The article deals with the process of a complete transformation of the role of a university as a social institution at local level. Taking into consideration the social-cultural approach to the formation of missions, aims and strategies of a university the authors have analyzed all the theoretical methods of approach to the research of the functions of a university and all the modern ways of its activity. The authors have also analyzed the social-economic development of small towns. The authors have defined the main components of the social function of a university, the ways of increasing of its effectiveness of the cooperation at local level as far as the cultural, social and economic development of a town is concerned. The authors have also defined the practical significance of the mechanisms of the formation of strategies and missions of the social — economic development of a university. Some peculiarities of the third function of a university located in a small town have been carefully analyzed. Shadrinsk State Pedagogical Institute has become an example of the process of investigation. The authors have worked out their own model of the cooperation of a university with the local community. The model contains the main tendencies of the integration of a university into the local community. The authors have come to the conclusion that the formation and development of the third function of universities is especially important in small towns. The article is based on theoretical and practical works of Russian and foreign scientists in the field of the formation of the third function of universities, on data of the federal information portal “Russian Education”, on the results of the analysis of mass-media of Shadrinsk. The analysis concerned the role of Shadrinsk State Pedagogical Institute in the social-economic and cultural development of Shadrinsk.