Higher education institutions across Europe face today a demanding and complex financial context in which traditional modes of funding have been transformed and continue to evolve. Moreover, public sources are not as generous as they often were in the past and frequently become more demanding and competitive. The changes are particularly significant in Europe due to the traditional reliance on public funding. The current economic and financial crisis has exacerbated even further these problems, with growing pressures upon the sustainability of funding regimes of public higher education and the pressure mounting to explore new sources of income.The efficiency of funding in terms of the capability to meet certain policy goals in a cost-effective way is becoming increasingly important. The present project makes funding efficiency in higher education the main focus of research and activities, thereby providing data and recommendations which will support the development of strategies to increase the efficiency of funding. This topic has not been sufficiently addressed in research so far, especially in a format that preserves the institutional perspective and offers fully updated information with a European scope. Therefore this project involves leading universities inter alia in structuring international focus groups of university practitioners to determine good practice, challenges and pitfalls as well as the impact of funding efficiency measures such as performance-based mechanisms, institutional mergers and excellence schemes. The project aims at contributing to the improved design and implementation of higher education funding policy and thereby to enhanced funding efficiency in the sector.The project findings will feed into current and future higher education funding policy development at national and European level and support universities in responding to these changes. The project will therefore have a large impact on the European higher education area.