I certainly doubt the latter portion. From my observations, whether the professoriat at any given university cares about teaching well or not has little to do with their funding sources.
whether the professoriat at any given university
The professoriat is not the university. That, actually, is one of the changes in academia that entangles with the quote above: universities are becoming money-making machines and the professoriat becomes the proletariat -- nothing more than salaried employees (notice what's happening to tenure).
Another month, another rationality quotes thread. The rules are: