7 ms·
He didn't mention the little problem of the fungibility of money. If a school gets two $100k donations, and one comes with a "no stem cell research" restriction
by hirundo 6y ago
He didn't mention the little problem of the fungibility of money. If a school gets two $100k donations, and one comes with a "no stem cell research" restriction, then it usually isn't a problem to spend the other donation on that, and the restricted one on the road maintenance that would have been done anyway. So a restricted donation is really only effectively restrictive if it significantly outweighs the rest.
- jefftk 6y agoThis also illustrates how unrestricted donations are much more useful to the nonprofit. Funds that can be spent as needed are very flexible, and so can fill gaps left by restricted funds.
- rriepe 6y agoIt's a great reason against donating restricted, but wouldn't help his overall argument that you should trust the non-profit.
- hntrader 6y ago> only ... if they significantly outweigh the rest. Or if it causes over-investment into a specific cause (e.g. $100k must go to roads, when the non-profit only wanted to allocate $50k to that), which fungibility of money can't address. The more specific the restriction is, the less fungibility is able to provide an out.
- ma2rten 6y agoI wouldn't donate to universities in general. The have growing endowments which they don't spend. It also adds the income inequality in the US, you are essentially donating to the education of rich people. Note that PG talks about non-profits not schools.
- freedomben 6y agoI don't disagree with what you've said, but your Note is wrong. PG in the article specifically uses a University donation as an example.
- ma2rten 6y agoBut it says that universities are the exception. It's more of a counterexample.
- sokoloff 6y agoMany universities are non-profits.
- jdavis703 6y agoUniversities are probably the main mechanism we have for economic mobility in the US. There’s almost no where else in the US where the government will give a kid from a poor family thousands of dollars to invest in their long-term well being (and that kid will wind up repaying in taxes their education anyways.)
- doktorhladnjak 6y agoIt really depends on the university. Many do not have substantial endowments. Many educate a disproportionately high number of first generation or low income students.
- remote_phone 6y agoSchools like Harvard and Stanford give away free tuition to students whose families make less than 120,000. This is directly from their endowments.
- analog31 6y agoIndeed, that happened in the state where I grew up. When they started the state lottery, it was with the promise that the money would be spent on "education." Sure enough, the lottery money went to the education fund, and the contribution from the general fund was reduced by the same amount.
- websites2323 6y agoAre you from Texas?
- analog31 6y agoMichigan.
- websites2323 6y agoInteresting. It seems to be a similar story in multiple states. I oppose state funded gambling, and this is one reason.
- colinmhayes 6y agoIf the alternative is more taxes or worse service isn't taxing gambling a good option?
- muti 6y agoThe lottery is effectively a regressive tax. I would prefer increasing taxes in a progressive or at least proportional scheme.
- colinmhayes 6y agoThe lottery is a choice. No one is forcing anyone to play. People are going to gamble though, so the state might as well take a cut as a way to discourage it.
- human 6y agoOk so everybody learned a new word this week: fungibility.
- danielam 6y agoRight, or if funds are earmarked across the board to some adequate degree.
- santoshalper 6y agoA lot of restricted donations are more specific than "no stem cell research", which I agree is going to be manageable for most organizations.
- doktorhladnjak 6y agoFungibility can add inefficiency even if it doesn't make a huge difference in the totals spent. For example, a friend of mine used to work for an environmental agriculture non-profit. A large donation had been made that could only be spent buying trees to plant. Now, they planted a lot of trees as part of their work anyways so this seems reasonable. The problem was that it did not cover the labor of planting the trees, tools for planting the trees, or many related costs. In practice, it took them many years to spend all this money across many projects, when an unrestricted donation would have probably had more positive effects sooner. Moreover, they had to track how much was spent on trees separately for every project so that it could be properly accounted for against this restricted donation, which of course added administrative overhead.
- m463 6y agoYeah, but... You don't want a situation like tips and doordash either.