How do university professors earn money external to their salary from the institutions where they teach?
As far as I understand:
Am I correct?
What other viable sources do they have for earning money?
I feel a lot of the existing answers are rather US-based. Here is my experience in Europe:
Notably, since we have 100% contracts the notion of paying yourself from your own grants does not exist. There may or may not be schemes to siphon off money from grants into your own pockets, but these are either downright illegal or at least heavily frowned upon.
All in all, for most people the salary that they get from university is the money they make, with the equivalent of a few hundred USD per year in bonus income from routine external service. Exceptions exist, but these people do something unusual in addition to standard academic work (such as running a successful company on the side).
At US universities most tenure-track positions are nominally 9 or 10 months, and allow faculty to do certain other work in the summer. In addition to summer research salary paid by grants, some other common sources of summer salary are teaching classes in the summer, organizing summer schools or REUs or similar events, or some kind of summer consulting for industry or government.
- Obtaining funding from government/companies for doing research.
This would not usually give the researcher more money, except in the long-term indirect sense of advancing their academic career and helping to get a promotion. Research grants are paid to the university employing the researcher and they will generally pay some or all of the salary of the researcher. The academic does not get money directly from this --- instead, the university takes the money and uses it to subsidise the salary costs of the researchers on the grant. (There are some exceptions to this, such as direct summer salaries in the US.)
Of course, if a researcher wins a major grant, this can be used to make a case for promotion from the university, and it can therefore lead to an indirect wage raise for the academic in question. For a researcher who is not already a full professor, winning a major research grant will usually lead to a promotion and consequent pay raise, though the pay raise is modest relative to the amount of the grant.
- Forming their own consultancy firms or doing freelance consultancy for external entities.
Many academics have strong technical expertise in areas that are useful to external entities, and some make money from external consulting work. Universities sometimes even allow academics to engage in external consulting work as a portion of their work time, which means that some academics can make money from consulting work within their ordinary academic hours.
Though I do not have data on this kind of work, my observation is that only a small proportion of academics do external consulting work outside their regular academic job. Even for those that do this, the income is highly skewed --- most academics who do external consulting earn a modest amount of money from this (substantially less than their academic salary) but a few make big money. In my observation the latter are mostly academics who work in economics/finance and moonlight working for big finance companies, or engineers doing work for big-name industrial firms.
What other viable sources do they have for earning money?
Other avenues relating to academic work are writing textbooks or popular books, creating blogs/websites/YouTube channels, etc. Again, only a relatively small number of academics earn any serious money doing this, but a few manage to make big money. Beyond these items, academics can of course apply for second jobs just like anyone else, but this is rare, since academic work tends to bleed into weekends and holidays already.
The standard sources I know about from rather direct knowledge:
I should point out that the royalties thing does not work that well anymore for reasons you can find on Google. Also (1) and (3) and (5) may not be possible in many locations. In particular, (1) seems to be mainly a US thing.
A select few university professors make big bucks from the royalties on a basic widely-used textbook.
Note I said "select few". Most academic textbooks make only minuscule amounts in royalties.
Some of these answers are only half true. These days, university faculty have to look to more than the university for their revenue stream. Its true that a faculty member can have a grant subsidize your teaching, which means that you aren't teaching and can spend all your time on research, which furthers your career, your reputation, your promotion or your next book. However, I have received grants where I received no time off from teaching and have instead received as much as 20-25% extra salary, which when making over a six figure salary is no small chunk of change. For some academics, book sales can also be quite enriching--think of Ibram Kendi's How to Be an Antiracist or Stamped from the Beginning. If you write for a more popular audience, and then pursue multi media around your book project, you can make a decent revenue stream. Even if it is just an academic book, I net about $1,500 a year from my latest book and have done so for the past five years. Then, many academics command speaking fees--$2,000-$5,000 for someone of note, and $10-25 K for someone with really big national standing. And that's for every single talk. Other academics I know have established lucrative consulting firms, and I have seen some do quite well, from economic policy firms to historians advising Hollywood on historical films. My university has no rule on how much one may make on a separate consulting firm. All in all, the days of academics quietly sitting in their office contemplating deep thoughts over theoretical works is largely done and over with. The public largesse has largely abandoned academia and academics, and we have to fend for ourselves. Many academics at top institutions have come to understand that the university is only part of their salary base. The neoliberal university has adopted the business model, and so have a lot of academics.
In addition to what has been stated above (No, you don't get income from government/company grants, yes a few get a modest amount from consulting, you can earn some royalties from books), it may be possible to earn something from patents. Rules vary from university to university, but at my institution licencing income from patents is shared between the named inventors and the university. Again, it is very rare to earn substantial amounts this way, but I do know of one academic who has earned tens of millions from a patent they took out while working for the university. The only other academic I know with a patent earns only a nominal amount from it though.
