There's a bit more to the story than that. This is a money laundering scheme. Many if not most benefactors of universities do not trust the administration to

There's a bit more to the story than that. This is a money laundering scheme. Many if not most benefactors of universities do not trust the administration to spend their money wisely, and/or they want to endow a particular part of it (e.g. the Chemistry Department for me). ADDED: this search will bring up a lot about the best known case of a university violating a donor's intent: https://www.google.com/search?q=woodrow+wilson+school+princeton+lawsuit https://www.google.com/search?q=woodrow+wilson+school+prince... By washing all sorts of money through tuition, they get a substantial cash flow they can spend any way they want.