University funding in Australia is largely a story of two missions. Research funding flows through the Australian Research Council and National Health and Medical Research Council, rewarding publication outputs, grant success, and increasingly, research impact. Teaching funding flows through the Commonwealth Grant Scheme, rewarding student enrolments and completions. Both of these streams have shaped Australian universities profoundly — and both have their problems. But the most significant gap in the system is what is missing entirely: dedicated, sustained funding for community engagement as a third mission in its own right.
How Funding Shapes Behaviour
Universities, like all organisations, respond to incentives. When research is funded through competitive grants that reward publication outputs, universities invest in research infrastructure, create academic career paths oriented around publications, and promote researchers who succeed in competitive grant rounds. When teaching is funded through student load, universities invest in student recruitment, retention, and completion. The pattern is predictable and entirely rational: institutions do more of what they are paid to do.
The implication is stark. If community engagement is not funded, universities will underinvest in it — not because they don’t value it, but because they cannot sustainably do it at scale without resources. The community engagement work that does happen typically does so through the discretionary effort of individual academics, sustained by goodwill rather than structural support. This is admirable but insufficient, and it means that community engagement capacity is fragile: it disappears when champions leave, when budgets are cut, or when competing demands crowd it out.
What a Community Engagement Funding Stream Could Look Like
There are several possible models for introducing community engagement into university funding. The simplest would be a performance-based allocation — a portion of base funding distributed to universities based on demonstrated community engagement activity, measured through a reporting framework aligned with agreed definitions and indicators. This approach is analogous to the performance-based research funding systems that operate in several countries, including through Australia’s own Engagement and Impact Assessment.
A more targeted approach would involve competitive grant funding specifically for community engagement — analogous to ARC Linkage grants but with a broader scope that includes non-research forms of engagement such as service learning, community cultural programs, and direct social services. Such a scheme would create a competitive market for community engagement innovation, rewarding institutions that develop novel and effective approaches to community partnership.
A third option is structural incentives embedded in the regulatory compact — making demonstrated community engagement a condition of access to mainstream university funding, rather than a bonus on top of it. This approach is more coercive but would ensure baseline performance across the sector rather than rewarding willing institutions while leaving others unaccountable.
Addressing the Measurement Challenge
Any funding model tied to community engagement performance requires measurement — and measurement of community engagement is genuinely challenging. Unlike publications, which are discrete, countable artefacts, community engagement is relational, contextual, and often invisible to external observers. A partnership that produces no publications, no patents, and no media coverage may nonetheless be generating extraordinary community value.
This challenge is surmountable, but it requires investment. Australia would need to develop a national framework for community engagement reporting — one built with input from universities and communities alike, focused on outcomes rather than just activities, and sensitive to the diversity of engagement forms across institution types. This is not a trivial undertaking, but it is a necessary one. The absence of measurement should not be an excuse for the absence of funding; rather, it is an argument for investing in developing better measurement tools.
The Return on Investment
What would Australia get for investing in university community engagement? The evidence from other countries and from the best Australian practice suggests the returns would be substantial. Greater uptake of university research into policy and practice. Stronger local economies, particularly in regional areas, through anchor institution strategies and workforce development. Better graduate outcomes, as students who engage with communities develop the interpersonal and civic competencies that employers and society value. More resilient communities, better connected to the expertise and resources that universities represent. And — perhaps most fundamentally — a university sector that is more clearly earning its social licence.
Public investment in higher education is an act of faith — a bet that educated people, skilled researchers, and engaged institutions will produce benefits that justify the cost. Community engagement funding is a way of making that bet more explicit, and more likely to pay off.