That source has its biases. Another source:
Yale spends more than twice as much paying its fund managers - 480 million than it does on financial aid for its students - 170 mill.
More shocking from the standpoint of a taxpayer - . Taxpayers subsidize Yale at 69,000 per student, Princeton at 105,000 per student. But the typical state school at only $10,000. per student.
Exactly.
I can’t think of too many things that provide as much benefit to society and humanity as a whole as university endowments do.
I’ve lost track of what is serious/joking here. But for all the complaints here about non-profits, I suggest to consider what non-profit really means. It does not mean you don’t make money. It means there are no external investors expecting to get a dividend, and they serve some purpose to the community or their members. We enjoy the benefits of non-profits in a lot of forms - schools, hospitals, professional organizations, PTA, disaster relief, etc. Don’t start taking some of this away simply because you think the organization has too much money. If that’s how you want it to be, then I want the right to go through your bank account and decide that you spent your money the wrong way and force you to give some away or pay more taxes or both.
Maybe you could explain the …thinking that helped you arrive at that conclusion. Are you one of those people who likes to count money they don’t have?
Quoting the NPR article which quoted a study. I’m assuming that calculation comes from how much the tax break costs taxpayers.
Given the current hue and cry over income inequality and tax the rich, these billion dollar university endowments that primarily help their hedge fund managers (see the Yale figures) would be a prime target.
I think it’s important to remember that universities like Harvard and Yale do things in addition to educating students, such as allowing faculty members to carry out research (much of which isn’t funded by outside sources). In figuring out what is being subsidized, you have to include that as well.
@TatinG Don’t hedge fund managers pay taxes?
Tatin, yes,my link appeared at least a bit defensive. But it provides some needed perspective- eg, after the hint that endowments should be regulated. There are both state and fed regulations.
As an example, a charity like the Red Cross spends 90% of its donations on helping victims of disasters; 10% on administration.
The Red cross is an iffy example: http://www.npr.org/2014/12/04/368453320/red-cross-misstates-how-donors-dollars-are-spent
And I don’t believe anyone wants to see colleges annually spending 50%+ of endowments. It would be akin to spending a huge chunk of your own investments.
One wonders why charitable givers give to already extremely wealthy institutions. A bit like sending coals to Newcastle as the old saying goes. I suppose a lot of it is self-aggrandizement. They want their names on a building.
The author of the Nexus study (the one quoted in the NPR study is Jorge Klor de Alva, “president of the Nexus Research and Policy Center, former president of the University of Phoenix, and former Class of 1940 Professor at the University of California–Berkeley.” (bolding mine)
Among his recent articles are:
Real cost of Obama’s war against for-profit colleges (Sep 2014)
Comment on Gainful Employment Rulemaking (May 2014)
For-Profit Status Is Not the Problem (May 2014)
It’s also interesting to note that his October 2011 study found that, “Public Institutions Cost Taxpayers More Than Private Ones”.
http://nexusresearch.org/wp-content/uploads/2015/06/AEI-EduO-Schneider-KlordeAlva-Oct-2011.pdf
@TatinG wrote
I strongly disagree.
When I graduated Yale, its endowment was about $2-3B. Because of good fortune and better investment strategies (led by David Swensen), Yale’s endowment blossomed to $24B over the last 25 years or so. During this growth, Yale spent over $1B on increasing its STEM holdings and facilities. Yale joined Princeton to eliminate undergrad loans as part of fin aid. Yale went to need blind for international applicants. Other generations-deep transformations are happening (including the building of the 2 new Residential colleges – among the most expensive construction projects in CT’s history). The new graduate school housing building is to be named after Swensen – not because of his own generosity – but due to another donor who wanted to honor Swensen for the quantum shift in growth and opportunities that the endowment’s growth has allowed the Yale Corporation to have. Should Swensen be one of the top paid investment officers extant? Yep. I can’t think of a more deserving person of his Yale salary.
Tatin’s logic would be to impale the success of Yale (like that ludicrous article at the onset of this thread) – rather than encourage others to attain it. Endowment growth is not a zero sum game – I abjectly disagree that this has to do with income disparity. Others can grow and give more back to their students and communities too you know.
According to NPR, the 90%-10% figure from the Red Cross is misleading.
http://www.npr.org/2014/12/04/368453320/red-cross-misstates-how-donors-dollars-are-spent
The Red Cross also (as is the case with most healthy charities) has substantial reserves- almost 2 billion dollars.
http://www.charitynavigator.org/index.cfm?bay=search.summary&orgid=3277#.Vjj2A4SpdUQ
The problem is, many middle-of-the-pack schools are actually excellent performers… you would never know it though because their high quality is overshadowed by a ranking system that values prestige, wealth, and exclusivity factors (factors which most of these schools have little control over).
The ranking system is the real problem, not the elite universities. Smart kids should not feel like they have to go to only a handful of “socially acceptable” schools… that in fact, there are many good quality schools to choose from out there that may offer a better fit, and make them happier in the long run.
Always helps to consider more than the obvious or the first info that comes down the pike or the supposed status of the person who said it.
Ranking schools means a list is created. Individual responses to the lists vary, and only a small number of young people truly feel they have to go to only a handful of socially acceptable schools. I don’t believe lists are really a problem for many people.
Lots of folks who make tons of money went to non-ivy schools. Lots of smart kids continue to go to non-ivy schools. Ivy league schools are not the cause of the nation’s woes, nor would abolishing them fix anything. Such a silly topic.
Love Malcolm Gladwell. Bill Gates and Warren Buffett, the two richest men in America, have both pledged to give away 95% of their wealth. It’s time for the champagne socialists in the People’s Republic of Cambridge to follow suit, stop being such shameless greedy hoarders.
Many elite private schools are among the largest recipients of federal research grants, on top of the many private research grants they get. In 2014 Harvard received $608m in federal research funding, plus $203m from private corporations. Columbia, Penn and Stanford received even more.
http://www.thecrimson.com/article/2015/1/22/federal-funding-decreases-2014/
http://247wallst.com/special-report/2013/04/25/universities-getting-the-most-government-money/3/
Yes, Yale has had good fortune. That doesn’t mean that good fortune should go tax free, anymore than an individual’s good fortune should go tax free. To get the multiple tax breaks that private universities get, they should be spending a certain percentage of their wealth on their charitable purpose. And if you spend over twice as much on your fund managment than on financial aid, that is subject to question, in my view.
This has nothing to do with encouraging other universities to attain large endowments. One has nothing to do with the other.
And we’re going to tax the Catholic Church, too, right?
I’m always surprised by the attitude of people who normally want to keep the government out of private decision-making, but who want to tell other people where to donate their own money.