<p>Well, I don’t know about that, I actually think that my idea actually goes less far than yours. After all, the universities have allocated their endowments with the expectations that those endowments can grow tax-free. That is why many of their investments have been placed in illiquid asset classes with long return lead-times, sometimes decades or longer. That is also why endowments rarely invest in tax-advantaged assets such as muni bonds, because the endowments are already shielded from taxes anyway. To then declare that those endowments are no longer allowed to accumulate tax-free (beyond a certain limit) would represent a precipitous change to how those endowments are managed. </p>
<p>But declaring that future donations to those endowments would no longer be deductible would not seem to be a particular jarring change. It could be accompanied by a grace period (i.e. no tax deductibility for donations beyond year 2020), and we could grandfather in donations that have already been pledged in writing but have yet to be disbursed.</p>