Malcolm Gladwell rips into Stanford University's request for donations | Hacker News Reader

Malcolm Gladwell rips into Stanford University's request for donations

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I think that tax exemptions for universities should come with a lot more strings attached. These exemptions are actually worth considerably more per undergraduate that even the best state funded public institutions receive per undergraduate.

http://www.slate.com/articles/business/moneybox/2015/09/harv...

Here's the report

http://www.slate.com/articles/business/moneybox/2015/09/harv...

Personally, I think one condition should be to increase the scale of undergraduate admission. Berkeley and UCLA, for instance, enroll around 25,000 undergraduates, whereas Harvard and Stanford are in the 6,000-8,000 range. This is of course a favorable arrangement for Stanford - enrolling very few undergraduates keeps the US News numbers happy, and allows them to focus mainly on research and graduate students. They shower a massive amount of money on a small and largely affluent student body, and enjoy a huge tax advantage because they benefit the public.

Although these institutions are generous with low income students, keep in mind that they 1) enroll a much lower percentage of low income students than UCLA or Berkeley, and 2) enroll far fewer students overall. As a result, Berkeley enrolls more low income students than the entire Ivy League combined. This is true of UCLA and several other UC campuses.

Why are we giving Harvard and Stanford a huge tax break in order to shower benefits on a tiny and largely affluent student body? The state funding for Berkeley and UCLA comes with all kinds of strings attached, and it's considerably less per undergrad than the value of this tax break.

We have, through policy, put our public institutions at a severe financial disadvantage. This isn't just a result of market forces or choice, this is built into our tax code and regulatory state.

Anyone knows why rich universities keep that amount of money lying in the bank?

I imagine banked money isn't taxed, but any spent would be, so every expenditure shoots up a bonus 20-40% relative to the value of just leaving it alone. Which means any revenue has to match, and exceed, the tax to actually be profitable (versus sitting on it)

Same way, I think, apple keeps $800bn unspent; not spending is simply more profitable than spending

And i guess at that level of money, its generally not worth doing much unless its big (due to all the overhead necessary to keep such funds available and tracked).

I'm not a tax expert so I can't answer the question on why universities would do that. As far as Apple goes, I'll assume they'd like to at least beat inflation and holding cash is usually done for regulatory reasons.

Apple is different than Stanford. Stanford's fund is not an IRA - there is no tax either when they withdraw from the fund. Apple has all that money stashed because they can't repatriate it to the United States and their shareholders, without realizing corporate income tax on it in the US. So as long as they keep it overseas, the value of their stock goes up because they control the cash, but they can't award it back to their shareholders as dividends without biting the dividend tax bullet.

It's not in the bank, it's invested in assets like stocks and bonds.

They use the returns to fund 21% - 25% of their budget every year (~$1.4 billion of $5.5 billion in 2015-2016).

The endowment contributes more annually than tuition does. [0]

[0] http://facts.stanford.edu/administration/finances

Okay, Malcom, let's tax private universities so nobody gets a great education. You're insane if you think those dollars should be taken from private universities and be spent on public schools!

I went to a state school and received a great education that was very cheap. Not sure what your comment was meant to imply?

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