Will future experts be educated with fewer euros?
It could be called a productivity leap. Over 15 years, the real, inflation-adjusted core funding from the Ministry of Education and Culture 91ÇàÇà²Ý University has decreased by more than one-third, but the university increased its student numbers by 40% and the number of international publications by 50% during the same period. Aalto researchers now secure 140% more competitive international research funding than in 2010.
Going forward, expectations continue to rise – Finland needs more expertise and innovations. Global problems require research-based knowledge and solutions. Once known as a model country for education, Finland has fallen worryingly behind many countries in higher education attainment among young people.
At the turn of the millennium, 39% of 25–34-year olds in Finland had completed a higher education degree – the highest rate in the world, compared to the OECD average of 27%. Now, the average share of young adults with a higher education degree in OECD countries has risen to 47%, while Finland remains at 39%.
The goal is to provide higher education to at least half of each age group. Aalto is also expected to increase the number of students and support entrepreneurship and innovation more than ever. The university is ready to increase its intake of new students by as much as 40% by 2035. However, achieving these goals is only possible with sufficient resources.
The easy productivity gains are done
Aalto University was founded in 2010, the same year Finland implemented a major university reform. The early years saw increasing public funding, but the 2015 education cuts hit universities hard.
Today, the Ministry of Education and Culture funds 54% of Aalto’s operations. Chief Financial Officer Marianna Bom explains that during the cuts, Aalto gained full ownership of its campus from the state and has since improved its space use by about one-third, reducing facility expenses and earning rental income from its partners. Competitive research funding and returns from the university’s endowment have also helped offset the decline in public funding.
‘The easy productivity improvements have already been made. The price erosion, where universities receive a little less money per degree each year, needs to stop. If funding drops, universities face the wrong incentive to lower quality. It’s absolutely critical for us not to compromise on the quality of teaching and research,’ Bom says.
Adequate university funding is essential to address the much-discussed skills shortage. As more international students and researchers are recruited into master’s or doctoral programs, it is crucial that they have a genuine opportunity to stay and find employment in Finland.
Free core funding is vital
In Finland, there is broad agreement on the importance of research – at least in principle. During the previous parliamentary term, all political parties committed to a decision to increase research, development and innovation (RDI) funding to 4% of GDP by 2030. One-third of this funding is to come from public money and two-thirds from businesses.
Part of the budget missing after the Ministry’s core funding is channeled through organisations like Business Finland and the Academy of Finland. ‘RDI funding typically comes as project money, where the funder provides 70–80% of the total costs, and the university must find the remaining 20–30% itself. If we receive a lot of project money but miss the corresponding core funding, the overall societal benefit of RDI funding is lost,’ says Bom.
In science, long term resourcing is required because high-quality research takes time. Innovations do not emerge from thin air, and basic research often yields results decades after it begins – results that could not have been imagined at the outset. Research infrastructures require significant investments and evolve alongside scientific discoveries and technological advancements.
The adverse effects of university funding cuts become evident gradually. The government that makes the cuts does not witness the consequences during its term. The current economic situation is not easy, as public funding is urgently needed for many purposes outside of higher education.
Resources are used efficiently
When discussing university rankings and admiring the world's top institutions, it is easy to forget that their resources are in a different league than those of Finnish universities.
With its current resources, Finland achieves surprisingly much, says Professor Hannu Seristö, Aalto’s Associate Vice President for External Relations.
For example, the total budget of the Technical University of Denmark (DTU), with fewer students than Aalto, is twice that of Aalto. The US-based Stanford University’s funding is nearly 19 times as large as Aalto’s, and its staff numbers nearly five times larger, even though the student population is roughly the same.
‘One can always ask, which comes first, resources or results. Top quality at Stanford or Cambridge naturally attracts funding, but at some point, building that quality must have started. It’s challenging to achieve excellent results with limited resources,’ Seristö says.
Public funding reflects the state of the national economy. Other Nordic countries are wealthier than Finland, and Denmark is particularly fortunate: private foundations fund university research with sums roughly equal to the entire Finnish university sector budget.
At Seristö’s initiative, a few master’s students at the School of Business are comparing what kind of results universities achieve with different levels of investment. ‘Considering resources and Finland’s cost levels, Aalto is likely among the best in the world. Here, people work hard and ambitiously,’ Seristö says.
Wealth for future generations
Aalto University has an endowment of approximately €1.5 billion, accumulated from donors and a state matching capitalisation campaign that covered all Finnish universities. The significant capital was built during the university reform, with Aalto receiving €200 million from businesses and alumni, matched by about €500 million from the state. The university’s endowment also includes the previous endowment funds of the three merged universities.
Spending from endowment accounts for about 10% of the university’s total funding, helping to compensate for declining public funding.
‘It may seem like the university has no problem with so much wealth. However, if we earn a 6–7% return on capital and inflation is 3%, only 2.5–3% of the endowment value can be used annually for university operations,’ says CFO Marianna Bom.
To ensure the quality of research and education for future generations as well, the inflation-adjusted capital itself cannot be spent. Aalto’s in-house professional team invests primarily through funds in listed and unlisted equities, as well as alternative investments. Short-term money market investments and cash always cover at least two years of operational needs.
Even small donations from private individuals or companies can have an impact greater than their monetary value. A strong balance sheet has helped the university obtain long-term debt for campus investments on competitive terms.
‘Thanks to our donors, we’ve been able to build a campus that serves as a cradle of innovation, where the university collaborates with startups and other businesses,’ Bom says.
Many private donors give freely for the university’s use. Donors can also choose a specific target to support, such as artificial intelligence or quantum technology research. One of the newest funds is the entrepreneurship donation fund, which supports emerging innovations before commercialisation.
‘Fifteen years ago, donating to universities was new in Finnish culture. Now awareness has increased. Especially alumni are eager to give back to their alma mater,’ Bom says.
Impact through donations
Many people donate to charity, but can private individuals support universities and science? Yes, with any amount.
Anna Berg, AV producer at Aalto, participated in preparing the university’s new fundraising campaign and decided to donate herself. ‘I thought it would be nice to participate after all these years when my life has been so closely tied to the university,’ she says.
Berg has studied two master’s degrees at Aalto: one in technology and the other in art. Since then, she has worked at the university almost continuously.
‘In my work in science communications, I see what the university does and think about all the good that science and research bring to society. Society is developed through taxes and voting, of course, but donating is a more targeted way to contribute. You can feel like you’ve made an impact,’ Berg says.
Vuolteenahos encourage student exchanges
Business School alumni Tuomo and Tarja Vuolteenaho have made a special pledge 91ÇàÇà²Ý’s fundraising campaign.
The couple, who live in the United States, will match all donations to international student exchanges at the School of Business – up to $1 million – by the end of 2025. The matching applies not only to individual donations but also to donations made through companies in which the donor owns more than 50%.
‘High living costs and tuition fees abroad discourage exchanges, so we want to encourage students to seize available opportunities,’ says Tarja Vuolteenaho.
‘During my years at the School of Business, I went on exchange to South Carolina, and Tuomo completed his postgraduate studies in Chicago. Neither of us had to pay tuition fees – either the schools or private donors covered our studies. We want to offer a similar opportunity to current and future students.’
This article has been published in the (issuu.com), May 2025.
Text: Terhi Hautamäki
Illustration: Nikolas Palonen
Photographic artist Nikolas Palonen describes the illustrations of the main article: ‘These AI-generated images depict architecture on the Otaniemi campus. They incorporate an element of speculation – something that doesn’t actually exist. Yet the works contain fragments of truth. Through a process between the human and the non-human, that truth is transformed into something else. It becomes a new kind of truth.’
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