A large percentage of the gifts at places like Harvard are (somehow, my grammatical sense tells me that the “are” should be “is” but “os” sounds wrong) directed to specific pursuits/schools. I gave a modest sum to my father’s alma mater. My father was a very poor, brilliant Jewish student growing up in the Depression who got a full scholarship at a school that was widely known to discriminate against Jews. He was a physics and math major and was planning to teach HS math because he knew the math teachers retained their jobs in the Depression. His professor told him that he wasn’t going to do that because he was just too good a student and my father went on to get a PhD at one of the best schools in the country and to have a distinguished career as a theoretical physicist. My father felt very grateful to his alma mater for enabling him to get started and guiding him. So, I directed that the gift was to provide a scholarship each year for a financially needy but promising senior studying physics. My gift would be counted in the school’s endowment but would not be available for any other purpose.
@katliamom, I think @hzhao2004 clearly overstated the point, but if you want your money to have impact by, say, funding advances in genomics and turning genomics into medicine, it is probably a much better investment to provide $600 MM to the Broad Institute (of MIT/Harvard) as I believe Eli Broad and his wife have done than to give it to many other schools or spread it around to many schools. The Broad has hired some of the best scholars, which attracts some of the best post-docs and grad students, which collectively produces great research, which collectively draws lots of grant money and cycles through to attract more of the best scholars who want to work with the best scholars, and so on. It would be a lot harder to have the same effect by giving the $600 MM to Fairleigh Dickinson University or Wake Forest University.
If your objective is to fund college tuition for many kids, you might do it very differently.
On the political side, I think we should have a simple progressive tax and no individual deductions. This would take the social engineering and social steering and favoritism out of the tax code. One would still have to deal with how to tax corporations – if you were taxing them, then there is a question as to which expenses are deductible or not. This would shift some of the debate back into the corporate rules. If, as the Wall Street Journal and cronies suggest, we had no corporate tax, we could have higher individual rates and no one would benefit from tax deductions.
On the flip side, I suppose one could argue that private funding has made a great contribution to the US having the best universities in the world. A lot of our national wealth at this point is being created by firms in the tech world largely emanating from Silicon Valley. Silicon Valley exists because Stanford is there. Hewlett and Packard got degrees there and at least one taught there. Think: Google, Yahoo, Sun, Cisco, NVidia, Electronic Arts, Dolby, Cypress, LinkedIn, Silicon Graphics, etc. A study commissioned by Sequoia Capital estimates that companies formed by Stanford entrepreneurs generate world revenues of $2.7 trillion annually and have created 5.4 million jobs since the 1930s. See http://news.stanford.edu/news/2012/october/innovation-economic-impact-102412.html. It is not unlikely that switching to government funding for universities would have led to a lot less economic value creation than enabling universities like Stanford to both foster an entrepreneurial culture and benefit from attracting the best faculty and students.
So, if we were omnipotent rule-makers, we’d have to choose between a system with no charitable tax deductions and likely political direction of funding (which would probably be less meritocratic and have its own brand of cronyism) and a system that has generated lots of jobs and wealth overtime (but has a heavy dose of perpetuating the 1%).