Universities invest significant effort in understanding their finances. Senior leaders receive detailed reports. Boards review income and expenditure carefully. Variances are analysed, and financial controls are well established.
At one level, this suggests clarity.
However, when we step back and look at how universities actually operate, a more complex picture begins to emerge. Not all costs are equally visible, and not all are considered together.
Some are hidden in plain sight. Others are fragmented across the institution. And some are so normalised that they no longer feel like costs at all.
The costs that do not appear
Let’s start with what is perhaps the least visible category: absorbed academic labour.
In a recent analysis, I estimated that universities in the United Kingdom may collectively be contributing tens of millions of pounds each year in peer review time. This is based on the time academics spend reviewing papers, often outside formal workload models, and almost always without direct financial recognition.
This is not a budgetary line and does not appear in financial statements. Yet it represents a real use of institutional resource. Some might argue that this your “duty as a scholar”, it is done outside of office hours and there is a benefit to the scholar (e.g. staying up to date with the field). All of these are valid arguments but this work is being indirectly paid for by the university rather than (say) the journals/publishers who are also benefitting from this resource.
The same can be said for other areas such as editorial work and grant reviewing.
Don’t get me wrong, these activities are essential to the functioning of the academic system. But from a financial perspective, they are largely invisible. Indeed, they are often not captured in university workload models, but that is a different discussion.
The costs that are visible, but fragmented
A second category includes costs that are recorded, but may not be considered as a whole.
Consultancy is a good example. Universities may spend substantial amounts on external advice, covering areas such as strategy, technology, marketing and transformation. These costs are real and often significant.
However, they are typically distributed across departments, approved through different processes and evaluated in isolation from one another.
Similarly, agent fees for international student recruitment have become an increasingly important component of university expenditure. These payments are visible and auditable, but they are often treated as part of recruitment operations rather than as a strategic cost category.
Marketing spend, partnership development, and internationalisation activities often sit in the same space. Each makes sense individually. Collectively, they can represent a substantial and growing investment.
The costs that are normalised
A third category consists of costs that are widely accepted as part of the system.
Article Processing Charges (APCs) are an example. Many universities now allocate significant budgets to support open access publishing. These payments are understood, planned for and, in many cases, encouraged.
Yet APCs are rarely considered alongside:
- The unpaid labour that supports peer review
- The subscription costs that still exist in parallel
- The broader incentives that drive publication volume
They are treated as a necessary part of research activity, rather than as one component of a much larger cost structure.
The same could be said for:
- Data and analytics subscriptions
- Rankings-related activities
- Research management systems
Over time, these become embedded in institutional practice. They are budgeted for, renewed, and rarely challenged alongside all the other costs. They get justified in isolation, rather than looking at the larger picture.
The governance lens: visibility and control
From a governance perspective, the issue is not whether universities track their finances. They do, and often very carefully.
The deeper question is whether institutions have visibility of their total cost base.
When costs are partially hidden, organisationally fragmented or structurally normalised it becomes difficult to answer relatively simple questions:
- What does it actually cost to produce research?
- What is the full cost of recruiting a student?
- How much do we spend, in total, to sustain our position in the system?
Without this level of visibility, strategic decision-making becomes more complex. Institutions may optimise individual activities without fully understanding the cumulative effect.
There is also a question of control. Some of these costs are driven externally:
- Expectations around publication
- Norms within academic publishing
- Competitive pressures in international recruitment
Even when visible, they are not always easily consolidated in a way they promotes visibility and informed discussion.
The systems lens: local optimisation, global cost
Universities are complex organisations. Different units pursue different objectives:
- Research offices focus on outputs and impact
- Faculties focus on teaching and publications
- International teams focus on recruitment and partnerships
Each area is often managed effectively in its own right. However, when each part of the system optimises locally, the overall cost of achieving institutional goals can increase in ways that are not immediately visible.
This is not the result of poor management. It is a feature of complexity, but it does raise an important question.
Questions worth asking
- Are universities aware of the work that their staff are doing which are supporting external agencies without the scholar or the university being properly compensated? Even if the university is happy to support these activities, do they know how much time is being invested?
- If we were to bring together the full cost of producing research, reviewing it, publishing it, promoting it and using it to support rankings and reputation would we be comfortable with the total?
… and perhaps more importantly:
Do we currently have a clear enough view to answer these questions with confidence?
About the author
Graham Kendall is Acting Vice-Chancellor at GlobalNxt University, Malaysia, and an Emeritus Professor at the University of Nottingham. He has held senior leadership roles across the UK and Asia, with a focus on governance, research strategy and academic systems.
He writes regularly on higher education, research and institutional decision-making. If your institution is reviewing how it understands its cost base, research strategy or performance frameworks, he welcomes the conversation.