Yeah. Or, as an observer of Harvard University recently put it:

Viewed purely in terms of economics, Harvard is really a $40 billion tax-free hedge fund with a very large marketing and PR arm called Harvard University that has the job of raising the investment capital and protecting the fund’s preferential tax treatment.

It’s just like the NCAA. People look at the NCAA and they say Why is that organization tax exempt? Why are all sorts of university sports goodies tax exempt? Do you know how much a luxury box costs? Hell of a tax write-off. Do you know how much the head of the NCAA makes? And it’s a non-profit! The tax laws make it easier for universities to pay their coaches four million dollars a year in order to recruit generations of players who leave school in nine months. Etc.

Eventually, people will begin to talk about immense wealth-generating tax exemptions based on all those fine upstanding educational values.

Indeed, because of the tax breaks, schools like Princeton and Harvard have become multibillionaires, a fact their struggling localities have noted… The localities want the schools taxed…

… U.S. municipalities still reeling from the economic crisis turn to their local universities, whose land holdings are mostly tax- exempt, to close budget shortfalls.

But wait just a minute!
The schools will point out how they’re struggling too. They used to have 30 billion dollars, and now they’re skidding along on 20!

Princeton used to have 16 billion and now it has around 13 billion… Its neighbors note that it maintains a teeny student body. Why does it need all that tax-exempt-begotten-money? Does each student get a one million dollar scholarship?

Trackback URL for this post:

3 Responses to ““Is the university some type of old-fashioned institution full of scholarly gentlemen with modest salaries and a devotion to education?” [Princeton Borough Councilman Kevin] Wilkes, a 1983 Princeton graduate, said in a phone interview. “Or is it a hedge fund with $16 billion promoting an educational arm on the side?””

  1. veblen Says:

    UD, Chuck Grassley and Tom Harkin, who were p.o.-ed becuase they thought that the Big Ten expansion might leave Iowa State out in the cold, have written are question the basis of that and other BCS conference’s tax-exempt status.

    A link to the letter they wrote to the Big Ten commissioner is here and the character flaws of your hero Chuck Grassley are on display here.

  2. In the provinces Says:

    Just perhaps Princeton uses some of that endowment revenue to support world-class scientific research and one of America’s great academic libraries–neither is a cheap endeavor, you know.

  3. Margaret Soltan Says:

    Sure it does, Itp. It uses it for all sorts of excellent things. (I haven’t checked, but I suspect, on the other hand, that it uses a ridiculously small percentage of it, just as Harvard does.) None of that undermines the argument that it has accumulated more money than a world-class university needs.

Comment on this Entry

Latest UD posts at IHE