Yet, curiously, the Internal Revenue Service does not treat alumni donations as transactional payments. Instead, it treats them as charitable giving. As a result, alumni that make such donations are entitled to deduct the amount of their donation from their income for tax purposes. In so doing, the richest alumni receive a tax subsidy of forty percent of the amount of their donation. That is, the public ultimately funds as much as forty percent of any given legacy admissions payment.
Under most understandings of charity, it is not clear why any donation, alumni or otherwise, to an elite educational institution should be considered charitable. Top tier universities like Harvard and Princeton, although non-profits, charge high tuitions and enroll nearly 25 rich students per each poor student. In any non-educational context, few would call an organization with similar characteristics a charity. But the case for alumni donations being charitable is even thinner. Because alumni donations purchase improved admissions chances, they violate the most fundamental rule of charity, namely that it not enrich the giver.
In addition to being poor public policy, these charitable tax subsidies generate a disgustingly unjust spectacle. The vast majority of parents do not have an educational background that enables them to benefit from the donation-legacy system. Yet these parents are forced, through the tax code, to help fund alumni donations that intentionally militate against their own children’s chances of admission to the elite institutions they may otherwise be well qualified for. Children of poor parents in particular already endure extraordinary burdens competing against children of rich parents from elite universities; publicly financing the rigging of college admissions systems against poor children is yet another thumb on the scales against their success.