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I'm struggling to find the article, mainly because Google is fixating on the generic terms of my search. But, university endowments are effectively hedge funds

I'm struggling to find the article, mainly because Google is fixating on the generic terms of my search. But, university endowments are effectively hedge funds with a non-profit status. A lawsuit sometime either in the late 80's or early 90's challenged this, and the university successfully argued that because of how much scholarship money they issue they should continue to be considered a non-profit. In particular, the ratio of students on tuition assistance was cited as justification. That established a precedent where universities are incentivized to continually raise tuition while simultaneously appearing to give out more financial aid. Be warned, though, I may be misremembering. So please do correct me if I am wrong.

alistairSH 4y ago
If we remove non-profit status for unis, can we do the same for religious enterprises?
cmh89 4y ago
If you think that's bad, look into 'non-profit' hospitals. They make money like its going out of style and get amazing tax breaks
nemothekid 4y ago
I remember this article as well, it was probably on HN, and I can't find it. I think the university in question was MIT and the complaint that was even though MIT gave very generous scholarships due to this ruling they had to increase tuition every year to balance out the numbers. Funnily enough I've also been looking for that article for years now.
nonameiguess 4y ago
As long as it is used to fund the school and individual people don't own the money and withdraw funds into their personal accounts, it is a non-profit. Not all non-profits need to have a charitable purpose to qualify. PACs, campaigns, and political parties themselves are non-profits. University athletic departments are non-profits. The NCAA and all other amateur sports leagues are non-profits. I'm not at all arguing in favor of this or saying it is moral that these organizations should be tax-exempt, but this is the current status of American tax law. This is particularly bad when you consider that it is entirely legal for, say, a political campaign to spend most of its money buying a candidate's books that nobody else buys in order to hand them out for free at rallies, or a church to spend most of its money buying a mansion and private jet fleet for the pastor.

alistairSH 4y ago

If we remove non-profit status for unis, can we do the same for religious enterprises?

cmh89 4y ago

If you think that's bad, look into 'non-profit' hospitals. They make money like its going out of style and get amazing tax breaks

nemothekid 4y ago

I remember this article as well, it was probably on HN, and I can't find it. I think the university in question was MIT and the complaint that was even though MIT gave very generous scholarships due to this ruling they had to increase tuition every year to balance out the numbers. Funnily enough I've also been looking for that article for years now.

nonameiguess 4y ago

As long as it is used to fund the school and individual people don't own the money and withdraw funds into their personal accounts, it is a non-profit. Not all non-profits need to have a charitable purpose to qualify. PACs, campaigns, and political parties themselves are non-profits. University athletic departments are non-profits. The NCAA and all other amateur sports leagues are non-profits. I'm not at all arguing in favor of this or saying it is moral that these organizations should be tax-exempt, but this is the current status of American tax law. This is particularly bad when you consider that it is entirely legal for, say, a political campaign to spend most of its money buying a candidate's books that nobody else buys in order to hand them out for free at rallies, or a church to spend most of its money buying a mansion and private jet fleet for the pastor.