Budget estimates this year suggest that €1.4 billion of State money will be paid to the third-level institutions, but universities and colleges still tap alternative sources because they say that State funding has not risen in accordance with the growth in student numbers and their rising cost

Business people have used fortunes earned during the boom and before it to sponsor higher-education programmes or buildings in their names.

But the slowdown and general belt-tightening since the dotcom collapse and the attacks on the US last September led one informed observer to suggest that the cash might not be flowing as freely now as before.

Either way, universities still depend on the taxpayer for the overwhelming bulk of their funding. As students prepare their return to work in the coming weeks, the Budget estimates this year suggest that some €1.4 billion of State money will be paid to the third-level institutions.

With education seen as a crucial building block in the creation of economic growth, this sum has risen significantly in recent years.

However, universities and colleges still tap alternative sources because they say that State funding has not risen in accordance with the growth in student numbers and their rising cost.

Hence there is no surprise that universities have developed sophisticated mechanisms to attract funding for their capital developments, often using dedicated foundations that allocate funds on a project-by-project basis.

While some of the State's best-known and most successful business people rank among the largest and most public donors to Irish universities, many others donate money quietly.

Donations in recent years include more than €100 million raised by the Dublin City University (DCU) Educational Trust since 1995. The trust is chaired by Aer Lingus chairman and former AIB chief executive Mr Tom Mulcahy, a business heavyweight with access to a wide network of potential donors. Its previous chairman was the former Jefferson Smurfit executive and current RTÉ Authority chairman Mr Paddy Wright.

The Trinity Foundation at Trinity College Dublin (TCD) has raised more than €110 million since 1994. In addition, Galway University Foundation (NUI Galway) raised some €15 million in 2000 and 2001.

The best-known donators include Jefferson Smurfit chairman Dr Michael Smurfit, who has donated some €4.44 million to the post-graduate business school bearing his name at UCD. Dr Smurfit has also donated some €3.8 million to TCD for the Smurfit School of Genetics.

Other donors include Sir Anthony O'Reilly, who gave €2.54 million to UCD in 1992 for the O'Reilly Hall. Sir Anthony also gave €1.9 million to TCD for a building named after his father. In addition, a new library building at DCU is named after both Sir Anthony's parents.

The family of Ryanair founder Dr Tony Ryan are other large donators, having promised two years ago to back a €6.35 million centre for entrepreneurs at the Citywest complex in west Dublin. They have also funded the Martin Ryan institute at UCG.

Another large donator is AIB chairman and Glen Dimplex co-founder Mr Lochlann Quinn, who made some €5.08 million available last year for the construction of the undergraduate Quinn School of Business, which is also at UCD.

The other co-founder of Glen Dimplex, Mr Martin Naughton, gave €1.27 million to the TCD Institute of Genetics and School of Pharmacy.

Though large, such sums are dwarfed by donations from the Atlantic Philanthropies, the vehicle set up by the Irish-American businessman Mr Chuck Feeney.

The body donated some €602 million to third-level institutions in the Republic and Northern Ireland between 1990 and 2000. Its policy is to make grants proactively and does not accept unsolicited applications for funding.

However, the allocation of State funding is more formulaic, although university managers complain that additional costs are not often met by funding that comes from the State.

For example, one well-placed person in a big university said no special provision was made for the creation of structures to manage the introduction of the Freedom of Information Act.

State grants are broken down between recurrent grants, fees paid by the Government and capital payments.

In the case of TCD, whose annual accounts are published on its website, almost 53 per cent of its non-research grant income of €113 million last year was derived from recurrent State grants. An additional 38 per cent was derived from fees paid by the State, mainly for undergraduate full-time students.

As the State's largest university, UCD received more than other institutions from the public purse last year.

It received some €29.21 million in capital grants last year from the Higher Education Authority, which allocates State money to the third-level institutions. It also received €96.91 million in recurrent grants and €35.65 million in free fees.

The capital grants vary. UCD received €1.68 million in 1999 and €12.32 million in 2000.

Recurrent grants include payments for targeted initiatives, programmes under the National Development Plan and European Social Fund, and increased intake programmes.

The fees are represented in a separate column because, in theory, the concession introduced in the mid-1990s could be withdrawn by the Government.

Such a move was believed to have been sought by the Department of Finance during negotiations earlier this summer on the Programme for Government. It was rejected.

After UCD, the next-highest recipient of recurrent State funding is TCD, followed by UCC, NUI Galway, University of Limerick, DCU and NUI Maynooth.

The next highest recipient of State payments for capital purposes after UCD last year was DCU.