The Harvard Handout: Wealthy Donors Giving Big Money to Already Rich Colleges
Recently, Slate‘s Matthew Yglesias argued against donating large amounts of money to wealthy schools like Harvard University. His position is that Ivy League schools already have huge endowments, and that most of the students attending these elite schools have wealthy families supporting them financially.
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A chart published by The Hamilton Project at The Brookings Institution supports this argument about student income at wealthy colleges, comparing socioeconomic distribution at colleges against college selectivity. According to the chart, a student at one of America’s most-selective universities is 14 times more likely to be from a high-income family than from a low-income family.
In his editorial, Yglesias says, “You’ll often hear that such-and-such a donation to an already-wealthy institution is a great idea because it’s going to financial aid. But when only about 5 percent of your class is coming from the bottom quarter of the income distribution (and we can assume that very little of that 5 percent is coming from the really truly poor) then even this financial aid is extremely poorly targeted.”
Elite schools have huge endowments to spend from — Harvard, for example, has a $32 billion endowment. Yet, individual donors continue to give large amounts of money to schools that aren’t hurting for cash. In a separate editorial, Yglesias examines a recent donation in which wealthy hedge fund manager, Kenneth Griffin, founder of Citadel, gave a jaw-dropping $150 million of his fortune to Harvard University. So, if charitable dollars are intended to make a difference, then why do donors keep giving to entities that are already wealthy?
Ken Stern addresses this issue in an April 2013 article for The Atlantic, entitled Why the Rich Don’t Give to Charity:
“Wealth affects not only how much money is given but to whom it is given. The poor tend to give to religious organizations and social-service charities, while the wealthy prefer to support colleges and universities, arts organizations, and museums. Of the 50 largest individual gifts to public charities in 2012, 34 went to educational institutions, the vast majority of them colleges and universities, like Harvard, Columbia, and Berkeley, that cater to the nation’s and the world’s elite.”
Examining why this difference in giving occurs, Stern refers to research that suggests it could be the result of exposure or lack there of. The research quoted in his article indicates that people who are personally exposed to poverty show more empathy. This could explain why the wealthy, who tend to live in isolation from desperate circumstances, don’t think about the need for such assistance.
Anyone who has extra money to give, whether it be a little or a lot, is always faced with making a decision on where that money would be best spent. Yglesias’ advice is to give the money to a school that educates lower-income kids. That’s probably the best way to help the poor get better access to education, and to improve the ROI of students’ tuition dollars.
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