Apart from the government indicating that additional federal funding would be provided to the endowment in coming years to increase the annual interest yield, it would also accept philanthropic donations which would be tax deductible and donors could designate the recipient.

The Minister for Education, Science and Training, Julie Bishop, has now  introduced draft laws to parliament that lock up $5 billion from the 2006-07 budget surplus in a trust.

While the Future Fund's board of guardians would decide the maximum grant amount each year, an advisory board would assist her in handing out the money to universities.

No prizes for working out who gets last say as to what's done with the money.

As matters stand the question of philanthropists earmarking their donations is in abeyance. The introduced legislation has scrapped the donors' prerogative although Ms Bishop says the law might be changed later if the board of guardians thought such a move was possible: "I will ask the interim advisory board to deliberate on this matter and provide me with advice."

So much for setting up the HEEF in such a way that philanthropy would find it more attractive to increase donations to the higher education sector than is now the case. Currently less than 2% of Australian universities' income is derived from philanthropic donations.