I want to present the complete opposite perspective. Let me admit up front that it's far from a perfect analogy, but it's not 100% wrong either.
Take the restaurant analogy that DeepBlue86 made. Imagine there’s group of people who decide to start a private dining club. They use their own money to buy some property, construct a building, hire the chefs, buy the food, etc. Over time, they open up the club to the public, but they continue to contribute their own money to expanding the restaurant, hiring more chefs, upgrading the tables, inventing new types of cuisine, etc. After many years, their restaurant is now considered one of the finest in the world.
In their private lives, the group of founders and their descendants have collectively become really wealthy, but they continue to be very fond of the restaurant they founded. They’re also really generous people, and they want to give lots of people the opportunity to eat there. They subsidize each and every meal even for those who pay their bill in full. In fact, for 55% of the diners they pretty much pick up the tab and make the meals almost free. Almost all the restaurant’s revenues come from earnings on the founders’ money, not from the restaurant bills.
The only bad news is that the restaurant has become so popular that every night there are 16 people in line for every seat in the restaurant. Competition to eat there is fierce. The founders, who paid for and built the place, do get some preferential treatment, but almost 90% of the seats go to those who have no prior connection with the restaurant.
Meanwhile, a small mob of outsiders, whose knowledge of the restaurant business consists of ordering Happy Meals at McDonalds and having watched 5 episodes of Iron Chef on TV twenty years ago, is telling them they’re doing it all wrong. They demand the right to eat at the restaurant and have their meals paid for by the founders. If you were in the group of founders, how would this sound to you??
As I said, it’s far from a perfect analogy. The story is exaggerated and doesn’t even reflect my own opinions. Even though it’s a private university that was built using private donations, Harvard is a tax exempt institution and should be doing things like giving lots of financial aid to those who need it. Its alums are proud of its generous aid policy and are very happy to contribute money for scholarships.
But I do think there is some truth in the analogy, and that’s why I don’t think a small amount of preferential admits to very qualified legacies and development admits is a “moral evil”. Honestly, there are so many pushes and pulls on the admissions process - athletic recruits, underrepresented groups, students from low-income families, legacies, geographical constraints, development admits, academic admits, kids to work on the student paper, kids to play in the orchestra, etc. - that it’s a wonder that the people in the admissions office don’t go crazy from having everyone breathing down their necks.