When Dorms Mimic Mansions

At Princeton, they like to do things in style. One of the newer dorms on the university’s New Jersey campus has triple-glazed windows framed in mahogany.

Princeton — and the rest of America’s elite private universities — can easily afford such exquisite touches. These institutions of higher education are sitting on mountainous caches of cash, as the just-released new annual numbers on collegiate charitable contributions make abundantly clear.

Three elite schools — Harvard, Stanford, and Columbia — each received over $1 billion in new donations last year. The 20 universities with the year’s highest charitable hauls took in 28 percent of the contributions America’s colleges and universities pocketed in 2018. These 20 schools enroll just 1.6 percent of the nation’s college students.

Princeton, according to the latest public figures, holds an endowment worth $23.4 billion, the equivalent of over $2.8 million per student.

Should any of this concern you? Should those mahogany windows particularly bother you in any way? Probably should. You, after all, are helping pay for that mahogany.

Billionaires like former eBay CEO Meg Whitman, the patron of Princeton’s triple-glazed-window dorm, get to deduct off their taxable income the millions they contribute to their elite alma maters. Before last year, Americans with deep pockets could use charitable donations to write off up to 50 percent of their annual income. Today, thanks to the Trump tax cut enacted in 2017, our wealthiest can use those donations to write off up to 60 percent of that income.

In other words, average taxpayers are subsidizing billionaire contributions to “Grand Old Ivy.” For every $1 million billionaires make in contributions, they currently save in federal income taxes — and the federal treasury loses in revenue — $370,000. State governments lose dollars, too.

Posted In: Allied Approaches