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Universities are normally non-profit. For public universities, it is understandable that governments invest the taxpayers' money for education purpose.

However, investors of a private university should invest a huge amount of money (campus, buildings, facilities, staff, etc.) without ambitious hope for financial gain. At best (after a few years), a new university can earn enough money (tuition fee and donations) to operate without financial benefits for its original investors.

Who invests in private universities?

It cannot be financial investment, and not all cases are charity. Then, how does this system work? as it is rapidly growing in many countries.

Who makes the huge initial investment?

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    As I understand it, most private universities are in fact "charity" in the sense that a wealthy private person funds them not as an investment, but as a contribution to the community. (just a guess, hence no answer)
    – xLeitix
    Jun 4 '14 at 7:46
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    Is the number dramatically increasing? Certainly not where I live - I know of exactly one private university being funded in the last 10 years in my neck of the woods.
    – xLeitix
    Jun 4 '14 at 7:54
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    For public universities, it is understandable that governments invest the taxpayers' money for education purpose. — I can think of 50 governments that disagree with you.
    – JeffE
    Jun 4 '14 at 13:02
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    @gerrit: In the US, extremely common. With a few exceptions, I bet that every US university you've ever heard of, that doesn't have a state in its name, is a private nonprofit. (And even a few that do have states in their names, such as New York University.) Jun 4 '14 at 15:02
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    @user13854: It's a joke, sort of. JeffE is thinking of the 50 US state governments. They do provide various amounts of funding for their public universities, but in general it has been declining. As far as I know, none of them provides for free higher education, though most have some tuition subsidy for state residents. Jun 4 '14 at 20:30
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I'm only familiar with the US, but my understanding is that most (if not all) private non-profit universities were started with a single large gift from a wealthy individual, family, small group of individual, or a charitable foundation (usually started by one of the above). In many cases the institution is named after that person.

I'm not sure in which countries the number of private non-profit universities is "rapidly growing". I only know of a few recently started institutions in the US. One with which I'm somewhat familiar is Olin College. According to their web site, the college was started with a $460 million gift from the F. W. Olin Foundation, which in turn was founded in 1938 by Franklin W. Olin and funded by his personal wealth.

Such gifts are considered "charity" in that their main purpose is to benefit the community, and the donor doesn't receive a financial benefit. Of course, any given donor could certainly have personal motivations other than a genuine desire to do good (attention, guilt, fun, taxes, etc.), but there is really no way to guess.

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  • isn't the number of new private universities in the US comparable with new public universities? If there is a few new private universities, it is because the US has already many universities, and there is not a good market for more.
    – user13854
    Jun 4 '14 at 19:52
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    @user13854: I couldn't find any data or comprehensive lists of new private or public universities. If you can, I'll be interested to see it. My impression is that the founding of a new public university is also quite rare, but that depends on whether or not you count an existing institution opening a new campus. Jun 4 '14 at 19:59
  • @user13854: I think the founding of any university is a fairly rare event in the USA. I agree with Nate that I'd be interested to know the source of your claim that the number of universities is rapidly growing. As an example, the California public university system (UC and CSU), which is the largest in the US, has added a total of only four schools in the last 40 years.
    – BrenBarn
    Jun 4 '14 at 20:13

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