Use of administrative capital at KI
KI has a growing level of agency capital. This consists of resources carried over from previous years’ appropriations and revenues. KI is taking various measures to reduce it over time.
What is administrative capital?
Administrative capital is the university equivalent to what in a company would be called equity. It comprises accumulated surplus from grants or external revenues, which for higher education institutions effectively means banked resources, primarily unutilised education and research grants. However, unlike a private company, where the aim is to generate profit for the benefit of shareholders, a university is to use its grants and external revenues for the benefit of society, through research, education and outreach.
How large is KI’s administrative capital?
In 2024, Karolinska Institutet’s administrative capital amounted to approximately SEK 2.5 billion, some 2.3 billion of which was connected to research and 200 million to education. Seen over a longer period, our administrative capital has risen sharply, rising by approximately SEK 1 billion in the past five years. Today, KI has one of the highest levels of administrative capital in the country.
Why is this?
KI has multiple sources of administrative capital. The largest share comes from the government-provided research and education grants that have remained unutilised over previous years.
An additional source is externally financed research projects, the excess funds of which the university is allowed to retain. Contract activities usually return a profit, and the capital itself can also generate interest income.
How is administrative capital utilised?
Even though the capital itself is managed by KI as a whole, some of it exists at a departmental or research group level. The rules state that the capital is to be invested in aspects of the university’s mission that would otherwise have lacked financing. For KI, this could be starting new research projects, employing research or teaching staff, investing in research infrastructure, or raising the quality of our programmes. Monies from different grants must, however, be kept separate.
Why is administrative capital a problem?
Having an excessive administrative capital can give the impression that KI is not using its resources efficiently, which can damage KI’s reputation and affect our future financial situation. If the rules change, KI’s current government appropriation for research and education might be cut if we do not make full use of our administrative capital.
Tightened demands and expectations from the government
The government expects the money to be used in the interests of society. The government and the Ministry of Education and Research therefore keeps a close eye on the utilisation of administrative capital by the country’s universities and university colleges.
A prioritised focus area
One of KI’s prioritised focus areas is Sustainable and Future-proofed Finances. Within this area, we are reviewing how we allocate research grant resources internally and drafting a plan for how administrative capital is to be utilised in the long and short term.