At the risk of stating the obvious, many big donors donate to already wealthy colleges because of the special attention it gives them. I’ve seen close up the fawning and attentiveness that big donors get. The relationships between colleges and big ticket donors are cultivated for years and wealthy families see this as legacy building for the family name. Yes, they want the money to be used well and to align it with their values/interests (art, medical research, scholarships, entrepreneurship, or you name it…), but I think a big motivator is being a VIP at the college, often their alma mater, and all the trappings, attention, and ego stroking that goes with that. And there’s more family prestige associated with being a big donor to an elite college compared to others.
Landing these ‘big fish’ year after year are what cause the endowment coffers to swell…
There’s something to the idea of special attention, but I think it more often stems from genuine attachment. These are people who can get their egos stroked anywhere, but they give back to the place that nurtured them, just as we smaller donors do. I think of the Ryan family at my alma mater, Northwestern. They’re clearly not shy about putting their name on things—the football stadium is Ryan Field, basketball is played at Welsh-Ryan Arena and they just backed the Ryan Fieldhouse, the best indoor football practice facility in the country. But if it were just about adulation, they could have stopped at one. It makes them happy to give students of today and tomorrow a better experience.
As far as I am concerned, I would not mind if the college my kid attends openly “sells” 20 to 40 spots a year on the open market to kids of the highest bidders on a condition that these kids meet some sort of MINIMUM standards. The reason I feel this way is I feel this is at least a more transparent system than the way it’s done currently anyway for some applicants and feel it can raise more money that will benefit all the students.
Also, looking at the largest endowment colleges in USA, no wonder HYPSM represents top 5 national colleges in prestige; they are top 5 individual colleges in endowments! Basically, more money means bigger brand names. I am convinced that the biggest factor in achieving high ranking directly corresponds to how much money the college has, not much more.
I disagree. Public colleges and universities are the backbone of our nation’s higher education system, educating roughly 3 out of every 4 college students. They’re simply too important to allow to fall apart when state legislatures fail to step up to the plate to provide adequate funding, as is all too often the case these days. And the best of them, including my undergraduate alma mater the University of Michigan, provide a very high quality education at a comparatively low cost, especially for in-state students. I gladly contribute to Michigan in gratitude for the outstanding education I got there at a price my parents could afford, at a time when top private colleges didn’t offer the generous FA they now provide. And because I believe in the mission and the importance of that university, and I know how much it depends on contributions from alums like me to maintain and build upon its excellence. And because I derive real satisfaction from knowing that I’m “paying it forward” and helping current generations of students enjoy the same kind and quality of educational experience I received.
I also contribute to the wealthy private schools where I got advanced degrees, again in gratitude, though in some ways they and their students are less in need of my money.
I don’t donate to my children’s colleges. Having already given them roughly a quarter of a million each in tuition and fees, I feel I don’t owe them another nickel. So I’ll keep some for my retirement. If my kids want to contribute when they’re financially able, that’s their business.
I’ll admit that I give to my alma mater solely for the purpose of a legacy admit tip for my kid. I would also consider giving if I felt that it would somehow help me professionally. I know that sounds crass, but it’s the truth. Instead I give to our local children’s hospital and to my kid’s grammar school (even though she long since left) because they do a lot on a shoe string budget and really need the money.
They’re non-profits, like any other - they just happen to be large (and their profitmaking activities, e.g., commercial real estate, are taxed). You can argue, if you like (I’d disagree with you) that universities don’t serve a public purpose and, despite not making profits or having shareholders, shouldn’t be considered non-profits. So long as they are, though, I think you have to treat them like any other non-profit. The Catholic Church is large too, but I don’t believe many people seriously argue that its non-commercial activities should be taxed.
@DeepBlue86 the universities are taxed or at least their investment income is taxed. It came with the new tax law for 2018. There are many limitations and such, but some will be taxed. Some in Congress are trying to change it, but I don’t think they have yet.
Exactly - an entirely arbitrary new tax has been put on the investment income of the universities with the largest endowments, thereby assuring that they will have less to spend on the things that make them great universities, including financial aid. My point is that this discriminates among different types of non-profits, hurts these universities materially while being less than a drop in the bucket of the federal budget and was only pushed by “anti-elitists” to make a political point. Again, no one is arguing to tax the Catholic Church because it’s the biggest in its category of non-profit.
The Red Cross earns over a billion dollars a year by selling plasma, blood, and other biologics. Why is it so profitable? well, because folks like us DONATE our blood, and the Red Cross then sells it.
Tax the Red Cross first before you worry about endowment income.
@melvin123 I don’t think it’s crass at all, although in my case, I did not care at all whether my kid wanted or did not want to apply to my undergraduate alma mater. My spouse got mad at me because I would not persuade my kid to at least apply to my alma mater. Even if I was a billionaire, I would not donate to my kid’s school solely for the reason my kid was accepted and is going there. The college did not accept my kid out of goodness of their hearts; they admitted him because they thought admitting my kid served their goals. And my kid is attending there because he thought that would serve his goal. And I am paying full costs because I think doing so serves my goal.
One of the biggest factors in my decision was that I generally support with money and emotions my loved one’s desire if it’s grounded on a persuasive argument. But I am very much aware that no decision is free from risks. All we can do is try to make decent decisions and move on.
Sometimes in the real world you have to “pay to play”. I see no problem with giving contributions back to your alma mater, whether its for purely altruistic reasons or a possible admissions bump for your kid. If we are honest with ourselves, there are so many ways we give extra consideration for our kids, extended family members, and close friends which results in a “leg up” on everyone else through nepotism, job offers, internships, access to powerful and influential people, and other opportunities etc. Dontions are no different.
One of my friends worked on Clinton’s second term campaign and some large donors were in a meeting where each one was asked what is the one thing on their agenda that they wanted help from this campaign; one by one they went around the room and campaign aids wrote down each item and said they would try to make it happen. Whether it’s politics or business, this is how some things work, like it or not.
It’s nothing different from parents volunteering at the schools where their kids are attending, hoping such volunteering will make the school better and benefit their kids in some ways. That is why to me giving legacy benefits to those alumni who contributed is understandable to me.
I donate pretty small amounts to my kid’s college mainly because the “% of parents participating” is a metric they value, and I am grateful to the school for the FA it has given to my kid. I earmark it to FA.
Not because it will help her get in - that ship has sailed. I’m just grateful.
My neighbor says his donations are an investment in his own self interest, he only gives because college’s prestige reflects up on alumni in social and material ways.
@cupcakemuffins, your post gave me the opportunity to clarify my prior post. Your neighbor does exactly what I do. Give to my alma mater because I’m getting something back. That’s not charity.
I do give for reasons of charity, but not to my college. My charitable gifts are to entities I feel are more needy/deserving.