How Taxpayers Are Helping to Finance Harvard's Capital Campaign

Kevin Carey:

Public funds for higher education are hard to find. States have slashed billions from university budgets while the federal government is struggling to keep the Pell Grant program afloat. So it came as a shock when government officials on Saturday announced plans to give $2-billion in taxpayer funds over the next five years to a single private university that mostly educates rich people and already has an endowment bigger than the gross domestic product of Bolivia.

Well, actually, government officials didn't do the announcing. Harvard University did it for them, by launching a $6.5-billion capital campaign, the largest ever.

Harvard, which has an endowment of more than $30-billion, is a "nonprofit" organization, according to a close, technical reading of the law. That means donations to the campaign are tax-deductible. If we conservatively estimate a 28-percent marginal federal income-tax rate for donors (the top rate is 39.6 percent), and a similar effective rate for corporate donations, that's $1.8-billion in forgone revenue. State income-tax rates vary from zero to more than 10 percent; assuming 5 percent, on average, yields $325-million more, or $2.1-billion total.

Posted by Jim Zellmer at October 5, 2013 12:03 AM
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