Harvard is filthy rich, with a massive endowment of $32 billion and a constant influx of millions of dollars from wealthy alumni. It kind of skews the public perception of universities, too — no, most of us are nowhere near that rich, and are struggling to make ends meet. But I don’t think that’s enough just yet to justify taking away Harvard’s nonprofit status.
…from a purely utilitarian perspective, there are causes that need that $350 million more. Groups like GiveWell are devoted to figuring out where a dollar does the most good. It recommends initiatives like deworming in very low-income countries. Harvard, at the same time, is spending a billion dollars upgrading its coeds’ convenient, riverfront housing. If it wanted to maximize its $32 billion worth of utility, it could, say, admit more students, especially poor ones, reduce its focus on property development, and double down on its focus on research, which currently makes up $800 million of its $4.2 billion in annual operating expenses.
But there is a way to encourage the university to do that, or at least to ensure that it is also contributing more to the public good. That is to take away some of Harvard’s tax exemptions, as suggested by legislators in Washington and Massachusetts, as well as a number of economists. The idea is that such megarich schools hoard funds and real-estate, tax-free, to the detriment of local communities or federal coffers, a situation that could be remedied with a wealth tax on endowments over $1 billion, property taxes, or a tuition sales tax.
It is definitely true that the well-off universities could do a better job of advancing scholarly goals, rather than the endless cycle of money for money’s sake, churning so much of their income into the purpose of increasing their income further. That, supposedly, is what a board of trustees is supposed to do — guide the institution in making decisions in line with its mission.
But all I could think on reading this proposal is…why are you going after universities, which are promoting education and research, and not going after the massive tax-free boondoggle of the churches, which promote superstition and, lately it seems, priestly buggery? If you’re going to claim a high-minded dedication to seeing huge endowments used wisely, I’d like to see some judicious prioritizing of targets on your part first.
Some of those suggestions are just awful, too. A sales tax on tuition? That’s just going to get passed on to the students, and they pay more than enough already. In fact, from my non-Harvard perspective, the big problem in this country is that most universities have been starved of support, and have had to turn to scraping it out of their students’ pockets, leading to increasing student debt. Any proposal that aims to take away a portion of university revenue by any means is going to lead to increased hardship for the students.
Part of the problem here is the idea that a university is a commercial enterprise selling a commodity to customers, and therefore should have its budgets policed in the same way as a business, that is, on the basis of its accounting. Harvard is a weird outlier, so it’s unfair to judge higher education by its example, but even so, talking about a sales tax on tuition is revealing of an invalid perspective.
A university’s customer is society. Are we creating productive citizens with skills and interesting perspectives? Society as a whole should be investing in that process, and unfortunately in the US, we’ve got an electorate that likes the benefits but thinks they should be acquired for free, somehow. And Harvard should be milked like a cash cow rather than seen as a resource that ought to be shaped and encouraged.
The article was prompted by a huge donation of $350 million to Harvard, which seems extravagant. It was. I also think it was foolish. That’s a large drop in the bucket at a colossal concern like Harvard, and an investment in a single concern that turns out a small number of graduates. If wealthy donors really want to make a difference, rather than throwing buckets o’ money at institutions that already got lots, spread it around — look around the country for worthy universities that reflect your values, and give them your donations and make a real difference.
Like the University of Minnesota Morris. I can’t even imagine what a donation of hundreds of millions of dollars would do here — it would revolutionize the place. We might actually have an endowment that would allow for long-term growth and stability.
And not just UMM, but any of hundreds of colleges all across the country. You want your donation to make a difference in education? You’re nuts to give it to Harvard.
But taxing any higher ed institution? That’s nuts, too.