A $1 billion Government fund for University Grants Committee-funded institutions to match private donations secured by them will start this academic year.

The matching grant scheme will be implemented in phases, with half of the fund set aside for its first phase.

The grants will be disbursed on a dollar-for-dollar matching basis, a 1:1 matching ratio, in respect of private donation or sponsorship received.

However, there will be an upper limit of $150 million applicable to the aggregate amount received by each institution during the first phase.

Secretary for Education & Manpower Professor Arthur Li said that this will ensure the scheme operates in a way that, within the first phase, no institution can capture too large a share of the amount available. He said every institution will have a guaranteed chance of being able to benefit from the scheme in a moderate way.

To encourage healthy competition amongst institutions and to allow the smaller ones a fair chance, apart from the ceiling, there will be a "floor".

The committee will set aside $20 million as a guaranteed minimum for each institution in the first six months after applications open.

The first phase will last for one year from the date the scheme is open for application or when the $500 million has been fully allocated to the institutions, whichever is earlier.

The unspent amount in the first phase, if any, will be carried forward.

Applications will be invited from July 1, and donations pledged and paid to committee-funded institutions after March 5, the effective date, are also eligible for matching grants.

Meanwhile, the Government also proposed to raise the ceiling for tax-exempted donations from 10% of assessable income or profits to 25% to encourage private donations to educational and other charitable organisations.