Tuesday, May 13, 2008

More on Harvard donations

You'd think I had a thing against Harvard, but really it started because Brad DeLong's a Harvard alum. And Harvard's the richest example, but of course the issue is private universities (and more broadly, all private schools, and the topic arises because of the high price of education generally).

Anyway, Matt's got some further discussion. This time, Jim Manzi suggests that viewed as a hedge fund with great tax shelter, Harvard's doing pretty good. Of course, this seems to target the tax status of universities, asking why they're so special. The same argument's been made regarding churches over at The Citizens some time ago.

I'm no high-finance guy, but I wonder if the hedge fund analogy makes sense. Surely I can get my money back from a hedge fund investment? I don't think Harvard'll give you your donation back with interest.

But it does remind me what I was mulling yesterday when I posted the first installment on this. The criteria for charitable donations is usually not simply a matter of the most good for the most people, or at the very least a donor uses extremely individual definitions to evaluate the "most good" part. I love my NPR, but it doesn't save very many lives. Many charitable donations, especially alumni donations, are personal in sentiment -- otherwise you'd give to the biggest college, or the college with the best graduate employment results, or something. But no, almost everyone gives to their college.

So coming back to the point, just because Harvard doesn't turn your donation into your profit, doesn't mean it doesn't pay dividends. (And again, Harvard is the shining example, but this is true of other fine institutions of higher learning also.) Maybe giving Harvard the richest endowment also ensures it stays on top of the prestige chart, which aggrandizes all those donating alums. Some crazy Marxist might go on to say that Harvard will then promulgate the advancement of the elites and so the "charitable donation" is maintaining the patrician system (or something like that -- I'm not a crazy Marxist, so I don't know what words they like to use to say "it's all about the Man keepin' the people down.")

I guess I'm saying that Matt seems to think that all those Harvard donors are mistakenly giving money to their alma mater when they probably meant to give it to deserving charitable causes. I suspect that they know what they're doing and what the effect of their donation will be: they did go to Harvard, after all. :)

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Sarah said...

Don't forget that applicants connected to donors are more likely to be admitted, so you're not just buying your own alma mater's prestige, you're buying your progeny's otherwise unearned admission to your alma mater. There's nothing like status passed by inheritance to reinforce the hegemony of the financial elites at the expense of the meritocracy.