The $1 billion matching grant pledged by the Financial Secretary Antony Leung Kam-chung in his budget speech this week is intended to encourage diversification of strengths among universities, according to the University Grants Committee. Secretary-general Peter Cheung Po-tak said the scheme would involve two stages. In the first, universities will be given an amount equal to what they have raised should they manage to reach a fund-raising target negotiated between them and the UGC. In the second stage, institutions will be rewarded for whatever success they have in their fund-raising efforts on a first come, first serve basis, on a 'pledge and pay'' principle. But no decision has been made yet on when that will begin. 'The matching grant idea is a novel concept. It will be a real test of an institution's ability to show its strength and the community's willingness to donate,' said Mr Cheung. The pledged grant will not cover donations for construction of campus buildings. The additional $1 billion grant brings education spending for the coming year to $61 billion. Actual spending will be scaled back 1.8 per cent.