How much does Germany do for its educational system? Not enough--at least financially--as the latest Organization for Economic Cooperation and Development ( OECD) report "Education at a Glance" states. In an international survey on educational investments compared to gross domestic products, Germany is ranked only seventh behind Sweden, Finland, Japan, Switzerland, the United States, and Korea. According to the OECD's study, a country's welfare highly depends on sufficient funding for education and research.

Especially in a globalized world with high competition for the best researchers and students, financial questions have taken almost as high a priority as research itself. So how can Germany's publicly funded higher education system--which also accounts for most of the basic research--survive on a long-term basis while still maintaining excellence on a competitive level?

The German federal government began blazing a trail last week by increasing the 2002 federal budget for the education and research ministry ( BMBF) by 0.23 billion Euro (?) to 8.39 billion ?. "Never before has a German administration invested as much into education and research as we have," said research minister Edelgard Bulmahn upon the presentation of these figures. The flip side of the coin, of course, is that her budget only makes up for about 9% of all German university funding. The biggest chunk of the burden is carried by the states (89%) with some additional help coming from private donors (2%).

So despite the spending increase, the crucial question remains, does this level of funding provide for the necessary infrastructure? "German universities are chronically underfunded," said Manfred Erhardt, general secretary of the Donors' Association for the Promoting of Sciences and Humanities in Germany ( Stifterverband für die Deutsche Wissenschaft), in a recent speech at the University of Augsburg.

Klaus Landfried, president of the Association of Universities and Other Higher Education Institutions in Germany ( Hochschulrektorenkonferenz) shares this view. "The budget increase has been a first step, but in the end, it depends on the states to furnish the universities with a sufficient base funding that enables these institutions to access additional sources of funding," says Landfried. The situation varies from state to state, and budgets in the southern states are generally higher than in the north or the east of Germany.

One source that might improve the current situation could be an increase in private donations, says Erhardt. Even the BMBF thinks that way. At the annual meeting of the Donors' Association, BMBF's parliamentary state secretary Wolf-Michael Catenhusen called upon potential donors to establish more foundations: "We need more private investments in education and research!" Because of necessary reforms in the academic sector, higher scientific expectations and decreasing budgets, the demand for private involvement is higher than ever.

But unlike the United States, Germany has never been a place where individual wealth has led to setting up foundations for educational, research, or even social purposes. While donators in the U.S. have incentives such as big tax cuts--up to 50% of the donations are tax deductible--the German government has made all efforts to become a "good citizen" almost impossible over the last decades by setting a maximum 10% tax deduction. "A state that crushes the will to donate with high taxes shouldn't be surprised about a lack of public spirit," Erhardt opines.

While U.S. universities like Yale or Princeton have huge endowment assets and a fundraising staff (Yale University alone had more than 62,000 donors), the majority of German universities still has to develop entrepreneurial spirit. Princeton alone received almost $67 million from alumni and sponsors in 2000, while the total donations by alumni and sponsors for all German universities were only about 35 million ? ($30 million). But there's interest in changing this situation. "Universities should and will be given the opportunity to raise additional funds in the future," Landfried says. "But also, the currently present mentality that all funding will automatically come through the state and federal governments has to change."

Everyone agrees that the portion of private donations for scientific research and education still has a potential for growth. An additional 10% to 15% on top of the regular budget through donations and contract research would be an optimal result that would promote excellence in research and education, Landfried thinks. "This is very well possible for certain universities. We will have more competition among the universities for donations."

Tax laws were finally changed last year, but the time since then has been too short to indicate any significant changes. Also, the changes seem to be quite marginal and ineffective. But despite unattractive legislation, the willingness to donate exists: The number of new scientific foundations within the Donors' Association has increased by almost 100% since 1990. But politicians should be rather careful about how they are asking for money from the private sector, Erhardt adds: "Donors like to support certain things in which an administration is not or cannot get involved in rather than just closing gaps in the budget and easing cutbacks."