<p>Was Harvard founded in 1630 as a tax dodge? I can't say that I noticed a large difference in the way that Harvard discharged its mission in the last 10 years. The endowment has grown, more labs have been/or being built, more faculty have been hired. Does any of that constitute a tax dodge? Should the loss of tax exemption status apply only to Harvard, or should all institutions of higher learning be treated the same way?</p>
<p>The per student endowment figure is not applicable.
First, it pits colleges against universities; the latter usually have professional schools with their own fund-raising and endowments, which cannot be used for undergraduates. The universities also spend a great deal more on research and labs, which are very costly. Colleges tend to have small libraries compared to research universities. And so on.
I don't know what the endowment of the Harvard or Yale or Princeton Faculty of Arts and Sciences is in contrast to the overall endowment of each university.</p>
<p>Anyway, it's not going to happen because the added revenue to the Treasury would be minuscule and it would need to hit all institutions of higher learning. It probably would need to apply to many other non-profit organizations, not just universities and colleges. You'd have museums, symphony orchestras, and all sorts of organizations protesting.</p>
<p>Like Barrons, I remember when Stanford and Yale were not so flush with money. In fact, I remember reading about deferred maintenance at Yale that included not only deferring badly needed repairs to buildings, but such economies as less frequent lawn mowings and less frequent washing of windows. A massive fund-raising effort was needed to right things.</p>
<p>I just think that the whole idea of universities not paying taxes on investment returns because they are "non-profit" needs to be looked at in light how colleges have been able to enrich themselves in the last 2 decades. Universities are being run as businesses more and more, and any business that can afford to pay tens of millions of dollars to investment managers are making a profit in my book.</p>
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<p>Let's take a private school charging $35,000 a year for tuition and fees, leaving out room and board. With an average of, say, 12 students per faculty member, that is $420,000 revenue per year per faculty member. Assuming that there is one support staff person for each faculty member, that is $210,000 revenueer year per employee. Any executive who can't run a profitable service business on $210k per employee should resign and go back to shoveling horse manure on the farm. If students actually paid full-boat tuition, private schools would be making money hand over fist. No one needs to weep for the finances of top schools.</p>
<p>I'd love to hear the reasoning of the folks here who think top privates aren't charging enough.</p>
<p>I beg to differ Marite. It is not a fact that bigger schools need more money to operate. In fact one could argue that there is an economy of expenses. Further, many professional programs, like law schools are very profitable (large lecture halls, no labs, little student housing needed etc., etc.). That is why you see a plethora of private law schools (start-ups). Also, many large universities have started extension schools and on line programs which are also very profitable. </p>
<p>Finally, what good is a large endowment if it is spread across many, many thousands of students (like the Univ. of Texas). A gross number alone tells us nothing. A per student figure is far more accurate in terms of wealth.</p>
<p>Cst makes a great point. Programs like business, law, social sciences, and humanities are money-makers. They require few resources or expensive labs. The best programs are ones such as fully-employed and executive MBA programs, and other professional programs aimed at employed students going part-time. Except for their ability to attract grant money -- primarily to faculty and grad students -- the hard sciences are money losers for universities.</p>
<p>There seems to be a confusion as to what a not-for-profit organization actually is. Not for profit simply means that there are no individual shareholders that own the organization and can sell their stock to make a profit. A not-for-profit is certainly allowed to invest its funds and grow its endowment. If all non-profit organizations had to be run at a loss, there would be no philantropic foundations left and most universities would go out of business. While I may not wish to give Microsoft any tax breaks, I certainly don't mind that the B&M Gates Foundation increases its endowment by billions a year to fund various charitable programs. None of that goes into Bill Gates' pocket. Same thing with Harvard. So what if they invest their money wisely and make billions a year from it! They have to use the funds for education. They can't distribute the funds to their alumni.</p>
<p>Wash Dad,</p>
<p>Thank you. Exactly my point, "Programs like business, law, social sciences, and humanities are money-makers". Not only that, but do not underestimate the ability of many of the schools I listed to attracted HUGE grant dollars for science programs. For example, Princeton has received hundreds of millions of dollars (from the government) for its one of a kind fusion program.</p>
<p>But my point is that the endowments of law schools, business schools, medical schools are not available to undergraduates. So the size of the overall endowment of a particular university has little direct bearing on how much it is able to spend on undergraduate education. The costly labs are actually associated with faculties of arts and sciences and engineering schools.
Furthermore, a lot of donations come with strings attached: endow a building; endow sports coaches positions; name a room; fund a chair in some field or other; run series of seminars, hold conferences, on some topic or other. Pursue research on xyz. And so on and so forth.
When universities hire new profs in the sciences, not only do they have to provide the appropriate lab facilities, but often, they have to bring a substantial number of researchers along.
The humanities and social sciences may be cheaper, but they also attract fewer outside grants. Try getting a large grant to study Islam in Indonesia. It should be an important topic of research. But I doubt it would attract large amounts of funding unless someone raised them in Indonesia (unlikely).
Law schools and business schools are able to raise huge amounts of money. Not so much Graduate Schools of Education and Divinity Schools. And again, the money that gets raised by law schools and business schools stays there.</p>
<p>cstixj:
Are the HUGE grants for science programs supposed to fund undergraduate education? or only Ph.D.s, postdoctoral fellows, profs, and labs?</p>
<p>Cellardweller:</p>
<p>Thanks. I wish people understood that not-for-profit need not mean close to bankruptcy.</p>
<p>I beg to differ that law schools or professional schools in general are big money makers. ABA accredited law schools are very expensive to run, are required to have large libraries, very expensive full time faculty and typically have very small students bodies over which to spread the cost. Online or non-ABA accredited schools are essentially worthless as you can't pass the bar in most States unless you graduate from an accredited school. Let us not talk about med schools where it is even worse. Even the top business schools are not big money makers. The cost of operation per student is through the roof because the school has to pay salaries to its faculty commensurate with private sector jobs.</p>
<p>Cellardweller:</p>
<p>Maybe the HBS and HLS are exceptions. I'm told that HBS is beyond lavish.</p>
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Even the top business schools are not big money makers. The cost of operation per student is through the roof because the school has to pay salaries to its faculty commensurate with private sector jobs.
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<p>While not Harvard or Yale, I was on the board of directors of the alumni association of a University of California campus which had a graduate business program, but not a law school. It was university officials who told me what I repeated above about the "profitability" of graduate professional programs. Things might have changed in the last few years, but in the absence of empirical data or a superior-quality anecdote, I'll stand by what I wrote.</p>
<p>Marite,
First, any and all money coming in, whether through donation or grant has an impact on a school's bottom line. Second, it can be easily argued that grad students, outside of the sciences perhaps, are less costly to educate than undergraduates. They require less oversight, less housing, fewer meal plans, etc. Also, you will often see huge lecture halls in some of the professional schools, particularly law and business. Don't underestimate the profitability of those programs. Also do not underestimate the ability of a select group of schools to raise enormous amounts of government money. </p>
<p>The original post dealt with only a select group of schools that have the ability, like Princeton, to pay a student's full tab. I fully understand that the great majority of schools struggle to get by.</p>
<p>Why do you keep on intermingling law schools and business schools together with undergraduates?</p>
<p>For the umpteenth time, the funds raised by law schools and business schools stay there. They may have huge lecture halls and lavish dining halls, etc. ad nauseam, but it does not benefit undergraduates. Capisce?</p>
<p>Marite,
Then why did you list the schools' total endowment figures, if in fact they have no value?
As I stated earlier, all schools have restricted funds, but unless you can come up with a listing of discretionary funds per school, the per pupil endowment figures are the best figures we have.
Io Capisco e tu?</p>
<p>Cellardweller,
If law schools were not profitable, you would not be seeing so many unaccredited startups everywhere. Every state has them. Pardon the cliche, but as long as the demand is there the supply will always be present to profit on it. </p>
<p>Even with established law schools like Harvard you will find lecture halls containing many hundreds of students. Most do not live on campus, eat in dining commons or partake in campus activities. They just pay the enormous tuition.</p>
<p>Marite;</p>
<p>They say "Nature abhors a vacuum". The schools will always spend their budgets, whatever the amount. My brother who is an HBS alumnus, is constantly tapped for donations to fund "essential" programs. According to him, all the glitz is pure marketing to induce greater donations from its bigwig alumni. Many of them have big egos (think Jeffrey Skilling of ENRON fame) and would not donate as much if the school did not project the right "image". So yes, HBS does very well from its endowment, but its operations are not a money maker.</p>
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<p>You've written this more than once. Where do you get the information that tuition, fees, and other revenue raised from graduate students are separated from a university's general fund and spent only on grad students? It certainly didn't work that way at the UC where I served on the alumni board.</p>
<p>Endowment grants can be made in many ways, and, has been suggested, some donations are directed for specific programs or purposes. This is certainly not the case of all donations.</p>
<p>Cstixj:</p>
<p>My point is that there is a world of difference between an ABA accredited and an unaccredited law school. The first one graduates lawyers, the second graduates suckers.</p>