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robertogreco : endowments   6

How Harvard and Other Colleges Manage Their Endowments - YouTube
"College is expensive, but there is one place in higher education where there's no shortage of money – endowments. There's more than $616 billion worth of endowments assets in the U.S. Lawmakers are starting to questions why tuition is still rising if some schools have billions of dollars."
colleges  universities  ivyleague  endowments  2019  money  charitableindustrialcomplex  philanthropicindustrialcomplex  philanthropy  inequality  finance  highereducation  highered  power  wealth  universityoftexas  hedgefunds  yale  charity  hoarding  taxes  investment  stanford  divestment  economics  policy  politics  princeton 
7 weeks ago by robertogreco
Universities Are Becoming Billion-Dollar Hedge Funds With Schools Attached | The Nation
" Students are beginning to urge divestment."



"All told, hedge funds have over $3 trillion worth of assets under management globally. In theory, they exist to provide a “hedge” to protect investor portfolios in tough times. Hedging, seen in this light, is simply one investment strategy among many. In practice, however, they are alternative investment vehicles that tend to be housed offshore to avoid oversight and taxes, which means they are largely unregulated, face minimal disclosure requirements, and can engage in all sorts of risky bets and market manipulations.

Not long ago universities were, in the words of one report, “careful stewards of endowment income” and avoided such shenanigans. In the early seventies Harvard and Yale spearheaded committees on investor responsibility and devised ethical investment policies for endowments that considered things like social impact. In the nineties things began to change. Many schools, private and public, have become high-risk gamblers, with finance overtaking fundraising as the main engine of endowment growth. A more aggressive approach to investing paid off—until the economy melted down and caused some endowments to lose up to 30 percent of their value.

But experts and activists have other concerns. Some commentators, for example, are troubled by public tax-exempt educational institutions doing business with companies notorious for dodging taxes in offshore havens. More generally, tax exemption is a giant government subsidy that disproportionately benefits elite schools (the ones that attract the biggest donations and earn the largest investment returns), thus further polarizing an educational system already separated into haves and have-nots.

And it gets worse. In a report called “Educational Endowments and the Financial Crisis,” Joshua Humphreys, president and senior fellow at Croatan Institute points to an even more disturbing consequence of risky investment practices. By embracing speculative trading tactics, exotic derivatives, hedge funds and private equity, “endowments played a role in magnifying certain systemic risks in the capital markets,” Humphreys writes. What’s more, their initial success encouraged other institutional investors (think pension funds, sovereign wealth funds, and foundations) to follow in their footsteps, amplifying the system’s overall volatility and instability. In other words, endowments were not just innocent victims of the 2008 financial crisis, but actually helped enable it.

“Hedge funds, as they were initially conceived, have a potential role to play in a long-term endowment seeking to ‘hedge’ certain risks,” Humphreys told me, making clear he’s hesitant to write them off entirely. “But their arbitrarily high fee structures, the excessive compensation of their managers, and their deliberate evasion of taxes and transparency make hedge funds easy targets for stakeholders rightly concerned about the simmering crisis of higher education today.”"



" The time has come for students to connect the dots between ballooning student debt, the poor treatment of campus workers, and the obscene wealth of hedge fund oligarchs. Once they do, they can fight back by following in the footsteps of recent mobilizations against the financial sector. In 2013, a group called Kick Wall Street Off Campus forced Minnesota’s Macalester College to move some, though not all, of its money out of Wells Fargo to protest the bank’s role in community foreclosures. In June of last year, Santa Cruz County pulled together to get its money out of five giant banks—including Citicorp and JPMorgan Chase and Barclays—that pleaded guilty in the spring to felony charges that they rigged the world’s foreign-currency market. Similar campaigns could easily be waged against university endowment partnerships with hedge funds.

Of course, kicking hedge funds of campus won’t solve the college crisis or instantly reform the financial sector. Nevertheless, targeting hedge funds remains a promising tactic for uniting students and workers against hedge funds’ efforts to increase inequality, and using our tuition dollars and public subsidies to do so. This tactic would be especially effective at public institutions where divestment campaigns should be coupled with calls for increased state funding for higher education and better pay for low-wage workers.

“It’s easy to feel powerless, but hedge funds need university endowments, just like they also need public pensions. If that money was taken away, it would really affect them,” Strain says, and he’s right. Campus divestment movements have a proven track record, going back to campaigns against Apartheid in the 1980s. Over the last few years, climate activists have pressured school trustees to divert trillions of dollars from fossil fuels, and last year Columbia became the first university to divest from private prisons. Hedge funds deserve to be next on the chopping block."
astrataylor  education  neoliberalism  2016  universities  colleges  endowments  divestment  finance  politics  money  hedgefunds  highered  highereducation  nonprofit  taxes  taxation  funding  inequality  ivyleague  harvard  princeton  stanford  yalconflisctsofinterest  nonprofits 
march 2016 by robertogreco
Why Harvard should be taxed ["Harvard is a 'hedge fund with a university attached to it'"] - Business Insider
"“The joke about Harvard is that it’s a hedge fund with a university attached to it,” Mark Schneider tells me. It’s a quip that, for obvious reasons, has become pretty popular in recent years.

In 2014, the university’s legendary endowment, overseen by a team of in-house experts and spread across a mind-bending array of investments that range from stocks and bonds to California wine vineyards, hit $36.4 billion.

“They’re just collecting tons, and tons, and tons of money,” says Schneider, a former Department of Education official who is currently a fellow at the American Institutes for Research.

Of course, normal hedge funds have to pay taxes on their earnings. Because it’s a nonprofit, Harvard doesn’t. And since bestowing tax exemptions is the same as spending cash from the government’s perspective (budgeteers call them “tax expenditures” for a reason), that means the American public effectively subsidizes Harvard’s moneymaking engine.

The same goes for Stanford (endowment: $21.4 billion), Princeton (endowment: $21 billion), Yale (endowment$23.9 billion), and the country’s other elite institutions of higher education.

Aiding wealthy research universities that cater to largely affluent undergraduates might have been acceptable in a more flush era. But at a time when state colleges are still suffering from deep budget cuts that have driven up tuition and politicians are stretching for ways to make school more affordable for middle-class students, clawing back some of that cash to spend on needier schools is starting to sound awfully appealing. Which is why it might just be time to start taxing Harvard and its cohort.

This isn’t a new idea by any stretch—in 2008, lawmakers in Massachusetts considered slapping a 2.5 percent tax on large university endowments—but Schneider has made an especially intriguing case for it."



"Another quandary: Today, the government generally doesn’t tax savings. It taxes income. So why take a cut of wealth from colleges when we don’t do it to individuals? As Kim Rueben, a senior fellow at the Tax Policy Center, put it to me, “We’re going to tax Harvard, but we’re not going to tax Warren Buffet?”

And, of course, there might be unintended consequences. Even with write-offs for financial aid, taxing endowments could encourage schools to spend less on things society generally likes, such as new research labs. The government could tax schools and require them to spend a minimum amount, which is how it treats private foundations. But then you have to consider to what creative lengths Harvard might go to avoid the IRS.

Cutting down the tax advantages of rich schools, obviously, would not be simple. But it still worth seriously considering the idea. Maybe we should consider taxing the Met as well. Maybe the government could stick to what it knows and tax Harvard’s capital gains instead of its whole endowment. Maybe we could learn to live with a little tax avoidance. However we choose to do it, I think we’d all like to spend a little less money sending other people’s kids to Harvard."
colleges  highered  highereducation  nonprofit  universities  money  finance  taxes  taxation  funding  inequality  ivyleague  harvard  endowments  princeton  stanford  yale  charitableindustrialcomplex  philanthropy  government  hedgefunds  jordanweissmann  philanthropicindustrialcomplex  nonprofits  capitalism  power  control 
february 2016 by robertogreco
John Green's tumblr • Fascinating chart from The Economist (not famed...
"Fascinating chart from The Economist (not famed for its liberal bias) showing how already-rich universities are receiving the most gifts from donors.

In the accompanying article, they write, “Philanthropy may be tilting America’s higher education system even further in favour of the rich.” 

I don’t think there’s any maybe about it. 

Harvard is (obviously) a great school. And because Harvard has an endowment of $32 billion, they can afford to give out a lot of scholarship aid; in fact, over 70% of their students receive aid; the amount is calculated based on family income and assets.

But at least according to Harvard’s financial aid calculator, you have to be ungodly rich not to be in that >70% of kids who receive scholarships. Like, if your parents make $150,000 a year, you personally have a $100,000 trust fund, and your parents have $1,000,000 of assets (not including their home), you get a scholarship.

The ~28% of Harvard students who don’t get merit scholarships are RICHER than that. Basically, over a quarter of Harvard student are in the top 5% of Americans when it comes to income and wealth. 

Meanwhile, as seen in the chart above, less-rich schools attract less donation money, which leads to smaller endowments and fewer scholarship dollars, which means more students have to take out loans, which only increases the U.S.’s already untenable economic inequality."
universities  highered  highereducation  endowments  2015  inequality  wealth  donations  harvard  riceuniversity  financialaid  loands  studentloans  debt  philanthropy  charitableindustrialcomplex  stanford  yale  princeton  sartmouth  duke  johnshopkins  philanthropicindustrialcomplex  capitalism  power  control 
june 2015 by robertogreco
The Coming Showdown Over University Endowments: Enlisting the Donors [.pdf]
"This Essay focuses on the discordance between universities with particularly large endowments and what is occurring in the rest of higher education, particularly with respect to skyrocketing tuition and a growing institutional wealth gap. The Essay considers absolute endowment values, the amount of endowment per student, and expense-endowment ratios at sixty 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 multifaceted effort to spur endowment spending and control tuition."

[See also: https://pinboard.in/u:robertogreco/b:5dcd8b659f56 ]
sarahwaldeck  charities  nonprofit  2009  law  legal  finance  universities  colleges  wealth  taxation  taxes  endowments  charity  nonprofits 
december 2014 by robertogreco
Chapter 4 of An Autobiography: The Story of My Experiments with Truth by Mohandas K. Gandhi
[Wayback: https://web.archive.org/web/20171227051615/http://www.columbia.edu:80/itc/mealac/pritchett/00litlinks/gandhi/part3/304chapter.html ]

"This sad situation developed after my departure from South Africa, but my idea of having permanent funds for public institutions underwent a change long before this difference arose. And now after considerable experience with the many public institutions which I have managed, it has become my firm conviction that it is not good to run public institutions on permanent funds. A permanent fund carries in itself the seed of the moral fall of the institution. A public institution means an institution conducted with the approval, and from the funds, of the public. When such an institution ceases to have public support, it forfeits its right to exist. Institutions maintained on permanent funds are often found to ignore public opinion, and are frequently responsible for acts contrary to it. In our country we experience this at every step. Some of the so-called religious trusts have ceased to render any accounts. The trustees have become the owners, and are responsible to none. I have no doubt that the ideal is for public institutions to live, like nature, from day to day. The institution that fails to win public support has no right to exist as such. The subscriptions that an institution annually receives are a test of its popularity and the honesty of its management, and I am of opinion that every institution should submit to that test. But let no one misunderstand me. My remarks do not apply to the bodies which cannot, by their very nature, be conducted without permanent buildings. What I mean to say it that the current expenditure should be found from subscriptions voluntarily received from year to year."

[Related:
http://marginalrevolution.com/marginalrevolution/2011/12/why-do-universities-have-endowments.html
http://ethicist.blogs.nytimes.com/2009/09/28/should-you-give-to-harvard/
http://harvardpolitics.com/hprgument-posts/investing-future/
http://www.ssireview.org/articles/entry/ethics_and_nonprofits ]

[More on endowments:
http://dealbook.nytimes.com/2013/01/07/dartmouth-controversy-reflects-quandary-for-endowments/
https://ideas.repec.org/a/ebl/ecbull/eb-11-00531.html
http://www.pgdc.com/pgdc/issues-and-opportunities-endowment-fundraising
http://blogs.reuters.com/felix-salmon/2010/05/28/the-problems-with-university-endowments/
http://www.universitybusiness.com/article/endowments-new-questions-new-normal
http://www.changemag.org/Archives/Back%20Issues/January-February%202010/full-the-truth.html
http://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=4428&context=flr (.pdf)]
endowments  money  finance  colleges  universities  nonprofit  gandhi  institutions  power  control  democracy  management  permanent  funds  publicopinion  charitableindustrialcomplex  philanthropy  capital  wealth  organizations  permanence  impermanence  ephemeral  ephemerality  legacy  philanthropicindustrialcomplex  nonprofits  capitalism 
july 2014 by robertogreco

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