. Donors are recognized in the online catalog for their gifts. [9] This creative approach to using endowments could have much merit particularly in smaller institutions.

In 1993 Georgia’s university system created the Equipment, Technology and Construction Trust Fund with the help of the Governor and the General Assembly with proceeds from the state lottery. This fund helps with the purchase of equipment for classroom and high-technology research, as well as the building and equipping of technology related facilities to strengthen program quality. To qualify for these funds institutions must match the amount of money requested with an equal amount generated from private fund-raising. [10]

Friends groups can be successful fund-raising mechanisms in academic libraries, an excellent example of which can be found at the University of Mississippi. Although founded in 1940, a reorganization in 1983 required dues and moved them into fund-raising. At this time they have an endowment of $75,000 and gifts of $200,000. Fund-raising activities include special parties, auctions and other creative events. [11]

The Connecticut legislature passed what is known as Ucom2000 in 1994-95 to give the University of Connecticut bonding authority to raise almost $1billion over the next ten years. This will be a welcome funding aid since state support for the university has decreased by 40% during the last five years. Library needs are included in this innovative plan for which fund-raising has begun. [12]

Successful fund-raising is based on several key factors as outlined by two experienced librarians at Ohio University where $9 million was raised in support of the library. [13] These factors include:

Stating the library’s goals and financial situation;

  1. selecting the best team for fund-raising;
  2. identifying potential donors;
  3. understanding the cost of fund-raising;
  4. building relationships;
  5. patience;
  6. giving personally and obtaining gifts from staff, and
  7. fostering dynamic relationships with donors in the future.

Resource sharing

A very effective and creative method to stretch academic library budgets is resource sharing. Libraries in the United States have been cooperating with one another for many years but the extent of resource sharing needed at this time and in the future surpasses everything librarians have done previously in this regard. Now libraries are cooperating state-wide, regionally and nationally in new and creative group activities. There are consortia for types of libraries, research libraries, different types of libraries, and for a variety of specific purposes.

OhioLINK in Ohio is an interesting example of innovative resource sharing among academic libraries in one state. Supported by state funding amounting to approximately $18 million a year, OhioLINK now includes more than 50 public and private libraries and the state library. Sharing an integrated automation system (Innovative Interfaces) has enabled them to build a database of more than 7 million items, accessible to all participants through an efficient and effective state-wide physical document delivery system. OhioLINK libraries also share full-text and bibliographic electronic databases, training, networks, cataloging and many other collection and service programs. Library users appreciate OhioLINK’s quick, effective document access and delivery. The state of Ohio is building similar library networks for public and school libraries with the goal of future cooperation between all these library networks.


Academic libraries are facing major competition for funding from other university units as well as information providers and companies. This is very new to academic libraries and they have limited experience to help them cope well with this situation. In addition to computing services on campus, libraries are faced with global competition from the Internet, Microsoft and other similar information providers.

A number of companies in the nation are now offering an array of possibilities to outsource such operations as cataloging, processing, acquisition. However, most academic libraries are not yet ready to take advantage of such services. They have not assessed the exact costs for most of their operations and services to help them decide when outsourcing is most economical and they have not yet concluded which operations and services to discontinue as new ones are demanded. Most academic libraries are just beginning to rethink and reengineer their operations and services so they can take advantage of available outsourcing services. [14] Once academic libraries assess the costs of their services and operation they will be able to reallocate resources and take advantage of outsourcing as well as insourcing and contracts.

Fee-based services

Fee-based information services have been in existence for many years. Special libraries have utilized them regularly. Likewise, several universities, among them the University of Michigan, the University of Minnesota, Arizona State University, Purdue University and others, for years have charged fees for special business and private clients. These services are based on quick and excellent information retrieval and customized research. In some cases, they generate enough funding to cover the cost for such an operation within an academic library. [15] Establishing a successful fee-based operation within an academic library takes professional planning, needs assessment, marketing, and good business sense and practice. [16]

Fee-based services can also contribute to corporate giving. If the customers are satisfied and the librarians work successfully with the Development Office on campus, new resources for the library may be obtained from corporate and other business sources which have been satisfied customers.


Academic libraries can build good partnerships with other units at the university such as computer centers, multi-media operations, publishing operations and bookstores to achieve cost savings for equipment, technology, licensing fees, information productions and others.

Libraries can also form partnerships with businesses on a contractual basis for information provision, specialized research or library operations. Some academic libraries manage business, governmental or museum libraries under special contracts with a particular business or a museum or a governmental agency. The academic library involved usually runs such an operation on a completely separate basis and receives some type of overhead compensation for it. This is another way to begin fund-raising with such groups.

University libraries can also form partnerships with other types of libraries such as public and school libraries to improve information provision in a given community. Special funding in the form of grants are usually available for such partnerships.

The Future

Some library leaders maintain that the digital libraries of the future will be substantially different. They may be physically much smaller and have fewer staff. Shelving of materials could become an activity of the past. Access to information will be purchased on a per-use basis, such as chapters in books, articles in journals, lines in reference works and other pieces of information as needed. Scholarly communication will change greatly as will publishing in the digital library environment. The network will be both the library and the university where students and faculty learn and teach and find information for teaching and research. There will be virtual catalogs, virtual collections, virtual faculty and virtual students. Future funding models for libraries in such an environment will change substantially as they become based on a per use factor.

However, budgets for academic libraries will continue to need increases as information in print and digital formats continues to be balanced, preserved, organized and made accessible in an environment of licensing and copyright regulations.

Entrepreneurial librarians will be much in demand in the future just as corporate entrepreneurs have always been in demand. Librarians need to have visions, ideas and courage to experiment with new and creative ways to fund their libraries. They need to be less territorial and realize that staff will be a most important resource.


  1. Cummings, Martin M. The Economics of Research Libraries . Washington, D.C.: Council on Library Resources, 1986, 123-124.

  2. Griebel, Rolf. ”German University Library Budgets - Model and Reality.” Library Management 16 (1995): 3-8.

  3. Hall, J.T.D. “New Methods of Top-Slicing.” British Journal of Academic Librarianship 7 (1992: 9-15.

  4. Choate, Ray. “Library Support for Research: The View from Australia.” IATUL Proceedings , New Series 4 (1995): 93-100.

  5. “Standards for College Libraries, 1995 Edition,” College and Research Libraries News 56 (April 1995): 255.

  6. Bowker Annual 1996 . New Providence, N.J.: R.J. Bowker, 1996, 449-450.

  7. Library Fund-Raising. Vital March for Excellence , ed. By Sul Lee. Ann Arbor, MI: Pierian Press, 1984, 47.

  8. Wilder, Stanley. “Louisiana’s Gift Horse: Funding Library Acquisitions with Bond Money.” Journal of Academic Librarianship 19 (1993):78-80.

  9. Basefsky, Stuart M. “ Pooled Endowments: A New Funding Idea.” College and Research Libraries News 56 (June 1995): 405-407.

  10. Richards, William A. “Betting on the Future of Technology in University System of Georgia Libraries.” The Georgia Librarian (Fall 1994): 63-65.

  11. Gaboury, John D. and June Breland. “Strategies for Alternate Funding for Academic Libraries.” Mississippi Libraries 58 (Summer 1994): 32-34.

  12. Martin, Murray S. and Paul Kobulnicky. “The Role of the Library in Institutional Development.” The Bottom Line; Managing Library Finances 9 (1996): 40-42.

  13. Hunt, Gary A. and Hwa-Wei Lee. “The Ten Principles for Successful Fund-raising.” The Bottom Line 6 (1993): 27-33.

  14. Renaud, Robert. “Learning to Compete: Competition, Outsourcing, and Academic Libraries.” Journal of Academic Librarianship 23 (March 1997): 85-90.

  15. Josephine, Helen B. “Intrepreneurship in Fee-Based Information Services,” in Creativity, Innovation and Entrepreneurship In Libraries , edited by Donald E. Riggs. New York: Haworth Press, 1989, 151-158.

  16. Warner, Alice S. “Selling the Service,” in Fee-Based Services: Issues & Answers , ed. By Anne K. Beaubien. Ann Arbor, MI: University of Michigan, 1987, 11-17.