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> (ii) the university's endowments if alumni decrease their donations. The tax law says you aren't supposed to be able to deduct contributions to charitable or

> (ii) the university's endowments if alumni decrease their donations. The tax law says you aren't supposed to be able to deduct contributions to charitable organizations if you get something in return. Edit: Point being that this system is illegitimate in the first place, not that it doesn't happen.

SpicyLemonZest 7y ago
I'm not sure that's true. There are rules about explicit quid-pro-quos, and although they're not entirely banned (if you donate $250 for a concert ticket worth $50 you can deduct the $200) there are rules that clearly aren't being followed in this case. But tax law doesn't (and probably couldn't) attempt to restrict vague returns like "the recipient sees you and your family in a more favorable light".
- lotsofpulp 7y ago
  Explicit quid pro quos are banned, your concert ticket example showing as such. And the fact that we can’t define or prove every situation where there is quid pro quo is a weakness that is exploited by many rich people, also shown by your example (is that ticket worth $50?). Doesn’t make it the right thing to do, and is not optimal for society in the long term.
morpheuskafka 7y ago
You are supposed to reduce the value of the deduction claimed by the fair market value of anything in return. So if they send you a $10 sticker or invite you to a banquet with $500 in food, you can't deduct that part. The question is, how exactly can one determine the FMV of a boost in admission consideration (not even just the admission itself, but an un-quantifiable additional favorable factor in review)?
- lotsofpulp 7y ago
  Question would be moot if we simple got rid of deductions. Only reason to have them is to enable this type of gaming of the system.
geofft 7y ago
Legacies are considered more favorably for admissions regardless of how much (or even whether) they donate, right? Or have I misunderstood the system? That is, the only thing that donations get you is the vague hope that your university will never make the decision Johns Hopkins just made, and it's a vague prisoner's dilemma - as long as enough alumni donate, legacy admissions stay around for all alumni.
- virtuous_signal 7y ago
  No -- I'm going off news that came out in light of the lawsuit against Harvard recently, but I have no reason to believe other elite universities handle it differently. These things are shrouded in secrecy for the precise reason that it is massively unpopular, but at least in this case we got an inside look because of discovery for the lawsuit. Harvard creates a special "Dean's Interest List" (https://www.thecrimson.com/article/2018/10/18/day-three-harvard-admissions-trial/ https://www.thecrimson.com/article/2018/10/18/day-three-harv...) which includes celebrities, "top donors", and certain athletes. The admissions rate restricted to this list was 42.2% in 6 recent years.
- leetcrew 7y ago
  my guess is that legacies are just a good proxy for donations in general. if someone encourages their child to apply to the same college they attended, they probably feel more connected to the institution than the average graduate (and have donated more accordingly). legacy admissions policies may also encourage people to donate more because they know their children will have a better chance of benefiting from the investment. it's likely a decent proxy for wealth, too; someone who graduated from an elite institution is probably well above the median income. so basically it correlates with a lot of things that the institution wants, but doesn't want to state as an explicit policy.

SpicyLemonZest 7y ago

I'm not sure that's true. There are rules about explicit quid-pro-quos, and although they're not entirely banned (if you donate $250 for a concert ticket worth $50 you can deduct the $200) there are rules that clearly aren't being followed in this case. But tax law doesn't (and probably couldn't) attempt to restrict vague returns like "the recipient sees you and your family in a more favorable light".

lotsofpulp 7y ago
Explicit quid pro quos are banned, your concert ticket example showing as such. And the fact that we can’t define or prove every situation where there is quid pro quo is a weakness that is exploited by many rich people, also shown by your example (is that ticket worth $50?). Doesn’t make it the right thing to do, and is not optimal for society in the long term.

morpheuskafka 7y ago

You are supposed to reduce the value of the deduction claimed by the fair market value of anything in return. So if they send you a $10 sticker or invite you to a banquet with $500 in food, you can't deduct that part. The question is, how exactly can one determine the FMV of a boost in admission consideration (not even just the admission itself, but an un-quantifiable additional favorable factor in review)?

lotsofpulp 7y ago
Question would be moot if we simple got rid of deductions. Only reason to have them is to enable this type of gaming of the system.

geofft 7y ago

Legacies are considered more favorably for admissions regardless of how much (or even whether) they donate, right? Or have I misunderstood the system? That is, the only thing that donations get you is the vague hope that your university will never make the decision Johns Hopkins just made, and it's a vague prisoner's dilemma - as long as enough alumni donate, legacy admissions stay around for all alumni.

virtuous_signal 7y ago
No -- I'm going off news that came out in light of the lawsuit against Harvard recently, but I have no reason to believe other elite universities handle it differently. These things are shrouded in secrecy for the precise reason that it is massively unpopular, but at least in this case we got an inside look because of discovery for the lawsuit. Harvard creates a special "Dean's Interest List" (https://www.thecrimson.com/article/2018/10/18/day-three-harvard-admissions-trial/ https://www.thecrimson.com/article/2018/10/18/day-three-harv...) which includes celebrities, "top donors", and certain athletes. The admissions rate restricted to this list was 42.2% in 6 recent years.
leetcrew 7y ago
my guess is that legacies are just a good proxy for donations in general. if someone encourages their child to apply to the same college they attended, they probably feel more connected to the institution than the average graduate (and have donated more accordingly). legacy admissions policies may also encourage people to donate more because they know their children will have a better chance of benefiting from the investment. it's likely a decent proxy for wealth, too; someone who graduated from an elite institution is probably well above the median income. so basically it correlates with a lot of things that the institution wants, but doesn't want to state as an explicit policy.