Bangladesh has a rich, centuries-old tradition of endowment funds and of donating land as waqf (endowment) for the spread of education. We even had a concept of mustir chal (keeping aside a portion of rice grains before each day's cooking), which was used for social purposes such as feeding the needy, building schools, libraries, healthcare, and roads. Recently, during a seminar on industry-academia linkage, the honourable chief guest, Education Minister Dipu Moni, lamented for the loss of this tradition. She added that now, the people's participation in development work is decreasing day by day as these are mainly carried out by government organisations and NGOs. However, government and NGO funding are not sufficient to meet the massive demand for quality higher education in Bangladesh. In this context, she emphasised the revival of endowment funds in order to promote a culture of research and innovation to take us towards being a knowledge-based society.

So what is an endowment fund and how can it help build a knowledge-based society? An endowment fund is a sum of money given by a donor or a group of donors as the principal, which is held in a fund in perpetuity and managed by a trustee. The principal is then invested to produce a profitable return and that return is used for the specific areas and purposes designated in the endowment fund. Since an endowment fund is perpetual in nature, it is suitable for sustainable and long-term investments to generate significant benefits relative to short-term investments.

In today's world, the endowment fund concept has been one of the largest financial assets and a perpetual source of support for universities. For example, Harvard University has more than 14,000 individual funds that are invested as a single entity and the returns of the endowment are used to provide financial aid for various programmes, scientific research, and professorships for various academic fields.

Education endowment funds can help universities avoid income volatility and run smoothly, especially in developing countries where the governments lack the resources to allocate adequate funding for universities. The Unesco prescribes an expenditure of four to six percent of GDP in the education sector. According to one statistic, in Bangladesh, this amount was only 1.83 percent in FY2023 and even lower at 1.76 percent in FY2024. In Bangladesh, public universities are heavily dependent on government funding, donors, and tuition fees. Although government support has been significantly increasing for public universities in Bangladesh over the years, we still lack funding to facilitate all the programmes that any university of the developed world usually offer. In this context, the endowment fund can play an effective role in enabling our universities to run high quality education programmes and conduct innovative research.

In setting up an endowment fund, Bangladeshi universities may face several challenges at the initial stage. As of now, Bangladesh does not have a legal framework for an endowment fund within the education sector. This will be necessary to create certainty and encourage many stakeholders and shareholders to embark on the journey of education endowment. If we can maintain transparency and soundness of legislation, it will encourage wealthy non-resident Bangladeshis and international educational organisations to establish education endowment funds in Bangladesh.

We see that many corporations and organisations who wish to support the education sector under the corporate social responsibility (CSR) are not aware of the concept of an education endowment fund. To rectify this, an awareness campaign should be carried out, by initiative of the Ministry of Education. Building a bridge between industry and academia is crucial in order to overcome this issue. Industry can establish an endowment fund at an academic institution to create a specific talent pool, whose members can then join the workforce under the industry.

We also see that there is a disconnect between alumni and academia. Due to lack of communication, alumni show no serious interest in donating to education endowment funds after their graduation. Universities need to be proactive in expanding education endowment by capitalising on their alumni networks. For this, universities and education providers need to maintain an updated database of their alumni so that they can be contacted for contributions to the university's endowment education fund.

In the past three decades, Bangladesh has achieved a great expansion in higher education. Meanwhile, the country's economy has grown to and is set to achieve developing country status by 2026. Now, we need to build a world-class higher education system that will help us transform our production-based economy into a knowledge-based economy, so we can also achieve developed nation status by 2041.

As government spending on higher education alone is not enough for ensuring quality higher education, education endowment funds can help to stabilise the financial conditions of Bangladeshi universities. It is high time for the Ministry of Education to take a holistic approach through mass awareness programmes to raise endowment funds for our universities. In the early stages, it will be challenging for Bangladeshi universities to establish endowment due to lack of legal framework and other cultural constraints. However, if these institutions are ready to take up the challenge and learn from international best practices, endowment funds can bring about a paradigm shift in education financing in Bangladesh.

Dr Foyasal Khan is an independent researcher and holds a PhD in Economics from International Islamic University Malaysia. He can be reached at foyasal.khan@gmail.com