Should The Ivy League Lose It's Tax Exempt Status?

[ellemenope]

>>but also taxes its own faculties <<

What?! Sounds so un-American...

[JHS]

It's worth noting that the only other private assemblage of tax-exempt wealth equivalent to Harvard's -- the Gates Foundation -- made grants of over $2 billion in 2007, or roughly twice Harvard's spending rate. The Gates Foundation is about the same size as the Harvard endowment -- $37.5 billion vs. $41 billion.

The comparison is a little unfair in both directions, of course. The Gates Foundation intends to liquidate itself over the course of a generation or two. At the same time, it is much less diversified than Harvard -- most of its wealth consists of Microsoft or Berkshire Hathaway stock, although it is certainly diversifying a a nice clip -- and therefore a good deal riskier. But it is virtually assured of attracting more new contributions than Harvard over the next few years, thanks to Warren Buffet's 10-year pledge. And in many respects it is not yet up to full speed.

As for the Allston project: A couple of years ago, Stuyvesant Town/Peter Cooper Village -- 80 acres of land in mid-town Manhattan, with over a hundred buildings and over 25,000 residents -- sold for $5.6 billion, or roughly two years of Harvard endowment growth net of contributions to the University's operations. I don't expect to see Harvard's endowment shrink to the measly levels of, say, Yale's anytime soon.

[johnwesley]

garland, at post #27(?) asked whether I thought Wesleyan should pay a tax on its endowment.

It depends. I think Marite brings up a good point in post #45: one factor should be whether the college or university is in a growth cycle with active plans for future use of its endowment.

Wesleyan faced many of these same questions in the early sixties when its endowment was probably worth well in excess of $1 billion in 2008 dollars. It too, was a big employer, paying above-average wages in a blue-collar host city; its presence also had a huge multiplier effect on surrounding communities. Middletown did considerably better than its neighbor, New Haven, to the south in the 1970s thanks, in part, to Wesleyan's rather astounding growth spurt.

In fact, some critics would argue Wesleyan was spending down its endowment in so doing.

Even now, Wesleyan is spending about 7.5% of the total return on its endowment, which is nearly twice the rate at which Harvard spends its.

[marite]

Re post 46: Did you know that HU rents Mass Hall from Harvard College? One interesting fact about Harvard is how little money the University (as distinct from its component parts) actually has. So for something like Allston, it has to levy monies from its constituent parts. Another tidbit is that the Faculty of Arts and Sciences (i.e Harvard College plus the Graduate School of Arts and Sciences) has been in a deficit for the last several years.

Re: post 48: I suppose Wesleyan has to spend more. When my S was attending, many buildings were crying out for renovation.

Universities have done very well in the last couple of decades. But I remember when Yale was coping with a deficit by mowing the lawn and washing windows less often and dealying much needed building maintenance.

[johnwesley]

^^hey, I know of at least one Connecticut doctor whose education was paid for by a Wesleyan building and renovation project.