A study of the economic behavior of a university was similar to the one for a study of the profit institution. This similarity attempted one to apply the principles of decision making of a firm to the decision making of a university. The university distinguished itself from the profit institutions in respect of the mechanics of its decision making itself. While in case of flue firm, the market process guided decisions, it was the political process that guides decisions of the university. The study examined sources of finance and developed general principles of resource use by the university as a non-profit institution and attempted a detailed economic examination of the performance of the university. The major sources of finance for university education happened to be the private sector. The private sources of finance consist of fees of various types and donations and charitable contributions. This paper propose to discuss some of general aspects of university fees and donations and then examine the economic dimension of these sources of finance for the university education. The analysis of the economic nature of university education revealed that it was neither a pure private good so that it should be supplied at a price to cover its costs fully, nor a public good, so that it should be supplied free of charge. It was a case of a mixed good, with major private benefits necessitating levy of fees at fairly high levels so as try cover a major portion of costs of supply. An attempt was made in this paper to examine the various tangible and intangible elements involved in the donation activity and also to prevent the conditions for realizing an equilibrium volume of donations both frm the point of view of the supplier of donations and the user of donations. This analysis of donation activity helps us to understand the nature of measures to be undertaken for encouraging the flow of donations to university education.