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Silver Spoons

[ 169 ] September 9, 2013 |

Interesting take on the relationship between legacy admissions to colleges and tax policy in the New Gilded Age:

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.

Comments (169)

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  1. TT says:

    Meritocracy at work.

    • GoDeep says:

      I have no problem with the tax deductions to universities. Charitable giving to my school got me through undergrad and graduate school. I owe a GREAT DEAL to those people.

      My bigger problem w/ the legacy system is how this works to grandfather in entitlement, privilege, and race.

      At my fancy pants school legacy applicants got by far more application points than any other class of students–blacks, Hispanics, the poor, etc.

      It always seemed strange to hear rich white kids complain abt affirmative action when they got many more points for being the child of an alumn than I could even dream of as a black kid from the projects. Not for nothing but legacy admissions are just racist; their disparate impact is indisputable. Don’t end the tax deductions, end the unfair admissions credit legacies get.

      • Anonymous says:

        What would get more people through school would be if states just funded public universities at adequate levels and then assessed the necessary levels of taxes in order to pay for that funding

        But rich people don’t get stuff for that so they keep it from happening

  2. Goldie says:

    Taking on the Ivy League and BIG EDUCATION? Good luck with that! We can’t even defund subsidies for scam pro-profit schools.

    I did not find the legacy people at Harvard to be less intelligent than normal admits. I did find this of the race AA admits, as well as many of the athletes and “poor rural white AA” admits, though there were not very many of them.

    Look at it this way: If 1 in 10 Harvard slots are for legacies, and the average Harvard grad has 2 children (10% of the time with another grad), and assuming class size is fixed, that means there are 18 potential legacies in the applicant pool for each legacy admission slot.

    There is thus still tons of room to be very selective with legacy applications, a pool that is already very smart.

    On the list of the world’s injustices, a tax deduction for college giving doesn’t even make the top 1000. Or even the top 100 dumb and regressive parts of our tax code. Harvard generally makes good use of its money, with its most expensive current project being setting up a large engineering and biotech research center. The good work of the Kennedy School and the School of Public Health is also subsidized by alumni donations and run at large losses.

    Moreover, little college giving is for securing legacy admission of children. It is overwhelmingly done by the living elderly and in bequests. Much of it is also earmarked to particular programs, a type of funding that is not what an administrator would demand in exchange for admission, as they strongly prefer unrestricted giving.

    • Warren Terra says:

      Might I suggest to you that if in assessing the intelligence of Harvard students you find the legacies consistently up to par but the poor white and poor black “diversity” admittees frequently underwhelming, you may be responding to cultural and behavioral markers as much as you are to actual intelligence?

      • ChrisTS says:

        That was far more gently put than I would have managed.

        • N__B says:

          “There comes a time when a man must spit on his hands, hoist the black flag and begin slitting throats.”

          As far as I know, this applies to women as well.

      • Charlie says:

        Whether you went to Harvard or not, study after study shows we are ALL, regardless of background, often woefully overconfident when it comes to assessing theabilities of others in “intelligence” and “competence.” What these studies show is that too often all we are good at recognizing is “shared cultural capital” and little else.

      • Goldie says:

        “you may be responding to cultural and behavioral markers as much as you are to actual intelligence?”

        I don’t doubt that it some of it, but not “as much.” And not at all in classes that don’t involve such markers, such as the hard sciences and math.

        There’s not any real question about the relatively bad performance of AA admits generally in selective colleges. My impression is that this is primarily an issue of intelligence (the same with the athletes) than culture/discrimination, but that’s another debate.

        I’ve seen no evidence that legacies are similar, and as I noted, that was never my impression over 4 years, unlike the other three groups. I would guess that if some statistics were compiled legacies would do very slightly worse than average, but they just were not obviously and disproportionately concentrated at the bottom of the class like the other groups I mentioned.

    • Tyro says:

      I didn’t find the legacy admits to be less intelligent than “normal” admits, but the legacy admits were there because they displaced other “normal” admits who were as intelligent if not more intelligent than they were.

      • I suppose I should be very, very, very careful with what I put here but what the hell. I’m a legacy at Harvard–my father, grandfather, and even grandmother went. I ended up marrying a guy from my class although we didn’t meet at Harvard. We have a rising 12th grader and would love her to go. The competition to get in to Harvard is even more overwrought now than it was 30 years ago–like tenure and academia generally. I’m pretty sure I wouldn’t qualify now although at the time I was an excellent candidate. My daughter, though an incredible candidate by any objective measurement, will probably not get in.

        The current acceptance rate at Harvard is 6 percent. All the kids of people I know who have applied to Harvard, whether accepted or not, were absolutely incredible candidates by any standard. I know people who have been turned down for Harvard who were just jaw droppingly great. And I know plenty of people who went to Harvard with me, have all the money in the world, and who wouldn’t dream of even letting their kid apply to Harvard because legacy, at this point, means absolutely nothing. You either have perfect scores on your SATs and an incredible resume or you are shit out of luck. (Barring the giving of an entire wing of a building and any nouveau riche parent could do that.) If there were a points system at play and there were a separate set aside for legacies one could argue that, the pool being smaller, it might be easier for a legacy to get in but one’s legacy dumpling is still going to be in a brutally competitive pool with the other hothouse, groomed, stellar students who have all striven to have “solved world hunger” “played violin at Carnegie hall” on their resumes.

        I guess what I’m trying to say is that the argument advanced for why Affirmative Action students aren’t worse than non AA students is actually as true for legacy students at a highly competitive school. The applicant pool is so overwhelmingly overqualified that they don’t have to accept anyone who isn’t a top student. You can use race, or class, or height as proxies for diversity but the few slots available will be filled with the highest caliber candidates–even choosing between two legacies you can afford to discriminate against the lower qualified candidate.

        • GoDeep says:

          I think there are 2 separate issues at stake here. One is quality of students & the 2nd is equity. So, sure, I’ll go along with the proposition that a legacy candidate is, very broadly speaking, generally well qualified.

          But the 2nd issue is equity & that’s a different story altogether. In the 2008 Olympics Usain Bolt won the 100m sprint in 9.69secs & was awarded the Gold Medal. Richard Thompson came in 2nd with a time of 9.89secs, a difference so vanishingly small you couldn’t blink your eyes in that length of time. Churandy Martina came in 4th because he was just .02 seconds behind #3, Walter Dix, and was awarded nothing to show for his effort.

          Operating under your premise these folks were all highly qualified and Harvard should be quite pleased to have any of them. But from the Point of View of the candidates where’s the fairness in that? What’s equal abt giving the Bronze Medal to Martina instead of Dix on the premise that Dix’ father ran in an Olympics 30yrs ago? After all, you might argue that only two hundrendths of a second separates them. But Legacy Students’ parents donate lots of money some say. OK, how about we take away Bolt’s Gold Medal and give it to Thompson because Thompson’s father donates money to amateur athletes?

          There’s no equity in a system like that. Its Reverse Affirmative Action. LBJ analogized affirmative action to running a sprint. As you see from this example Reverse Affirmative Action turns that analogy on its head.

          • Aimai says:

            I think thats a terrible analogy. The olympics analogy cuts the other way entirely. First of all: it rests on a single score or group of scores and nothing that happens outside of it affects it. There is no affirmative action or equity consideration that, for example, awards an athelete who has worked harder or come from an impoverished background–the scores are the scores. Sure, one can’t buy the medal outright but in the US and around the world tons of money, sometimes family money and sometimes state money, is poured into the atheletes giving them an advantage over atheletes who otherwise can’t afford to train.

            At any rate I’m not defending legacy admissions or arguing that they are a good thing. I don’t think they are equitable or comport with a meritocracy. My only point is that standards have risen so high and competition is so fierce that even the legacies can’t be dismissed as simply upper class twits.

            Personally, I don’t think a focus on the Ivies or their imagined sins makes the slightest sense. The social status that gets passed around at that level among the children of the elites is largely illusory–not entirely but largely. There are hundreds of great schools in this country and the people who go to them get great educations and if the economy permits can expect to have great careers and lives. The real educational issue is not who gets to go to Harvard but whether every kid gets a great education k-8, a great highschool education in a public school and can then afford a great public education at a state school. The other real issue is an economy that has good jobs for everyone regardless of where they went to school.

            I guess what I’m saying is that you could fill up every Harvard and Yale class tomorrow with non legacies–hell, you could fill them with students coming from China–and not change the nature of privilige and elitism in this country, and not touch the real educational issues which run top to bottom and need to be dealt with systemically by rebuilding a decaying state system.

            • GoDeep says:

              I don’t think the ‘outrage’ is largely due to the fact that most ppl think most Legacies are dumb twits. Most of the objection is b/cs it cements in advantage & undermines the meritocracy. As a class you can’t escape the fact that Legacy students are less qualified than their non Legacy peers–otherwise they wouldn’t need additional points to get in.

              As to your broader point abt elite schooling vs K-12. Sure that’s true as far as it goes, but given that a large percentage of our national leadership–esp POTUS and SCOTUS–is culled from top schools I don’t think the interest in having a more egalitarian admissions policy is unfounded. Honestly the university is one of the few (and first) arenas where the elite & non-elite get to mingle, so we have a civic interest in ensuring the university fairly reflects the full diversity of American life.

            • dollared says:

              Really? Filling the universities with the children of highly qualified rich kids, as opposed to highly qualified children of the middle class, would have zero effect?

              Good. Let’s do it. Tomorrow.

            • dollared says:

              I generally respect your opinions, but your obliviousness and lame rationalization on this subject are mind-boggling. You don’t think it affects our country that the prime leadership training institutions in our country are limited to mind boggling 18 year olds who somehow overcome insane odds, and a large number of children of privilege? Have you looked at the Harvard/Princeton/Yale lock on national leadership and opinion making in our country? Do you really, really think that closing off 10% of the slots to ensure the privilege of the upper class doesn’t have an effect? Really? Then of course you wouldn’t mind sending your kid to UConn, just to show any child can still be a Supreme Court Justice of partner in a New York I-Bank coming from UConn, right?

              You talk about the need to repair the overall education system. What universities do the leading assassins of the system come from? Where did Bill Gates go? Harvard. Michelle Rhee? Cornell. The policy makers’ children are assured of their Ivy league slots. Why should they care?

              • Goldie says:

                Having an upper-middle class background, but probably in the bottom quarter of my classmates economically, I greatly appreciated mingling with the upper class and absorbing their culture. You might call in learning outside of the classroom.

                I don’t really care that some of them might have been admitted in place of a middle class person who is slightly more qualified. First, that just means a tougher curve. Second, that means weaker connections. Third, I want what is best for the university once I was there.

                For these same reasons I have no problem with the preferences for underrepresented minorities, athletes, and rural/poor whites. Nor am I really one to complain, since while all these groups had an easier admission standard than I did, I in turn had an easier standard than Asian applicants.

          • JL says:

            Like you, I also dislike legacy admission, and am glad that my alma mater did not practice it.

            However, the running analogy is ridiculous. First of all, you can’t rank college applicants in the exact way that you can rank finishers in a race – there are many criteria, some of which are not quantitative, and it’s not always clear how they should be prioritized. Second of all, medals are a reward for strong performance. I worked in admissions part-time as an undergrad, and I kept trying to explain to high schoolers and their parents that elite college admission is not a cookie to reward your high school performance, it’s an investment in someone’s potential, and therefore, whining that you didn’t get in even though your GPA was a tenth of a grade point higher than that of this girl you knew who did get in, and that’s so unfair, was missing the point.

            Normally, I hear analogies to things like races from people who oppose affirmative action, who contend that even if the underrepresented students that a school is accepting are highly qualified, AA means that they’re displacing more qualified rich white or East/South Asian guys. This argument is based on the same erroneous ideas that you can rank applicants exactly and that past performance should be the main criteria. IMO, AA is justified in a way that legacy admissions are not because colleges should not just be institutions for reinforcing privilege and inequality. Any elite college is going to be that to some degree, unfortunately, but policies like this can either mitigate or strengthen that effect.

        • IFD says:

          Apparently in your world, greater than 5 times the chances as a non-legacy is absolutely nothing.

          In recent years, Harvard’s acceptance rate for legacies has remained around 30% while for the overall population it has declined from to 7.1% in 2008 to 5.8% in 2013.

        • Manny Kant says:

          Worth noting that these kind of insane resumes are themselves a way of maintaining class privilege. It generally takes a significant amount of money to build the kind of “incredible resume” you’re talking about.

    • LoriK says:

      There is thus still tons of room to be very selective with legacy applications, a pool that is already very smart.

      Citation needed.

      • EH says:

        Well, they obviously chose the right families to be born into. Not to be chauvinistic, but for a fetus that takes some smarts.

      • dollared says:

        I got your citation right here: GWB.

      • Goldie says:

        That Harvard students are much more intelligent than average, and their children will be too, is pretty obvious. Do you want a citation on the length of this month as well?

        I suggest going to Google Scholar, and doing searches for IQ and heredity. Then go to Harvard.edu and search for statistics about the current class.

        The more interesting question than this obvious point is how badly Harvard graduates’ children will regress to the mean.

        • Andrew says:

          Since you’re suggesting reading and research for others, may I suggest going to Google Scholar and searching for critiques of IQ test results? You might find that it’s not such a great measure of latent intelligence and that environment plays a substantial role in IQ test performance.

          • Manny Kant says:

            Not to very seriously defend Goldie’s racist meanderings, but I’d think both genetics and environment would be positively affected by having a Harvard alum parent. And in choosing students for elite schools, aren’t we looking for actual displayed intelligence, rather than latent intelligence?

            That being said, even if children of Harvard alumni are more intelligent, on average, than the general population, that doesn’t mean that there’s no legacy premium going on.

            • Manny Kant says:

              As an example, I’d assume children of Yale alumni are also smarter than the average person. What percentage of children of Yale alumni (who are not also children of Harvard aluni) get into Harvard? I doubt it’s particularly close to 30%.

            • Andrew says:

              I’d think both genetics and environment would be positively affected by having a Harvard alum parent…As an example, I’d assume children of Yale alumni are also smarter than the average person.

              Yes, for a variety of reasons most of which aren’t due to heredity (although trust funds can be inherited), Ivy parents are probably more likely than average to provide an environment for their kids that maximizes intelligence. That’s different than saying “Ivy parents give birth to smarter children because DNA.” How we measure intelligence matters. Using IQ, which is susceptible to all the advantages afforded to someone born to Ivy parents, is problematic to say the least.

              And in choosing students for elite schools, aren’t we looking for actual displayed intelligence, rather than latent intelligence?

              That depends on whether we’re discussing elite schools as they are or as they should be, no?

  3. SP says:

    I’ll give Yglesias this, he’s burning any advantage his future offspring might have derived from his legacy, not only refusing to donate himself but using his soapbox to actively discourage others from joining the immoral system.

    • Charlie says:

      He is also very good at demonstrating the palpable downsides of receiving a Harvard education.

      • Lee Rudolph says:

        Different strokes, and all that, but I for one could have gone on much longer than I had already without being led to contemplate palpating Matt Yglesias’s downside.

      • Gregor Sansa says:

        The world has room for pundits who shoot from the hip. Yes, the average quality of his posts is somewhere around “wrong but interesting”, with a high variance on both sides, so that includes some real stinkers. But I sure as hell couldn’t do his job better than he does it, and there are an awful lot of pundits and bloggers who do it worse. And anyway, upside or downside, I suspect that’s kinda how he is naturally; I doubt Harvard had all too much to do with making him that way.

        • dollared says:

          He is the living, breathing demonstration of how ivy elitism is undermining this country.

          He seems like a nice guy, but I met 25 year old paralegals in downtown Minneapolis who were smarter and more astute judges of political economy. But their diploma said “University of Minnesota” or “St. John’s,” so they were never, ever going to be nationally known pundits.

          So we are blessed with the facile market based contrarianism of yet another oblivious Harvard grad.

          • mpowell says:

            I don’t meet many people whose grasp of political economy anywhere near approaches Yglesias’s. And his is astoundingly good for a pundit. So I’m going to call bullshit on you. I think a lot of people dislike Yglesias because they don’t like his views and he certainly doesn’t try to fit in on the left. Sometimes he’s wrong and sometimes he’s right, but he’s just not interested in being a ‘good liberal’.

            • Bijan Parsia says:

              To the degree I dislike Yglesias it’s because I don’t think he’s very good. I like some of the things he says and dislike others. What annoys me about him is that I don’t find him hugely responsive to evidence and argument perhaps most where his are poorest (which often, but not always, correspond to when he’s wrongest).

              I also tend to find him glib where depth is needed. Unlike Ezra Klien, I don’t see him doing much reporting either.

              Maybe he’s still good-for-a-pundit…but then why should I care? Pundits who aren’t experts or capable have no value for me and being better than most of them says very little.

            • NewishLawyer says:

              I dislike Matt Y because to him everything can be reduced to: economics, economics, economics. Growth, growth, growth. He isn’t even an economist. He merely seems to have taken econ 101 and turned it into a lucrative writing career.

              Note: I am highly opposed to a view of the world based on one academic discipline whether it be economics, poli sci, STEM fields, arts and humanities, etc. You need to approach issues from multiple viewpoints and disciples. My friends with urban policy degrees have different solutions to the housing crisis than my friends with economics and business degrees. Perhaps this suggests the best policy combines multiple outlooks?

              He has a shtick and I suppose most successful pundits do but there is more to life to economics and he is uncommonly snide at dismissing those who disagree with him and not thinking that they have any valid points.

              To be fair: I have a much more theoretical and philosophical view of what makes a city different from other cities and it does need to involve physical features. San Francisco and Portland would not be San Francisco and Portland if they looked like Manhattan.

            • NewishLawyer says:

              Another good example is how he thinks that there should be unlimited caps on the number of liquor licenses available for any location because he thinks it will improve the economy.

              It never seems to occur to him that there is such a thing as balance and even people who live in urban neighborhoods want some peace and quiet. There is having a good number of bars and restaurants but too many creates a lot of noise and unruliness.

              I live in a neighborhood that becomes ground zero for the Bay to Breakers after party every year. This means a lot of young 20-somethings usually from the suburbs or the fratier district of SF (aka The Marina) come to my neighborhood and spend the entire morning to late afternoon drinking tons of beer. This year I needed to ignore a game of beer can grenades when doing my chores. At the end of the day, the young bros and their female equivalents left lots of empty bottles and cans on the street without clean up efforts.

              Too many bars in a domestic/residential area could create a mini-version of that on a weekly basis especially if people tend to party far from home.
              I already live in a somewhat more bar heavy area and hear a lot of very drunk people at 2 or 3 on weeknight mornings.

              I suspect Matt Y would merely comment about the revenue and call me NIMBY for opposing this.

    • Erik says:

      Wow, 1 post and 3 replies, and not one of them can read a byline.

      Not Yglesias.

      • Manny Kant says:

        Nothing in SP’s post, nor in any of the replies, suggests that anyone thought Yglesias wrote the post in question. Yglesias has repeatedly and frequently argued against charitable donations to elite academic institutions.

  4. bob mcmanus says:

    My first thought when you mentioned the tax deductible donations of alumni was the three small private colleges within walking distance of my home. I don’t quite understand why there are the hundreds or thousands of denominational or community colleges that exist, but i do wonder if the aggregate alumni donations give to the Southwest Baptist Theological Universities of America don’t exceed what is given to the Ivy League. I also presume the smaller colleges and universities are more dependent on alumni donations, and might guess those places also favor legacy admissions. I don’t know why I care that this diversity, including black colleges, continue, but I do.

    Jim Wright, the Speaker, graduated from Weatherford.

    I am not sure if our problem is that the elite elites are drawn increasingly from the Ivy League, or if we assume that a Weatherford College education is worse than going fishing, or if we no longer notice or care about the 1% of Parker County, Texas, who are also an elite. I bet Parker County cares, and probably more than about who is the Undersecretary of Whatever of has gotten onto a NY trading floor.

  5. wjts says:

    Although I suspect it would be difficult to track down hard numbers, I’d be curious to know exactly how large a donation is required to positively influence a legacy’s chances of admission and what percentage of college donations meet that threshold in terms of both total dollar amount and number of donors. I’ve funneled literally dozens of dollars back to my fancy-pants undergraduate alma mater, and I can’t imagine this having much of an effect on my extremely hypothetical children’s chances of admission.

    Under most understandings of charity, it is not clear why any donation, alumni or otherwise, to an elite educational institution should be considered charitable.

    Given that at my alma mater (and I assume others) it’s possible to earmark donations for (among other things) scholarships, medical research, the performing and visual arts, museums, and libraries, I don’t think it’s unclear at all.

    • Warren Terra says:

      (1) Why should any charitable donation be tax-deductible? Why should your desire to flatter yourself with good works be subsidized by my tax dollars? Some types of rich-man’s-sport are especially prone to this dodge – competitive art collecting, especially. Any insanely rich person who wants to can build themselves a collection and an edifice to house it, tax-free, and all they have to do is allow the public to gawk at their loot occasionally – possibly only after their death.

      (2) Yeah, sure, name the more laudable recipients. Just last week, in a story I can’t find at the moment, some rich asshole donated a couple hundred million to their alma mater – stipulating that it go only to the Business School and to Athletics. I hope they grace the lawn in front of the resulting building(s) with a life-size bronze of the donor literally pleasuring himself.

      (3) I do however agree with you that the connection drawn here between donation and admission is probably overblown – that admission is surely purchased, and more surely influenced, but that most donors (though not most donor dollars) are poor schmucks guilt-tripped or badgered into handing over $100, not Daddy Warbucks building a library so their idiot child can be admitted.

      • L2P says:

        Why should any charitable donation be tax-deductible? Why should your desire to flatter yourself with good works be subsidized by my tax dollars?

        So that we do, eventually, get to see those awesome artworks that otherwise would be kept in someone’s closet? So that we can get parkland that otherwise would be some rich guy’s back yard? So that the poor aren’t entirely left at the mercy of scarce public financing for cool stuff?

        Among other things, charitable deductions fund innumerable scholarships for art and science fellowships, pay for pre-college enrichment for hundreds of thousands of poor children that otherwise wouldn’t get squat, and are one of the main ways a lot of parks stay afloat (at least in California). IMO putting up with the Gates Computer Science Wing is a small price to pay, but YMMV.

        • Warren Terra says:

          Gates is a bright spot in my assessment of humanity (Microsoft’s actual business aside). But he’s an extraordinary person, and while it’s great he’s funding attempts to treat diseases affecting the global poor, it’s a goddam disgrace he’s the only one doing so. As a Liberal, I believe in a strong safety net and a government that meets society’s needs – not a bunch of people who pray that rich folks will build Computer Science Centers for public universities, instead of willing their estate to create a charitable foundation that builds luxury hotels for cats. And while I adore (most of) what Gates has chosen to do with the second half of his life, I still question why he gets total control of all his money to make those decisions with, utterly tax-free. I don’t like a tax code that makes us supplicants dependent on the goodwill of Gates.

          • Linnaeus says:

            Oddly enough, the computer science building at UW is named for Paul Allen. But the law school is named for Gates’ father and one other building is named for his mother.

          • JoyfulA says:

            And lots of Gates’s money has been used to undermine public education and fund charter schools.

        • Fake Irishman says:

          You could have endowed the child-care subsidy program for both grads and undergrads at UMichigan in perpetuity, greatly expanded it so international students could take advantage of it (and members of Satellite campuses as well), and build in annual increases for $45 million. Instead, Ross gave it to build another palace named after himself at the Business school for $200 million.

      • wjts says:

        Why should any charitable donation be tax-deductible?

        That’s a separate question, I think. And while it’s fair to say that no charitable donations should be deductible, I don’t think it makes a great deal of sense to say donations to one sort of 501(c)(3) should be deductible but others should not be. As the law currently stands, I don’t see much of a difference between deducting your $2500 donation to the Metropolitan Opera and deducting your $2500 donation to the Berklee College of Music.

        Just last week, in a story I can’t find at the moment, some rich asshole donated a couple hundred million to their alma mater – stipulating that it go only to the Business School and to Athletics.

        Yes. Some donations are laudable, some are despicable, and some are morally neutral.

      • wjts says:

        Why should any charitable donation be tax-deductible?

        That’s a separate question, I think. And while it’s fair to say that no charitable donations should be deductible, I don’t think it makes a great deal of sense to say donations to one sort of 501(c)(3) should be deductible but others should not be. As the law currently stands, I don’t see much of a difference between deducting your $2500 donation to the Metropolitan Opera and deducting your $2500 donation to the Berklee College of Music.

        Just last week, in a story I can’t find at the moment, some rich asshole donated a couple hundred million to their alma mater – stipulating that it go only to the Business School and to Athletics.

        Yes. Some donations are laudable, some are despicable, and some are morally neutral.

      • UserGoogol says:

        If a charity actually does social good, (which in principle they’re supposed to) then it makes sense that the government would subsidize that. So making donations tax-deductible is a somewhat crude and ad-hoc way of getting the government to subsidize programs which aren’t special enough to get special government attention, but which some people seem to think does a decent job.

        The problem is that when you add up all the flaws of the system it becomes a lot harder to justify it, (the bar for doing social good is very low, tax deductions in general are a regressive way to do things, etc) but making charitable contributions tax deductible isn’t inherently just subsidizing the whims of the rich.

        At the very least, putting a cap on how much people can deduct would alleviate a lot of the problems you are talking about.

        • wjts says:

          Deductions are, I think, capped at 50% of adjusted gross income. Lowering that cap might not be a bad idea.

          • Warren Terra says:

            I haven’t heard of that cap, and would be very surprised if it’s correct. Do you think the Gates Foundation paid tax on half its endowment?

            • Hogan says:

              That’s 50% of the AGI for the donor, not the donee.

              • Warren Terra says:

                Works out the same. The “money” Gates gave his eponymous foundation was wealth he’d never paid taxes on – Microsoft stock on which he’d never paid Capital Gains taxes (such as they are, which is a whole ‘nother argument). When I asked whether the Gates Foundation had paid taxes on half its bundle, what I meant was whether anybody had paid taxes on the bundle that funded them. And I’m still pretty sure the answer is “no”, and that since most massive wealth in this country arrives as Capital Gains (accurately or fraudulently; see Carried Interest), the 50% deduction limit is a dead letter, and has no effect on how the truly wealthy dispose of their moolah.

            • wjts says:

              The cap is for deductions of charitable donations from personal income. I have no idea what the rules are for institutions like the Gates Foundation.

              • Anna in PDX says:

                It’s a nonprofit, so it probably does not pay taxes at all, I would think.

                • Duke says:

                  Only if it’s private and follows the IRS guidelines. But, as in all things IRS, I’m sure they’re negotiable, if you have the right politician in your pocket.

    • Shakezula says:

      I’ve never heard it is as straight-forward as “Here’s a check for $11 million, little Tommy would like a room facing the quad.”

      However, if the parents seem to be good for the naming gift for a new building, that could help admissions overlook that low GPA/SAT score.

  6. Marc says:

    So, in other words, we should remove tax exemptions from donations to universities. And this is good public policy because….some people hate those fancy-pants places? Because someone, somewhere, might leverage a legacy admit to a university for their kid – so you wipe out charitable giving to them as a precaution?

    The anti-elitist stuff can be such a powerful drug that you forget, at times, that there may be other useful principles. Making it harder for universities to provide scholarships isn’t going to make them more egalitarian. This is political posturing masquerading as thoughtfulness.

    • L2P says:

      Particularly since I’ve seen no evidence that most alumni donations are tied, in any way, to getting alumni kids into college. Yes, occasionally there’s the “found a new physics wing and get your kid into Harvard” story. But I’d be floored if the vast majority of these donations have any link to admissions at all. If anyone really think that the billions donated to the UC system every year are linked to admissions, they’re either high or insane. And what about, I dunno, Oregon? Is anyone thinking that UO is getting millions in donations so alumni can secure a sweet spot for their kids?

      I get it, it’s annoying that you can buy your way into college. This is the smallest, narrowest edge of the gigantic axe the rich use to keep their advantages.

      • Vance Maverick says:

        Isn’t the narrow edge of the axe the effective one?

        • L2P says:

          Are you serious? I can’t tell. But the answer is no. For the insanely rich an alumni “donation” is the tinest, smallest advantage they have.

          I have a friend who’s kid is going to Harvard. His kid had a math and english tutor every week since 7th grade. His kid went to Costa Rica, India, and some small island in the South Pacific on “charity” vacations every summer. His kid “founded” his own non-profit to encourage literacy at a local school. His kid had private coaching in wrestling forever and finished second in his weight division in the county. He has perfect grades and test scores and a perfect resume. He might not get into Harvard; that’s a crap shoot. But he’s definitely getting into some top-10 school.

          Why on God’s green earth do you think that a $40k alumni donation would be anywhere near the biggest advantage this kid has?

          • sharculese says:

            I think he’s saying that axes don’t work that way.

            • Vance Maverick says:

              “Thin edge of the wedge” was probably the model.

              My own elite institution (well, my undergraduate one — the status of the grad one is “threatened”) was a wonderful place, but I didn’t get my [sic] together as a student to benefit from it properly. I haven’t given anything since, because with my finances it could only be a symbolic amount — and I can’t sincerely give symbolic thanks for blessings I contrived to avoid.

          • Vance Maverick says:

            I was questioning the aptness of your metaphor, not (directly) your claim.

        • Linnaeus says:

          Careful with that axe, Eugene.

        • GoDeep says:

          The blunt edge of the axe is pretty effective too.

    • Cody says:

      Why can’t we just use taxes to fund public universities, and if you want to prop up your favorite private school – pay all you want. Just don’t expect me to subsidize funding Westboro University or some crap.

  7. tt says:

    The article doesn’t present any data indicating that donating increases the probability of legacy admission. Legacy admission is bad and should be banned, but the absence of such data seems like a hole in the particular argument that you quote.

    • L2P says:

      The hole is so big there’s no argument left.

      The vast majority of donations (by money) are huge gifts by old people whose kids are long since out of college, and whose children are in no way threatened with missing out on the college of their choice.

      • quercus says:

        It may be true that most large donations are by people old enough that their children are long since out of college. Though I’ll point out that there is this concept called ‘grandchildren’.

        But in the end, I don’t think universities are generally quite that crass as to blatantly sell admissions slots. Well, not for anything within the means of even a typical one-percenter. But they do try really hard to admit the kind of students who will grow up to be rich donors in the future, and the best indicator of that is their parent’s (and grandparent’s) income and donation tendencies…

        • L2P says:

          Yes, that’s called “the admissions process.” The UC system only admits that top 10% or so of students in the state. By definition they’re going to get a lot of wealthy alumni.

          I don’t know what to tell you. I donate thousands of dollars to UCLA every year. I have absolutely no desire for my kid to go there.

    • Warren Terra says:

      The article goes too far’ I suspect you go too far in the other direction. It hardly seems arguing against the seemingly obvious idea that the children of the elite are admitted on a strongly preferential basis – sometimes their families (or governments) may have been generous, sometimes it is hoped their families, their governments, or they themselves will be generous in the future. But do you really think this doesn’t happen? There’s also celebrity admission – I’m sure Chelsea Clinton is plenty bright, but Stanford surely factored into their decision all the attention they’d get by hosting her for four years (similarly the Bush twins, though playing to a different market).

      I doubt that blatantly transactual admission decisions are common (though how would I know?), but schools playing the odds, especially schools that are hundreds of years old and so know the Long Game? You really think that doesn’t happen?

      • tt says:

        The authors make a very strong claim about quid pro quo and completely fail to back it up. I have no strong belief on the matter. I could be convinced either way by evidence.

        (Children of the elite being admitted on a preferential basis does not imply quid pro quo).

    • Anna in PDX says:

      It seems to me if it’s an ethical question that a donor who benefits from the legacy system should avoid the appearance of quid pro quo that results, and the burden of proof should be on the college to show that they would give the same benefits to legacy students whose alumni parents had never donated.

      • L2P says:

        How would you suggest any person NOT meet that burden of proof?

        Every kid is a special snowflake with something they can point to to show their awesomeness. That’s why so many blatantly average white people are so angered by affirmative action – they’re obviously worthy of going to Awesome U.

        • Breadbaker says:

          My kid was a double-legacy at Harvard and we probably gave less than $1000 between us for the thirty years before he applied. He got in early action because he was indeed a special snowflake. He also graduated magna cum laude, just as his parents (one a first-generation college grad the other a second) did. The advantage he got was not an expectation of funds, but an expectation of achievement. He fulfilled it.

          • GoDeep says:

            That’s a great example & I applaud your parenting skills.

            But then there’s George W. Bush & Yale…and that kinda blows your example away.

            • efgoldman says:

              But then there’s George W. Bush & Yale…

              and Harvard Business School.

              • GoDeep says:

                HBS called a mulligan for that one :-)

              • Aimai says:

                I think it should be obvious that one of the things that people pay for when they go to a place like HBS (or, for that matter, Yale or Harvard Undergrad) is the belief that the person sitting next to them might “be” somebody important. You might say that George Bush Junior, despite his manifest shortcomings, was a quite satisfactory loss leader or teaser rate candidate in that regard. After all, he knew people who knew people, and he later became the President.

                This is not just an elite pre-occupation. When Obama ran the first time the papers were digging around for all kinds of human interest stories about Obama and Michelle. They were entranced with Michelle’s impressive family achievements and the fact that both Michelle and her brother had gone to Princeton. You know who wasn’t impressed? Michelle’s original freshman roomate–a working class white girl whose mother was so shocked and dissapointed that her daughter got stuck with another outsider/nobody instead of the kind of elite Princeton student she wanted that she demanded her daughter be moved. (The daughter, who was wrestling with her own identity issues as a lesbian, remembers simply acquiescing with her mother’s wishes). Both she and her mother seemed a tad bit regretful that they missed the chance to be on a first name basis with the future first lady.

                • Lee Rudolph says:

                  My mother—although she and my father both had considerable respect for both intelligence and learning—had somehow, somewhere, absorbed the message that “going to college” was good, in large part, because it allowed you to “meet people” who “might ‘be’ somebody important”. (I have no idea where she got that message; certainly not from her own experience at college, of which the main benefit to her was that it got her out of anthracite coal country in Pennsylvania and into the Appalachian foothills of Ohio. During the overlap of our lifetimes, she was an elementary school teacher, for which she had qualified at a Normal School before escaping to two years at a university.)

                  I dutifully included a sentence in the single brief essay that formed part of each of my college applications (50 years ago, kids; things have changed) to the effect that I wanted to go to X in order to meet people who might be somebody important. Naive and socially obtuse as I was, I still got very clear signals at one or two “alumni interviews” (this was in the days before “college visits” became mandatory; out in such boondocks as Cleveland, applicants would meet with some poor—though of course rich—alumnus to talk things over, and the alumnus would report back to the deanery of admissions) that being so blatant was not the thing to do. I hadn’t applied to Harvard (my parents were convinced it was a den of Communists), but if I had, I’m sure that that sentence would have killed me there, of all places. Swarthmore was one place that rejected me, I’m sure because of the un-Friendly tenor of that sentence.

                  In the event, of course, when I had done my part in satisfying my high school’s guidance counselor’s dream of placing as many students as possible in Eastern Colleges, and showed up at mine, I never in four years did (consciously) “meet” anyone who was “somebody important”. Instead (thank FSM) I met a lot of wonks, many of them Jews (a group represented at my high school by the children of exactly one family), a few of them black (there were no Negro families at all in our West Side neighborhood), none of them trust-fund babies, of whom some number became my friends then and some smaller number became somebodies of some importance eventually (one of them, now retired from a social work career in Chicago, was responsible for recruiting Michelle: I’d say he did important work, but the last bit is surely the closest he has ever come to being “important”). I now keep in touch with very few of them. Such pecuniary and/or professional benefits of “meeting people at college” as have accrued to me have all been from faculty that I met, not from other undergraduates.

                • Shakezula says:

                  I think it should be obvious that one of the things that people pay for when they go to a place like HBS (or, for that matter, Yale or Harvard Undergrad) is the belief that the person sitting next to them might “be” somebody important.

                  You do realize you’re hinging this rather insulting theory on one anecdote about the First Lady’s first roommate. And that even your anecdote counters your statement because the person who had hopes of an important connection wasn’t the student, but the parent. And there’s the problem that most 17-18 year olds tend to be not important, but they may be the children of important people.

                  I’m not saying it never happens, but I have never met anyone who went to college in the hopes they’d get to take Psych 101 with trust fund babies.

                • Aimai says:

                  Shakezula,
                  I didn’t mean it to be insulting and when I said “people pay for” I actually was specifically thinking of parents. The question I was attempting to answer was “why Yale and then HBS took Bush.” And my answer, which I don’t think was insulting at all, was that the admissions process is not actually focused on meritocracy or equity–especially not at HBS which is explicitly about paying money and making social and business connections.

                  I felt sorry for the girl who was Michelle Obama’s roomate, actually, because she clearly was wrestling with big issues at that time and whatever happened, happened and she had moved on. She was as much an outsider as Michelle, though for different reasons, and it was easier to satisfy her mother’s demands that she move out than to confront her mother. I’m not critical of her decision I just brought it up because I felt it exemplified the point I was trying to make.

            • Breadbaker says:

              George W. Bush and Yale was in a rather different era than my kid, Class of ’08. They didn’t even admit women at the time. Apples and oranges.

          • Harvard '01 says:

            It is a bit easier to fulfill expectations when 91% of a class “earns” Latin Honors.

        • Anna in PDX says:

          I think I’d put the burden of proof on the college, not the individual donor, of course we aren’t rational about our own kids and of course our own kids really deserve everything!

    • Anon says:

      I think this gets the causation backwards. I don’t think people donate so their kid gets a preference. Universities give a preference so people will donate.

      Knowing that your alma mater will give preference to your kids (even if it’s just a slight nudge) tightens the bond with the institution and reinforces the idea that your undergraduate experience is the start of a lifelong or even intergenerational relationship with the school. That lifelong relationship drives the donations — including the large death bequests.

      This same reasoning is behind university support for things like class reunions and (or so the argument goes) athletic excellence.

    • GoDeep says:

      My experience is a bit dated, but at my alma mater “legacies” got a flat # of points added to their application score. It was not correlated to how much they gave. I don’t know if “double-legacies” got more than “single-legacies” tho.

    • Bijan Parsia says:

      There does seem to be some evidence that perception of increasing admission chances affects donation levels:

      This paper uses a unique data set to assess whether donors’ contributions to a
      nonprofit institution are affected by the perception that the institution might confer a
      reciprocal benefit. We study alumni contributions to an anonymous research university.
      Inter alia, the data include information on the ages of the alumni’s children, whether
      they applied for admission to the university, and if so, whether they were accepted. The
      premise of our analysis is simple: If alumni believe that donations will increase the likelihood of admission for their children and if this belief helps motivate their giving, then
      the pattern of giving should vary systematically with the ages of their children, whether
      the children ultimately apply to university, and the outcome of the admissions process.
      We refer to this pattern as the child-cycle of alumni giving.

      If the child-cycle is operative, one would observe that, ceteris paribus, the presence of children increases the propensity to give, that giving drops off after the admissions decision is made, and that the decline is greater when the child is rejected by the
      university. Further, under the joint hypothesis that alumni can reasonably predict the
      likelihood that their children will someday apply to the university and that reciprocity
      in the form of a higher probability of admission is expected, we expect that alumni with
      children in their early teens who eventually apply will give more than alumni whose
      teenagers do not.

      The evidence is strongly consistent with the child-cycle pattern. Thus, while altruism drives some giving, the hope for a reciprocal benefit plays a role as well. Using
      our results, we compute rough estimates of the proportion of giving due to selfish motives.

      And interestingly:

      We know of no statistical evidence on whether alumni donations at any university
      affect admissions probabilities for their children, and if so, how much. For our purposes,
      the key insight is that generating the child-cycle of alumni giving requires only the perception of reciprocity.

      • tt says:

        Good paper. Their conclusion is pretty convincing. I think it’s plausible that many parents believe that donations will increase the probability their children get admitted, that this belief is typically false, and that universities subtly encourage this misperception.

        • This paper reflects my naive, practitioner’s view, of the life cycle of donations from alumni in every situation, from preschool through to University. First of all: there are at least two kinds of giving at each of these schools: annual fund/sentimental/impulse giving and groomed giving aiming at targeted gifts. A new school can’t afford to focus on building up an endowment and the new instructions to their fundraisers is to focus on annual fund giving (unrestricted) because they get more bang for their buck in that way. (I’m talking about private grade and highschools). Then there is targeted, groomed giving of major gifts. That is a very long range process which is highly focused on specific donors who are courted and whose gifts are often leveraged (they give those “matching grants” that get other, sporadic givers, to give).

          In my experience the pitch to donors is usually focused on sentiment and school spirit extended towards the rising crop of new students–not a quid pro quo at all.

          But that doesn’t make it any the less pernicious or a potential source of classisism, racism, and sexism. Dartmouth and Smith have both experienced a revolt of the alumni as the changing student population (in terms of race, class, and gender) have made the alumni unable to see themselves in the new crop of students. There were some very bitter exchanges between the older Smith alums and the new students a few years ago and the alums definitely used what they thought would be the power of the purse to try to bring the college into line with their expectations for what a Smith woman would be like.

    • IFD says:

      No university is ever going to release numbers highlighting the intersection of donations and admissions. It is quite difficult to even get firm numbers on legacy admit rates. You can usually find something like this every spring when Ivy League admission rates are released.

      Brenzel also said that there is a positive correlation between alumni donations and legacy admissions. According to
      Brenzel, Yale fundraising suffers when fewer legacies are accepted. Still, he said, this year Yale rejected more children of top donors than it accepted.

      If one assumes this means only 40% of children of top donors were accepted that means those applicants had double the chance of Yale legacies and over 5 times the chance of the applicant pool.

  8. SP says:

    “they violate the most fundamental rule of charity, namely that it not enrich the giver”
    So does giving to religious organizations also violate this since a lot of people do it to avoid the whole burning in hell thing, or is it the official position of the IRS that religion is a bunch of BS?

    • Anna in PDX says:

      I think the IRS can only make rules about material, in-this-world enrichment…

    • PeakVT says:

      The 1st Amendment might be involved in the case of religious organizations…

    • Aimai says:

      Actually, if I remember the stats on this, it turned out that a whole lot of so called “religious” charitable donation was in the form of targeted donations to private religious schools aka “tuition.” I think this might be a scam that Abramoff used to fund his own children’s education. Giving to one’s own church, when the church may be the site of a whole lot of socializing and business related benefits, is also another dubious religious charity.

  9. Anna in PDX says:

    I went to a not-quite-Ivy school (Georgetown) in the late 80s, which has guaranteed financial aid and mostly gave me “need based grants” as I was from a low-income family. I have been involved in their admissions system since, as an alumni volunteer who conducts interviews with applicants here in my hometown. Many applicants are upper or upper-middle class people and many of them go to private Catholic schools, but the admissions team strives to get some low-income, some first-generation-of-college, and some public-school applicants into the mix.

    Georgetown also had/probably still has a lot of remedial help for students who come from disadvantaged backgrounds because it is not that they are “less intelligent” (really???) but that they just did not have the education and family atmosphere of more privileged students so they are operating at a disadvantage.

    I also donate a very modest amount to them and ask that it all go to their scholarship program for low-income kids, and neither of my kids even applied there. I have always thought that using a legacy is kind of bordering on immoral, but as it happens my sons were not academic enough to have been reasonable applicants anyhow, so the issue did not arise.

    I guess I see that there are some private, well-known, “top tier” schools that are trying to be as ethical as they can and level the playing field as much as is possible while still getting students into their system who are ready to succeed.

    • Anna in PDX says:

      Also, as a donor, I don’t really care whether the donations are tax-deductible or not. I’d still donate if they weren’t, the way I do political donations.

      I can see an argument for them not to be, particularly if you are in the situation of having your kids benefit from a legacy system, because that just seems like a very immoral quid pro quo.

      • GoDeep says:

        Pretty high minded of you Anna.

        • Anna in PDX says:

          Maybe I would feel different if it were a lot of money, or if I were a wealthy person….

          • GoDeep says:

            Its the thought that counts; you do what you can is all that matters.

            • The Ghost of James Buchanan says:

              I have never given (and would never give) any money to either university from which I have a degree, on the grounds that the highest and best use they could make of any money would be to pay a mathematician, and it would be silly of me to use some of my own pay as a mathematician to pay somebody else (particularly somebody else likely to get a job at either of those places).

              Nor did I ever give in to the periodic attempts at shakedowns from the university from which I retired (my previous employers never tried), where the reasoning was the same but far more pointed, since there I knew how much vigorish came off the top of any donation whatever, and how badly all the faculty (especially me…) were being underpaid, compared (for a very bad instance) to what the administration fancied to be our “peer group”, in which we were constantly at rank 14 or 15 out of 15 in faculty compensation. I did suggest, at one faculty meeting, that the university’s legal counsel should find out how we could declare the tens-of-thousands-dollars differences between our salaries and those of our peers elsewhere as charitable donations on our income taxes, but got no reply, nor did I ever have the guts to try it myself.

  10. Malaclypse says:

    It is by no means limited to Ivies. Mini-Mal’s preschool, by no means an elite institution, made it pretty clear that an annual donation was something that good parents, the kind of parents that they wanted to be part of the community, the kind whose kid comes back next year, make donations in addition to tuition. See also here.

    • Vance Maverick says:

      I’m told many of the public schools in Marin County operate with gently coerced tuition-in-all-but-name as well.

  11. PeakVT says:

    Maybe I’m wrong, but I don’t see a good way to address this problem other than to jack up the top marginal rate to where it should be (~70%), which is something we should do anyway. Perhaps there is a way to force private colleges with huge trust funds to disperse more directly to underprivileged students, but how do that without some unintended consequences eludes me at the moment. Other approaches could be even more problematic.

    • Malaclypse says:

      While I’m all for higher marginal rates, that will increase the value of a tax deduction.

      • PeakVT says:

        Right, but over time it would close the gap between the rich and poor, and allow the government to better fund education through grants, loans, research grants, etc. IOW, our problem isn’t so much legacy admits strolling around ivy-covered campuses but the fact that so many of our elite universities are private in the first place.

  12. Breadbaker says:

    Where does this 25 rich kids for every poor kid “statistic” come from? 70% of Harvard students receive financial aid. 60% receive scholarship grants. There are about 1600 students in a class. That math doesn’t hold up unless one applies a pretty generous definition to “rich” and then a really tight definition to “poor”. Even then the numbers probably don’t work. A helluva lot more than 4% of the class is on a complete free ride.

    • GoDeep says:

      There’s a difference between “rich” and “wealthy”. As Chris Rock said once upon a time, “Shaquille O’Neal is rich. The guy who signs Shaquille’s paycheck is wealthy.”

      To whit a $250K household income places you in the top 5% of incomes in NYC & top 2-4% everyplace else in the US. I think its fair to call that cohort rich, if not wealthy. http://www.nytimes.com/interactive/2012/01/15/business/one-percent-map.html?_r=0

      “Rich” is not having a private plane, its being able to afford airfare more than a few times a year.

      • Breadbaker says:

        You entirely missed the point. 70% on financial aid. It is literally impossible for there to be 25 rich kids for every poor kids. This is basic innumeracy.

        • dumb dood says:

          +1+1+1

        • Gregor Sansa says:

          I think that it’s 25 non-poor kids for every poor kid. Which is entirely plausible to me, but doesn’t actually help the argument. Because a poor kid who’s heroically overcome the odds to have the basic qualifications for admission will be admitted, just as much as a similar legacy; in both cases, the ones getting squeezed out will be the middle class.

        • Frank Somatra says:

          Harvard also gives a lot of financial aid to kids who would never get it elsewhere. Like kids whose parents make $150,000 a year. By no means rich, but even more clearly not poor.

          • IFD says:

            We find that low and middle income students are likewise extremely underrepresented in the most selective colleges. Students from top income quintile families are seven to eight times more likely to enroll in a highly selective college than students from bottom quintile families. This disparity appears to have grown over time, as more and more seats in highly selective schools have been occupied by students from high income families.
            Reardon, Baker & Klasik CEPA Stanford 2012

            Harvard extended the 0 to 10 program to families earning up to $180K in 2012. According to the Harvard financial aid website, 2/3 of all those who receive aid are from families earning over $65K/year.

  13. Shakezula says:

    Under most understandings of charity, it is not clear why any donation, alumni or otherwise, to an elite educational institution should be considered charitable.

    Because part of those donations go to scholarships for dirt poor proles like me?

    I’m just sayin’.

    I also have to wonder how the argument would look if instead of mentioning Harvard and Princeton (why not Yale?) the author used Haverford and Radcliffe.

    • sharculese says:

      saw Radcliffe and my mind immediately translated the rest of this into being about Hogwarts.

      • Shakezula says:

        Did you notice the only poor kids there were the Weasleys? I could have done without Ron’s poverty being a running joke.

        The bit where Ron’s wand broke and he couldn’t afford a new one? I understand it was an important plot point, but I could identify with it a bit too much. Suck.

        (Go ahead, laugh. You brought it up.)

        • Anna in PDX says:

          Of the older generation, there were at least two more poor kids mentioned:

          - Hagrid
          - Voldemort

          /geekery

        • sharculese says:

          I hadn’t thought about it, but it actually doesn’t surprise me that that was the case. After all, once you get past the secondary cast (Luna, Neville, Ginny, Draco, etc.) the kids turn into caricatures with one defining characteristic pretty quickly.

          And I don’t see how discussing the depiction of poverty in Harry Potter is silly? It’s one of the major pop culture touchstones of the 00s, we absolutely should talk about that kind of thing.

          • Shakezula says:

            Thanks. I suppose she thought the Weasleys serves as a nice counter-balance to the Malfoys, but because Ron is the sidekick, it doesn’t really work.

            And for the record I normally don’t expect much in the way of character depth from kids’ books. And there seems to be a rule that bars people from creating convincing and honest child characters.

            HOWEVER

            If an author is going to crank out a multi-volume opus complete with books that weigh more than some children, she really should spend a little more time giving the inhabitants of her universe a little dimension.

        • Aimai says:

          I thought the race and class stuff in Harry potter was fascinating. I really disliked it, actually, but I admire what’s her name so much that I’ve come to forgive her for it. I disliked that most of the race stuff didn’t cast against type so much as confirm racial sterotypes and I actually, personally, couldn’t stand Harry.

        • JL says:

          Eh. I didn’t feel like it was a running joke, I felt like Rowling sympathized with Ron and the other Weasleys. Rowling had been poor herself, and has said some pretty emphatic things about how she will never vote Tory.

          Since they were poor because Mr. Weasley worked in a field that was devalued because it focused on people who, in the wizarding world, are marginalized, and the family were considered blood traitors, it was also an interesting look at being a dedicated ally and what it can cost when you’re seen as a traitor to the group.

    • Alan Tomlinson says:

      It would seem less egregious if we weren’t talking about Harvard and its over $30 billion endowment. But it’s still essentially taking from the poor and giving to the rich, which seems a trifle inequitable.

      That said, I could see allowing a tax-reduction on charitable giving if it were much more controlled. One example would be allowing charitable giving to a fund that gives scholarships which are portable(i.e. not connected to a particular school).

      Cheers,

      Alan Tomlinson

      • djw says:

        It would seem less egregious if we weren’t talking about Harvard and its over $30 billion endowment.

        Yes. There are colleges and universities of relatively modest resources where some formula of endowment income/gifts pretty closely determines the amount of certain types of tuition discounts (labelled “scholarships”) they give out, which means your donation might actually contribute to some future graduate having a slightly less crippling level of student debt. Still a pretty inefficient use of charitable resources, but not obviously a complete waste. But from a standpoint of “charity is supposed to do some actual, tangible good in the world” donating to Harvard doesn’t really make much more sense than donating to Paul Allen or Goldman Sachs.

        • I’m opposed to the “charitable deduction” at all because I don’t think that people’s ego gratification (which is what charitable donations are) should be a tax dodge. If you want to give: give. The highest form of charitable action, in Judaism, is a charitable act where neither the giver nor the receiver know who gave or who received. To know who gets your charitable gift is to unrighteously enrich yourself with the vanity of your gesture.

          But that being said of course there’s a difference between donating to a University, even a wealthy one, and a bank. You could endow a chair, or a scholarship, or help fund needs blind admission, or graduate student salaries, or buy a library, or pay the salaries of the guards and docents needed to keep the University Museum open to the public. The University is and should be a locus of community activity and donating to that just isn’t a meaningless act.

          Of course I think the state should fully fund community colleges and State Universities first, so I don’t think Senator Umpglumph the III’s donation of a wing of a building for his Alma Mater should be tax deductible. But having great universities, both public and private, is going to take a ton of money. Private Universities should get money from private donors and not tax payer subsidies.

          • wjts says:

            Private Universities should get money from private donors and not tax payer subsidies.

            Precluding students and faculty at private universities from receiving money from the NIH, NSF, NEA, NEH, and other federal funding agencies strikes me as a profoundly illiberal idea.

            • Aimai says:

              I’m distinguishing between the University and its students and faculty, which I admit was silly given the fact that both faculty and students often live off of grants from federal funding agencies. But you don’t build buildings with those grants (although you may run them through the overhead.)

              • wjts says:

                Ah, gotcha. For the most part, I agree – the city of Chicago shouldn’t be stumping up $33 million for DePaul’s basketball team.

                But you don’t build buildings with those grants (although you may run them through the overhead.)

                Mostly no, but there are cases like Argonne, the JPL, and the other FFRDCs where that distinction can be very blurry. Those are defensible, to my mind.

          • Shakezula says:

            Wait. Are you honestly saying all charitable donations are ego strokes? Because that ain’t right. In fact, it is perfectly possible to make a charitable donation anonymously, or at least in such a way that the benefactor of your largess (e.g. a scholarship student) doesn’t know you from Adam’s house cat and you won’t know who is getting a boost from your donation.

            (Also, giving money to the homeless. I hand the money to them and usually make eye contact. Should I be tossing it over my shoulder and rushing off?)

            If you want to argue that those donations where the donor gets his name in a big list under the amount he donated is an ego stroke … I’d say that’s more an announcement that some people are suckers for the right pitch.

            • Aimai says:

              No, I’m not saying there is no such thing as truly charitable acts made from charitable purposes/motivations. But I am saying that when a tax deduction is taken for a charitable deduction it calls that motivation into question. The gift itself should be reward enough to the giver. All my charitable giving is done anonymously and I don’t take a tax deduction for it, either.

              • dumb dood says:

                Hmmm…. might be interesting to understand the context. We talking annual $1000 in charitable giving, or more on the order of $30,000 in charitable giving?

                With the former might be easier to forego deductions…

                • Cody says:

                  If you can give $30,000 then you can afford to pay your taxes on it still. Else you should redo your finances and consider how much you can afford to give.

                  Also, I go to sleep looking at my tax dollars as charity! And I have no idea where it goes (except apparently a lot of it goes to funding people’s “charitable” giving via tax breaks and funding guns)

      • Shakezula says:

        No one, not even the author, is just talking about Harvard (or Princeton or Smith or …). If anyone wants to propose a system whereby charitable donations or endowments are capped for universities they’re welcome to do so but I don’t see how that happens without causing more harm than whatever supposed good that would come out of the rule.

        Really, of the 99 problems assailing higher ed, tax-deductible donations ain’t one.

    • Orpho says:

      This. I realize they’re only throwing me (us) the crumbs, but I needed those crumbs at the time. Raise the marginal tax rate, sure. But unless your plan is to do both that and reduce tuition costs to Canada/UK-pre-2010 levels or less plus fund room and board, the kid I was would need more or wouldn’t go. I had free tuition at [State], but I got by and paid room and board with disbursements from private scholarships.

    • Chris J says:

      Haverford’s legacy situation is complicated by their wanting at least a few Quakers (preferably birth-right), and they are getting hard to find. But yeah, in comparison with the Ivies (or even Swarthmore) Haverford’s endowment is pretty small.

      • The Ghost of James Buchanan says:

        Haverford’s legacy situation is complicated by their wanting at least a few Quakers (preferably birth-right), and they are getting hard to find.

        Could be worse. Could be Shakers.

        • Aimai says:

          Well, they could always raid the orphanages like the Shakers did, but generally the kids might be too young for college.

          This is actually a problem, all joking aside, at Cambridge Friends. Not enough Friends are left.

  14. Fake Irishman says:

    I’d actually settle for eliminating the charity deductions for making a mandatory “donation” athletic departments in exchange for getting luxury seating.

    See here

    and here

    This alone would likely bring several hundred million bucks back into the federal treasury, which we could maybe use on interest-free loans or Pell grants.

  15. cackalacka says:

    “Yale could use an international airport, Mr. Burns.”

  16. Bloix says:

    Although we (and the IRS) refer to tax-deductible contributions as “charitable contributions” for short, the tax code explicitly provides for contributions to a wide range of organizations that are not “charitable” under any meaning of the word.

    Here’s the IRS summary of organizations that can receive tax-deductible contributions:

    1. [A non-profit organization] organized and operated only for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. Certain organizations that foster national or international amateur sports competition also qualify.

    2. War veterans’ organizations …

    4. Certain nonprofit cemetery companies or corporations…

    http://www.irs.gov/publications/p526/ar02.html#en_US_2012_publink1000229693

    So don’t try to argue that Harvard isn’t a “charitable” institution. Under the internal revenue code, it doesn’t have to be. It’s educational, and that’s enough.

  17. Manju says:

    All we gotta do is pass a bill denying federal funds to any college practicing legacy. Sayonara lagacy. Overnight. The Feds control the big money.

    Can the bill pass? How hard is it whip up some populist fervor over this? That should delver the Dems. Contrary to what you may have read, the poor vote Dem.

    What about repubs? Well, those Southern ones hate Harvard too. Wanna sweaten the deal? Through a ban on race-conscious selection in. Hear me out. First of all, is anyone even doing this? Secondly, you can accomplish the same thing by using income instead. Thirdly, you put the screws on republicans who then have to oppose opposing affirmative action, which the base hates more than Islamo-communism. If they refuse to budge, you can probably pluck off a couple of districts.

    Its a win-win.

  18. Bitter Scribe says:

    If churches can be charities, then so can universities.

  19. dumb dood says:

    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.

    Um, no. The richest alumni, assuming they’re rich due to having relatively high incomes, don’t deduct because they’re deduction limited by the IRC and because they’re also subject to AMT, which pretty much wipes out their deductions for so-called charitable giving.

    • Warren Terra says:

      How does that handle the transfer of assets that have been subject to massive capital gains, though? Sure, what you describe would be accurate for huge amounts of earned income. But the truly wealthy don’t have huge amounts of earned income.

      • dumb dood says:

        When I’m king of the world capital gains and divvies will be taxed as regular earned income. That said, your question about the truly wealthy who don’t have large earned incomes is valid for a certain percentage of the population.

        Care to hazard a guess as to how large a percentage this is? Somewhat under 1%? (Not sure, really, but I doubt the numbers of university donors with non-appreciable earned income are larger than 1%. But I could be way off. Maybe it’s even 5%.)

        So, what about the other 95% of those “rich” alumni?

        Or, looked at another way, if perhaps the original author WAS talking about those uber-rich non-earners, then the quote is accurate. But it’s also a quote bitching about a very small percentage of the donors. Without disclosing that aspect, at that.

        • Warren Terra says:

          I’d wager that a number of people indistinguishable from zero make more than, say, a couple of million dollars a year as “earned income”, especially if you discount elite professional athletes. That’s real money (if you stretch “a couple” it’s two orders of magnitude more than I make), but it’s not the sort of money that gets you into competitive art collecting, or that gets business schools named after you. To rake in those kind of bucks, you have to make Capital Gains (often earned income disguised as capital gains, but that’s another story).

          I’d guess the average person who donates to their alma mater probably makes the average income for an educated person, perhaps a trifle more. But the average dollar donated comes from someone with a serious bundle to their name. The kind of money that corrupts admission decisions (or for the eventual prospect of which admission decisions get corrupted) comes from people whose people have people. You don’t sell out because you think the kid’s dad might fork over enough to buy the football team a new fridge-freezer; you do it because you think the kid’s dad might buy the school a new athletics complex.

          • dumb dood says:

            (wildly truncated, but I hope I’m not abusing the essence of your message)
            I’d guess the… average dollar donated comes from someone with a serious bundle to their name. The kind of money that corrupts admission decisions…

            I suppose it’s possible. But I’ve sat in on a fair number of admissions sessions at my old law school (as a non-decision-maker) and had a number of discussions with the decision-makers, and it would be a sharp shock to me that any particular endowment would have swayed those rigid bastards (and I use that description with respect and admiration in this context) to admit any particular child of a donor.

            But that’s just one school. I can admit the possibility exists. But from my limited experience, the folks doing the admit reviews are remarkably untouchable, given they’re all tenured and couldn’t give a flying flip about whose daddy or momma one particular applicant laid claim to.

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