Finance is the main source of fund for many organizations. When an organization lacks the funds necessary for its various activities, it has to depend on some other source. Thus they go for the various finance companies. And a university is not an exception to this.
The main source of income for a university is through the admission fees that they collect from students. Due to restrictions provided by various governmental bodies, a university cannot act according to its own accord. These governmental bodies have specified an upper seal on this admission fees. Thus when the funds generated through admission process gets depleted a university has to go for the various finances available to them.
Additional sources of income for a university may include funds provided by non governmental organizations, grants from governmental bodies, etc. But these funds will not be necessary to handle the needs of a university. Particularly, when a university is thinking of upgrading its infrastructure by constructing new buildings they will need huge amounts of money. These funds cannot be generated directly by the university and so they have to go to other finance organizations.
The potential of a university is very large and most finance providers are aware of this fact. Hence, if university administrative officers approach a finance company, they will definitely get help. But, in common, we do not find universities going to a finance company. This is because when people come to know that a particular university is running on finance from another company they will never opt that university.
Also, if a university is running on finance, its reputation will be ruined and as a result, admissions will begin to reduce. This will ultimately lead to heavy loss which a university will not be able to handle.
The only possible way for a university to get financial help is by allowing the university to become a part of another government university. When a university is undertaken by government, its reputation will increase automatically as most people prefer studying in a government aided university. This will reduce the possibility of higher profits but will negate any chance of losses.
Although a university has the option to get finance, there is more number of problems associated with it. So, it is advisable not to rely on finance and if a university wants to make some improvements, it can wait till the necessary funds are acquired through some means other than finance.