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I never quite understood why people donate to colleges in such a way that it is the legal entity of the university that benefits. They provide a service, and t

I never quite understood why people donate to colleges in such a way that it is the legal entity of the university that benefits. They provide a service, and they charge money for it. The university operates as a business. I don't donate to Wal-Mart, so why would I donate to University X? Why wouldn't you instead endow a scholarship for students of your favorite college? Instead of giving cash to Wal-Mart, buy prepaid Wal-Mart gift cards, and pass them out to fellow customers. The university doesn't need your donations. It is fully capable of building its own buildings outright, begging for state funding, or at least issuing bonds backed by future tuition. If someone is so keen on having a building with their name on it, perhaps they should instead construct some off-campus student apartments, and make some nice signs in the same general style as the university signage.

nemothekid 8y ago
Most universities primary function is research, and tuition doesn't pay for research. Most funds from research (should) come from grants and donations. The research into a cancer cure doesn't come from Jimmy Undergrad paying tuition.
- Balgair 8y ago
  Per my anecdata, it wasn't a research university, just a liberal arts college. From what I can remember, most of the donated funds that my extended family gave went to scholarships, though I'm not 100% on that.
- gowld 8y ago
  At the more desirable schools, tuition fees don't pay for tuition costs either. There's a correlation between how much the college (and its donors) give to a student and the quality of the college, for reasons that are obvious upon reflection: it aligns incentives. If the school is paying for your attendance, their motive is for you to succeed at something (or else why would they bother schooling you)? If the school is profiting from your enrollment, their motivation is for you to enroll, not suceed.
- bachmeier 8y ago
  > Most universities primary function is research Actually, in the US, at the vast majority of universities, the primary job of faculty involves teaching, extension/outreach, and forms of service like mentoring students. Most universities have research expectations, but that is not how faculty spend their time. > and tuition doesn't pay for research. This is a STEM-oriented view. In a lot of fields the primary cost of research is faculty time, and it is often paid by tuition.
  - nemothekid 8y ago
    >This is a STEM-oriented view. In a lot of fields the primary cost of research is faculty time, and it is often paid by tuition. While I don't doubt there are colleges out there that primarily function of tuition, I'm fairly confident that the schools that the GP was talking about which take in millions of donations, are not funded by tuition - STEM or not. Endowments are practically tax-free hedgefunds. There are several liberal arts colleges in boston with billion+ endowments - where the return alone on the endowment rivals the total revenue from students (assuming they were all paying the full 50k, which they likely aren't).
cortesoft 8y ago
Because almost all universitys are NOT businesses... they are non-profits. They don't provide their services so they can make money, they make money so they can provide their services. Now, you can argue that incentives sometimes get messed up, but that is the case for ALL charities/non-profits.
- logfromblammo 8y ago
  Non-profits are businesses--businesses with a privileged tax status. It is possible to set up a non-profit business such that the money that comes in goes out through different ports than the ownership outflow pipe. A typical setup for a corrupt non-profit is for managers of the business to earn above-market salaries, and to own for-profit businesses that "compete" for service contracts with the non-profit entity. For example, Jack Grift establishes a non-profit charity for orphan children with fantods. He works the circuit and manages to fund it to the tune of $1M per year. He leases a nice office space in a building owned by Jack Grift AAA Office Space, and contracts with Jack Grift Janitorial Services to empty the trash can, and sets the charity's salary for CEO at $250k/year, and Chief Revenue Officer at $100k/year, plus a bonus of 5% of incoming donations. Jack, of course, holds both positions. He gets $250k as CEO, $150k as CRO, $100k as his own landlord, and $50k for taking out his own trash. He rolls $440k into uncapturable overhead, marketing, and fundraising efforts, and still has $10k left to supply orphans with copies of both Huck Finn and Tom Sawyer. The finances of universities are even more obfuscated, but it is undeniable that some university employees have the power to spend the organization's money for their own personal benefit. Catered faculty luncheons. Campus beautification in and around personal offices. Settlements from the university to forestall civil suits based on personal indiscretions. Premium parking spaces. These expenditures may, in fact, be justified by the mission of the university, but it is impossible for me to audit any given university's accounting books to make that determination for myself before deciding whether I want to give them more money than they demand on their invoices. There are a lot of outflow pipes for business revenues. Non-profits only close one of them.
dragonwriter 8y ago
> Why wouldn't you instead endow a scholarship for students of your favorite college? Because endowing a scholarship is setting up a charity and donating to a University (the kind anyone donates to, at any rate—no one is endowing chairs at the University of Phoenix) is giving to an existing charity; the two probably have similar tax, feeling of giving back, and status/ego benefits, but the former is more work.
- logfromblammo 8y ago
  The charity you set up will be perfectly aligned with your interests and values, whereas the highest paid employees of the existing "charity" are probably the president and the men's football coach, and not necessarily in that order. As charities, universities massage their financials to make themselves look better. They set the tuition rate. They determine the scholarship amounts. They bring in dollar-denominated donations, but the actual "charity" they provide is a nebulous value for the amount of additional knowledge and education the student would have been otherwise unable to acquire without paying more out of their own pocket in tuition. The university decides what that is worth anyway. They move $50k from one pocket to another, and then say they gave away $50k worth of education. A private scholarship charity can't play those games, because the costs of education are set by someone else.
  - dragonwriter 8y ago
    > The charity you set up will be perfectly aligned with your interests and values If you are perfect at setting up and managing a charity, perhaps, but then if you are concerned with education, and what something perfectly aligned with your values, may mean you need to set up a university, not a scholarship fund. > whereas the highest paid employees of the existing "charity" are probably the president and the men's football coach You assume that this conflicts with, rather than reflects, the interests and values of the kind of people who donate money to the universities. I think that if you explored the issue you would find that it is not the case, and particularly that the variation in whether or not that is true at any particular university correlates very neatly with the values of the people who donate to the university. (As far as causal explanations, I would assume that there is a two-way feedback loop; donors who value football will make a school more likely to pay the football coach well which will attract more donations from people who value football and less from those who do not, etc.) > A private scholarship charity can't play those games Yes, but that's just another way of saying that a private scholarship charity has a lot less control of what actually gets delivered as education than a university. Not sure that's a reason to support the former over the latter, though, especially when the choice is taking the additional effort and cost to set up the former; its just another way of saying "less bang for the buck".
bachmeier 8y ago
> Why wouldn't you instead endow a scholarship for students of your favorite college? Many people do. They also give money to improve football facilities, bring speakers to campus, and endow a chaired professor position. > I don't donate to Wal-Mart, so why would I donate to University X? Because a university is a nonprofit that exists only for the purpose of improving the world. (Not necessarily the employees, who work there as a job, but it's why universities exist.) You probably don't see a lot of donations to the University of Phoenix or other for-profit universities.
- alasdair_ 8y ago
  >Because a university is a nonprofit that exists only for the purpose of improving the world. (Not necessarily the employees, who work there as a job, but it's why universities exist.) For something like fifteen years of my life I owed well over a hundred thousand dollars of non-bankruptable debt because of the fees this "non-profit" charged. A "non-profit" university exists for many, many reasons. Giving the dean a million dollar salary is one of those reasons. Student education is likely third or fourth on the list.
  - edoo 8y ago
    "Non-profit" is literally no more than a corporate tax status. That actual charitable causes happen to be non-profit is a coincidence.
    - integrate-this 8y ago
      Correct. Despite this, I choose to donate to my universities because a) when its my children's turn, I want the organization to remember my name, and b) I honestly believe that education is a truly worthwhile pursuit and I want to expand access to, and quality of, education and discovery. PhDs and grad students may be a bunch of blowhards but they drive a lot of innovation.
      - logfromblammo 8y ago
        > when its my children's turn, I want the organization to remember my name When it's time for my children, I want the organization that will be teaching them about professional and ethical conduct in the real world to not only not be corrupt, but also demonstrably free of all prejudicial biases in the applications process. Which is to say, I want my children to be assigned a randomized identifier and their personally identifiable information anonymized, before their application is given to an admissions officer, so that irrelevant qualifications like the amount of money parent alumni have given to the organization are not and cannot be used for an admit/no-admit decision. I'm fine with your kid getting a 2nd-floor room in the posh dormitory, and first bite at class scheduling. You can pay for additional conveniences, but not to deny someone else an opportunity earned by their own hard work.

nemothekid 8y ago

Most universities primary function is research, and tuition doesn't pay for research. Most funds from research (should) come from grants and donations. The research into a cancer cure doesn't come from Jimmy Undergrad paying tuition.

Balgair 8y ago
Per my anecdata, it wasn't a research university, just a liberal arts college. From what I can remember, most of the donated funds that my extended family gave went to scholarships, though I'm not 100% on that.
gowld 8y ago
At the more desirable schools, tuition fees don't pay for tuition costs either. There's a correlation between how much the college (and its donors) give to a student and the quality of the college, for reasons that are obvious upon reflection: it aligns incentives. If the school is paying for your attendance, their motive is for you to succeed at something (or else why would they bother schooling you)? If the school is profiting from your enrollment, their motivation is for you to enroll, not suceed.
bachmeier 8y ago
> Most universities primary function is research Actually, in the US, at the vast majority of universities, the primary job of faculty involves teaching, extension/outreach, and forms of service like mentoring students. Most universities have research expectations, but that is not how faculty spend their time. > and tuition doesn't pay for research. This is a STEM-oriented view. In a lot of fields the primary cost of research is faculty time, and it is often paid by tuition.
- nemothekid 8y ago
  >This is a STEM-oriented view. In a lot of fields the primary cost of research is faculty time, and it is often paid by tuition. While I don't doubt there are colleges out there that primarily function of tuition, I'm fairly confident that the schools that the GP was talking about which take in millions of donations, are not funded by tuition - STEM or not. Endowments are practically tax-free hedgefunds. There are several liberal arts colleges in boston with billion+ endowments - where the return alone on the endowment rivals the total revenue from students (assuming they were all paying the full 50k, which they likely aren't).

cortesoft 8y ago

Because almost all universitys are NOT businesses... they are non-profits. They don't provide their services so they can make money, they make money so they can provide their services. Now, you can argue that incentives sometimes get messed up, but that is the case for ALL charities/non-profits.

logfromblammo 8y ago
Non-profits are businesses--businesses with a privileged tax status. It is possible to set up a non-profit business such that the money that comes in goes out through different ports than the ownership outflow pipe. A typical setup for a corrupt non-profit is for managers of the business to earn above-market salaries, and to own for-profit businesses that "compete" for service contracts with the non-profit entity. For example, Jack Grift establishes a non-profit charity for orphan children with fantods. He works the circuit and manages to fund it to the tune of $1M per year. He leases a nice office space in a building owned by Jack Grift AAA Office Space, and contracts with Jack Grift Janitorial Services to empty the trash can, and sets the charity's salary for CEO at $250k/year, and Chief Revenue Officer at $100k/year, plus a bonus of 5% of incoming donations. Jack, of course, holds both positions. He gets $250k as CEO, $150k as CRO, $100k as his own landlord, and $50k for taking out his own trash. He rolls $440k into uncapturable overhead, marketing, and fundraising efforts, and still has $10k left to supply orphans with copies of both Huck Finn and Tom Sawyer. The finances of universities are even more obfuscated, but it is undeniable that some university employees have the power to spend the organization's money for their own personal benefit. Catered faculty luncheons. Campus beautification in and around personal offices. Settlements from the university to forestall civil suits based on personal indiscretions. Premium parking spaces. These expenditures may, in fact, be justified by the mission of the university, but it is impossible for me to audit any given university's accounting books to make that determination for myself before deciding whether I want to give them more money than they demand on their invoices. There are a lot of outflow pipes for business revenues. Non-profits only close one of them.

dragonwriter 8y ago

> Why wouldn't you instead endow a scholarship for students of your favorite college? Because endowing a scholarship is setting up a charity and donating to a University (the kind anyone donates to, at any rate—no one is endowing chairs at the University of Phoenix) is giving to an existing charity; the two probably have similar tax, feeling of giving back, and status/ego benefits, but the former is more work.

logfromblammo 8y ago
The charity you set up will be perfectly aligned with your interests and values, whereas the highest paid employees of the existing "charity" are probably the president and the men's football coach, and not necessarily in that order. As charities, universities massage their financials to make themselves look better. They set the tuition rate. They determine the scholarship amounts. They bring in dollar-denominated donations, but the actual "charity" they provide is a nebulous value for the amount of additional knowledge and education the student would have been otherwise unable to acquire without paying more out of their own pocket in tuition. The university decides what that is worth anyway. They move $50k from one pocket to another, and then say they gave away $50k worth of education. A private scholarship charity can't play those games, because the costs of education are set by someone else.
- dragonwriter 8y ago
  > The charity you set up will be perfectly aligned with your interests and values If you are perfect at setting up and managing a charity, perhaps, but then if you are concerned with education, and what something perfectly aligned with your values, may mean you need to set up a university, not a scholarship fund. > whereas the highest paid employees of the existing "charity" are probably the president and the men's football coach You assume that this conflicts with, rather than reflects, the interests and values of the kind of people who donate money to the universities. I think that if you explored the issue you would find that it is not the case, and particularly that the variation in whether or not that is true at any particular university correlates very neatly with the values of the people who donate to the university. (As far as causal explanations, I would assume that there is a two-way feedback loop; donors who value football will make a school more likely to pay the football coach well which will attract more donations from people who value football and less from those who do not, etc.) > A private scholarship charity can't play those games Yes, but that's just another way of saying that a private scholarship charity has a lot less control of what actually gets delivered as education than a university. Not sure that's a reason to support the former over the latter, though, especially when the choice is taking the additional effort and cost to set up the former; its just another way of saying "less bang for the buck".

bachmeier 8y ago

> Why wouldn't you instead endow a scholarship for students of your favorite college? Many people do. They also give money to improve football facilities, bring speakers to campus, and endow a chaired professor position. > I don't donate to Wal-Mart, so why would I donate to University X? Because a university is a nonprofit that exists only for the purpose of improving the world. (Not necessarily the employees, who work there as a job, but it's why universities exist.) You probably don't see a lot of donations to the University of Phoenix or other for-profit universities.

alasdair_ 8y ago
>Because a university is a nonprofit that exists only for the purpose of improving the world. (Not necessarily the employees, who work there as a job, but it's why universities exist.) For something like fifteen years of my life I owed well over a hundred thousand dollars of non-bankruptable debt because of the fees this "non-profit" charged. A "non-profit" university exists for many, many reasons. Giving the dean a million dollar salary is one of those reasons. Student education is likely third or fourth on the list.
- edoo 8y ago
  "Non-profit" is literally no more than a corporate tax status. That actual charitable causes happen to be non-profit is a coincidence.
  - integrate-this 8y ago
    Correct. Despite this, I choose to donate to my universities because a) when its my children's turn, I want the organization to remember my name, and b) I honestly believe that education is a truly worthwhile pursuit and I want to expand access to, and quality of, education and discovery. PhDs and grad students may be a bunch of blowhards but they drive a lot of innovation.
    - logfromblammo 8y ago
      > when its my children's turn, I want the organization to remember my name When it's time for my children, I want the organization that will be teaching them about professional and ethical conduct in the real world to not only not be corrupt, but also demonstrably free of all prejudicial biases in the applications process. Which is to say, I want my children to be assigned a randomized identifier and their personally identifiable information anonymized, before their application is given to an admissions officer, so that irrelevant qualifications like the amount of money parent alumni have given to the organization are not and cannot be used for an admit/no-admit decision. I'm fine with your kid getting a 2nd-floor room in the posh dormitory, and first bite at class scheduling. You can pay for additional conveniences, but not to deny someone else an opportunity earned by their own hard work.