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December 7, 2017

Ivy League Billions: Sponsored by the American Taxpayer

Despite cumulative endowments of $119 billion, we’re still paying big for these eight elite universities.

Open the Books, an organization dedicated to transparency of government spending, tracks and publishes government spending online and serves as one of the largest private databases of government spending in the world. Their motto, “Every dime. Online. In Real Time,” reflects their mission of making government spending transparent and accessible to the public. Open the Books publishes a report every quarter, focusing on an aspect of government spending. Earlier this year, they published an oversight report entitled, “Ivy League, Inc.,” which reveals the government money and tax privileges granted to the eight colleges of the Ivy League: Brown University, Columbia University, Cornell University, Dartmouth College, Harvard University, the University of Pennsylvania, Princeton University and Yale University.

The endowments for these universities range from $3.2 billion (Brown) to $35.7 billion (Harvard). As Open the Books Founder and CEO Adam Andrzejewski wryly remarks in Forbes, “Many pundits describe the Ivy League as ‘a hedge fund with classes.’” Open the Books notes that the combined endowments of the universities ($119.4 billion) could fund a full-ride scholarship for all Ivy undergraduate students for the next 51 years. As non-profits, the government does not tax the Ivy League schools on their endowment earnings. So, they not only operate like a hedge fund, but a hedge fund with tax privileges.

While the Ivy League certainly commits no error in freely raising money from alumni and private donors, the Open the Books report reveals how the Ivy League profits off of taxpayers who pay the Ivy League whether they want to or not. Tracking government payments and entitlements for six years (FY2010-FY2015), Open the Books discovered the total Ivy League cost to taxpayers as $41.9 billion, or about $6.93 billion per year. This number includes payments, subsidies and special tax treatment. In terms of total government money received, 16 states (including South Dakota, North Dakota, Hawaii, Utah, Alaska and Montana) receive less government money per year than the Ivy League does. In other words, entire states take less government money per year than a group of eight universities, each of which have multi-billion-dollar endowments. They don’t need the money, so why are they receiving it?

Lobbying for their interests seems to be part of the answer. Open the Books reveals that between 2010-2014, the Ivy League spent $17.8 million on lobbying Congress to advocate for their interests. This explains the preference given to the Ivies, and the billions of dollars granted to these institutions in federal contracts, subsidies and tax privileges.

While government grants and contracts make sense in terms of groundbreaking medical research, they don’t make sense in terms of the unnecessary research funded by the American taxpayer. Consider the following grants:

  • $137,530 from the National Science Foundation to Dartmouth College to fund the making of a video game entitled “Layoff.” In this game, the player must fire employees until he or she receives a bank bailout. In the game, bankers are invincible and cannot be fired.

  • $53,419 from the National Institutes of Health (NIH) to Brown University to study whether homosexual men and male sex workers in Mexico City would decrease the number of sex partners and/or use condoms if the government paid them.

  • $5.7 million from the National Science Foundation to Columbia University to develop a website entitled Future Coast. The website allows visitors to leave voicemails describing how they think the world will be changed by destructive climate change in the future (2020-2065). Examples include a dwindling Alaska and a California without water.

Most people do not object to private research to fund such projects. If a person wants to develop a video game or study sexual habits and incentives of men in Mexico City or listen to fictional voicemails, why not? But these people should do what the rest of the country does: raise capital, fundraise and involve their friends. The American taxpayer should not have to shoulder the cost.

In fact, the Ivy League receives more money from their government contract “side gig” ($25.27 billion) than they do from student tuition payments ($22 billion). This prompts the question, Is their government contract “business” a higher priority than their students?

Further, the Ivy League schools receive an enormous $3.7 billion tax break in local government property taxes. Open the Books estimates that with regard to local property taxes, the Ivy Leagues should be paying approximately $617 million per year. However, due to the lost revenue, residential property taxes in the surrounding areas are 20-30% higher. In the case of Princeton University, residents sued the school, and won a settlement of $18 million.

Ultimately, the Open the Books report on the Ivy League shows taxpayers what has really been happening to their money. While the Ivy League should be able to maintain their status as top universities, the time has come to re-examine how much, if any, government money they should receive.

When we place all the issues facing our country on the table, government money should be prioritized toward keeping our communities safe and encouraging human flourishing, not toward contributing to the billion-dollar corporatism of the Ivy League. They can do that on their own.

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