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Thursday, June 5, 2008

Waldeck: The Case for Restricting the Charitable Deduction for Gifts to Universities with Excess Endowments

Sarah Waldeck (Seton Hall) has posted The Coming Showdown Over University Endowments: Enlisting the Donors, 77 Fordham L. Rev. ___ (2009), on SSRN.  Here is the abstract:

This essay focuses on the discordance between universities with endowments in excess of one billion dollars and what is occurring in the rest of higher education, particularly with respect to skyrocketing tuition and a growing institutional wealth gap. The essay analyzes absolute endowment values, the amount of endowment per student, and expense-endowment ratios at 60 private universities. It concludes that a small number of schools have an excess endowment, and then provides a convenient proxy for determining when an endowment is so large that it should receive less-preferential tax treatment. The essay then considers the effects that large endowments have at their home institutions and throughout higher education, the arguments in defense of large endowments, and some frequently-proposed modifications to the tax code. The essay recommends that policymakers modify the charitable deduction for gifts to universities with mega-endowments, as part of a multi-faceted effort to spur endowment spending and control tuition.

http://taxprof.typepad.com/taxprof_blog/2008/06/waldeck-the-cas.html

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Comments

We should tax the endowments of large universities and spread the proceeds of the tax among other colleges and universities. Call it tax fairness. And I'm sure that all the liberals profs on rich college campuses, you know, the very ones who want to tax others to support their life style, will agree to have the shoe firmly placed on their foot.

Posted by: Rich | Jun 6, 2008 10:30:43 AM

Why bother with more unnecessary legislation? I WAS a donor to two universities that each have endowments in excess of $10 billion. My charity dollars are spent more effectively elsewhere, and I'm sure many of my fellow alumni have concluded the same.

Posted by: Steve Y | Jun 6, 2008 12:16:26 PM