3 ms·

US universities are becoming for profit institutions using non-profit status to cook the books.

munk-a 3y ago
Ivy league schools in particular are essentially just endowment funds with some teachers around to keep their non-profit status. There are plenty of great educational institutions out there but the most prestigious ones are suffering from their success and attracting money-minded management that is more focused on growing their investment portfolio and handing out juicy bonuses than attracting good staff and ensuring a good educational environment. And even with all that universities still have better a more altruistic profit alignment than most private firms.
- blackhawkC17 3y ago
  > There are plenty of great educational institutions out there but the most prestigious ones are suffering from their success and attracting money-minded management that is more focused on growing their investment portfolio and handing out juicy bonuses than attracting good staff and ensuring a good educational environment. People keep trotting this line but without any substantial proof. Harvard's highest paid employee is a faculty member, David Malan, of the popular CS50 course earning $1.6 million annually [1]. It's always been faculty members earning even more than the President. I assume you're counting Harvard Management Company, the firm managing Harvard's endowment. Yeah, the CEO earns $9 million annually, which is quite high [2]. But there's a catch; were he in the private industry managing a $50 billion+ fund, he'll easily clear $50 million+ in annual compensation, if not $100 million depending on the performance. The endowment managers operate differently from the institution, and salaries are actually much lower than in the private sector. Maybe you want to complain about inequality, sure, but that's another thing entirely. They're paying the least they can to get expert fund managers.. 1- https://projects.propublica.org/nonprofits/organizations/42103580 https://projects.propublica.org/nonprofits/organizations/421... 2- https://projects.propublica.org/nonprofits/organizations/237361259 https://projects.propublica.org/nonprofits/organizations/237...
- detourdog 3y ago
  The number of $100 million+ buildings a New England town of 8,000 can have is staggering. The problem is the idle hands and minds these buildings house. The number of administrator looks like a make work project to create more jobs.
SoftTalker 3y ago
Yes and the administrative areas take up to 50% of all grant funding as "overhead" Some overhead is necessary of course, you need buildings and offices and the people who take care of them but it's likely more bloated than it needs to be.
- jbullock35 3y ago
  > administrative areas take up to 50% of all grant funding as "overhead" I saw them take 60% as overhead at one of my institutions.
  - ethbr1 3y ago
    Are there no caps on admin overhead for grants? (it's been awhile since I've been close to academia)
    - p4ul 3y ago
      At least in the US, an institution’s “facilities and administrative” F&A rate gets negotiated with the Federal government every four or five years. I know of some institutions with F&A rates at or above 70%!! I presume that an institution trying to negotiate a higher F&A rate than this would have some significant pushback!
      - jhbadger 3y ago
        70% is not that high these days -- there are institutions (normally non-university-affiliated research institutions like the Salk Institute that still apply for NIH and NSF grants) have overheads of 90%! It's important to realize that overheads aren't taken out of the grant given to the researcher, they are added to it. So if a researcher gets a $100K grant at institution with 70% overhead, the institution gets $170K.
    - mnky9800n 3y ago
      Many grant giving institutions limit what they are willing to pay. For example, from my understanding the European research council will only pay 25% even if you university demands more.

Ivy league schools in particular are essentially just endowment funds with some teachers around to keep their non-profit status. There are plenty of great educational institutions out there but the most prestigious ones are suffering from their success and attracting money-minded management that is more focused on growing their investment portfolio and handing out juicy bonuses than attracting good staff and ensuring a good educational environment. And even with all that universities still have better a more altruistic profit alignment than most private firms.

blackhawkC17 3y ago
> There are plenty of great educational institutions out there but the most prestigious ones are suffering from their success and attracting money-minded management that is more focused on growing their investment portfolio and handing out juicy bonuses than attracting good staff and ensuring a good educational environment. People keep trotting this line but without any substantial proof. Harvard's highest paid employee is a faculty member, David Malan, of the popular CS50 course earning $1.6 million annually [1]. It's always been faculty members earning even more than the President. I assume you're counting Harvard Management Company, the firm managing Harvard's endowment. Yeah, the CEO earns $9 million annually, which is quite high [2]. But there's a catch; were he in the private industry managing a $50 billion+ fund, he'll easily clear $50 million+ in annual compensation, if not $100 million depending on the performance. The endowment managers operate differently from the institution, and salaries are actually much lower than in the private sector. Maybe you want to complain about inequality, sure, but that's another thing entirely. They're paying the least they can to get expert fund managers.. 1- https://projects.propublica.org/nonprofits/organizations/42103580 https://projects.propublica.org/nonprofits/organizations/421... 2- https://projects.propublica.org/nonprofits/organizations/237361259 https://projects.propublica.org/nonprofits/organizations/237...
detourdog 3y ago
The number of $100 million+ buildings a New England town of 8,000 can have is staggering. The problem is the idle hands and minds these buildings house. The number of administrator looks like a make work project to create more jobs.

SoftTalker 3y ago

Yes and the administrative areas take up to 50% of all grant funding as "overhead" Some overhead is necessary of course, you need buildings and offices and the people who take care of them but it's likely more bloated than it needs to be.

jbullock35 3y ago
> administrative areas take up to 50% of all grant funding as "overhead" I saw them take 60% as overhead at one of my institutions.
- ethbr1 3y ago
  Are there no caps on admin overhead for grants? (it's been awhile since I've been close to academia)
  - p4ul 3y ago
    At least in the US, an institution’s “facilities and administrative” F&A rate gets negotiated with the Federal government every four or five years. I know of some institutions with F&A rates at or above 70%!! I presume that an institution trying to negotiate a higher F&A rate than this would have some significant pushback!
    - jhbadger 3y ago
      70% is not that high these days -- there are institutions (normally non-university-affiliated research institutions like the Salk Institute that still apply for NIH and NSF grants) have overheads of 90%! It's important to realize that overheads aren't taken out of the grant given to the researcher, they are added to it. So if a researcher gets a $100K grant at institution with 70% overhead, the institution gets $170K.
  - mnky9800n 3y ago
    Many grant giving institutions limit what they are willing to pay. For example, from my understanding the European research council will only pay 25% even if you university demands more.