7 ms·

Tax-exempt endowments seems like the absolute most logical loophole to close (perhaps a minimum size, but the point stands). They're some of the largest institu

Tax-exempt endowments seems like the absolute most logical loophole to close (perhaps a minimum size, but the point stands). They're some of the largest institutional investors in the country, yet they're taxed like a non-profit. Even if donations aren't taxed, just treat the endowments like any other institutional investor. NOTE: This should not in any way rule out additional tax reform, whatever your preferred mechanism. The point is to treat multibillion dollar institutional investors like multibillion dollar institutional investors, however we wind up choosing.

JoshTriplett 10y ago
> They're some of the largest institutional investors in the country, yet they're taxed like a non-profit. Is there a reason we shouldn't treat major educational institutions as non-profits, assuming we accept the concept of non-profits in the first place? (Note that the rules for non-profits already require spending a certain amount of the endowment every year.)
- sjburt 10y ago
  I think the argument is that they are much less accessible to students with less privileged backgrounds. If one views the subsidy associated with the non-profit status as a form of education spending, it's fair to ask whether that is the best use of that money.
  - danhak 10y ago
    > I think the argument is that they are much less accessible to students with less privileged backgrounds. That's exactly backward though. The Ivy League schools all have need-blind admissions and meet 100% of demonstrated financial need (for U.S. students)
    - esrauch 10y ago
      And yet the median income of the students parents at ivy league is something like $125k while the median income in America is more like $50k right?
      - sokoloff 10y ago
        It would be shocking to me if the profile of students applying to Ivy League schools didn't skew substantially high on median family income, highest degree attained by parents, and SAT scores. Successful parents breed (read: raise) successful children. Surely not in every case, but in aggregate. As a successful graduate of a small tech school in Cambridge, I was aided by my parents' educational bent, bias, and investments of time and money. They were aided by their parents, just as my wife and I will aid our children.
        esrauch 10y ago
        sjburt said they are less accessible to poor students, which I was defending as true.
        sokoloff 10y ago
        Is accessibility best measured by: P ( student_is_poor | student_attends_ivy ) P ( applicant_is_admitted_to_ivy | applicant_is_poor ) I take the view that the latter is the better measure, but I can see people arguing that the former has some relevance.
        esrauch 10y ago
        The point is that both are low, I would accept the second metric and I don't think it shows what you seen to claim it does. If you take all the applications submitted, income would be positively correlated with acceptance even though it is "needs blind". Some of that is implicit, but some of it is likely explicit (admit kids who played polo over kids who worked at McDonald's if everything else is equal)
        10y ago
  - deleted 10y ago
    [deleted]
- peter303 10y ago
  Non profit charities MUST spend 5% of their endowments on charitable projects. Some argue universities should do this too.
  - cowsandmilk 10y ago
    Many endowments at least aim for this. Harvard's target every year is to spend 5-5.5%. Actual spending over the last decades has been 4.2%-6.1%.
  - sidek 10y ago
    Building the future doesn't count as charitable?
    - hueving 10y ago
      No, because you could use that same vague statement to describe Google since they are building self driving cars.
- jackcosgrove 10y ago
  > Is there a reason we shouldn't treat major educational institutions as non-profits, Because universities are increasingly operating like businesses, using technology transfer offices to bring in revenue and using graduate students to cut labor costs.
- the_watcher 10y ago
  Just their endowments. Their endowments are not even taxed on gains. As I mentioned, a good first step would just to be treating the endowments like the institutional funds the behave like. Keep donations to the school (which fund the endowment) tax-free, if you want.

JoshTriplett 10y ago

> They're some of the largest institutional investors in the country, yet they're taxed like a non-profit. Is there a reason we shouldn't treat major educational institutions as non-profits, assuming we accept the concept of non-profits in the first place? (Note that the rules for non-profits already require spending a certain amount of the endowment every year.)

sjburt 10y ago
I think the argument is that they are much less accessible to students with less privileged backgrounds. If one views the subsidy associated with the non-profit status as a form of education spending, it's fair to ask whether that is the best use of that money.
- danhak 10y ago
  > I think the argument is that they are much less accessible to students with less privileged backgrounds. That's exactly backward though. The Ivy League schools all have need-blind admissions and meet 100% of demonstrated financial need (for U.S. students)
  - esrauch 10y ago
    And yet the median income of the students parents at ivy league is something like $125k while the median income in America is more like $50k right?
    - sokoloff 10y ago
      It would be shocking to me if the profile of students applying to Ivy League schools didn't skew substantially high on median family income, highest degree attained by parents, and SAT scores. Successful parents breed (read: raise) successful children. Surely not in every case, but in aggregate. As a successful graduate of a small tech school in Cambridge, I was aided by my parents' educational bent, bias, and investments of time and money. They were aided by their parents, just as my wife and I will aid our children.
      - esrauch 10y ago
        sjburt said they are less accessible to poor students, which I was defending as true.
        sokoloff 10y ago
        Is accessibility best measured by: P ( student_is_poor | student_attends_ivy ) P ( applicant_is_admitted_to_ivy | applicant_is_poor ) I take the view that the latter is the better measure, but I can see people arguing that the former has some relevance.
        esrauch 10y ago
        The point is that both are low, I would accept the second metric and I don't think it shows what you seen to claim it does. If you take all the applications submitted, income would be positively correlated with acceptance even though it is "needs blind". Some of that is implicit, but some of it is likely explicit (admit kids who played polo over kids who worked at McDonald's if everything else is equal)
        10y ago
- deleted 10y ago
  [deleted]
peter303 10y ago
Non profit charities MUST spend 5% of their endowments on charitable projects. Some argue universities should do this too.
- cowsandmilk 10y ago
  Many endowments at least aim for this. Harvard's target every year is to spend 5-5.5%. Actual spending over the last decades has been 4.2%-6.1%.
- sidek 10y ago
  Building the future doesn't count as charitable?
  - hueving 10y ago
    No, because you could use that same vague statement to describe Google since they are building self driving cars.
jackcosgrove 10y ago
> Is there a reason we shouldn't treat major educational institutions as non-profits, Because universities are increasingly operating like businesses, using technology transfer offices to bring in revenue and using graduate students to cut labor costs.
the_watcher 10y ago
Just their endowments. Their endowments are not even taxed on gains. As I mentioned, a good first step would just to be treating the endowments like the institutional funds the behave like. Keep donations to the school (which fund the endowment) tax-free, if you want.