Taxpayer Subsidies to Wealthy, Elite Universities Like Harvard (Analysis)

TOPLINE: Who knew that the Ivy League and other wealthy institutions were taxing you, the American people?

Incredibly, it’s a $45 billion largess during the most recent five-year period.

Our auditors at OpenTheBooks.com quantified the federal payments on contracts and grants and special tax treatment of their endowments into the eight schools of the Ivy League plus Stanford University and Northwestern University.

Since 2018, $33 billion of federal contracts and grants flowed to these ten colleges – averaging $6.6 billion annually.

Today, these “educational” non-profits are more federal contractor than they are educator. Their $33 billion in federal contracts and grants outpaced their collection of undergraduate student tuition.

Furthermore, these schools reaped another $12 billion in special tax treatment benefits on the growth of their massive endowment gains (2018-2022). Endowments totaled $237 billion in 2022, up almost $65 billion from $172 billion in 2018.

Since 2017, these colleges are only subject to a 1.4-percent excessive endowments tax and not the 20-percent capital gains tax levied on wealthy Americans.

These rich colleges received even more government benefits and subsidies not quantified in this accounting.

For example, these figures do not include additional billions in special tax benefits derived from state and local sources (i.e., property taxes), investment gains outside of their endowments, use of tax-exempt bonds for construction and other purposes, or taxpayer-subsidized loans students use to pay tuition.

BACKGROUND: Stanford University was the biggest recipient of federal funds over the past five years. It counted more than $7 billion. It received more than any of the Ivies, and Northwestern. Only Dartmouth received less than $1 billion in federal contracts and grants.

Most of the funds – roughly $29 billion (88-percent) versus $4 billion (12-percent) – were provided by the feds via grants, not contracts. Grants are giveaways and, typically, the recipient university owns the work product — meaning they profit from the resulting intellectual property. Contracts are for work done on behalf of a federal agency – taxpayers own the output.

Trump Administration versus Biden Administration

The wealthy universities have benefited over both the Trump and Biden Administrations. We didn’t find a material difference between the two.

In the last three years of the Trump administration the wealthy colleges received between $6.4 billion and $6.7 billion per year. In the first two years of the Biden administration, the colleges received between $6.7 billion and $6.9 billion.

Can’t Tax The Ivies Or Cut Their Federal Payments, Really?

In the past, the Ivies argued that cutting federal funding (or taxing them) meant stripping money from research into cancer, heart disease, diabetes, etc. However, as highlighted above, we found a $65 billion increase in endowments between 2018 and 2023. In the same period, these schools booked more than $33 billion in federal grants and contracts.

One cannot escape the impression: Elite universities 1. fundraise from private sector donors to stuff their endowments, and, 2. take tens of billions of taxpayer dollars to pay for their research — 88 percent of which are grants — which allows them to further profit from the produced intellectual property.

Pandemic Bailouts

Five wealthy Ivy League colleges took $220.6 million in Covid-aid bailouts through the Higher Education Emergency Relief Fund according to the records provided by the U.S. Department of Education.

These universities were UPenn ($50.2 million | $21 billion endowment); Columbia University ($64.2 million | $13.3 billion endowment); Cornell University ($64.6 million | $9.8 billion endowment); Dartmouth College ($17.2 million | $8.1 billion endowment); and Brown University ($24.4 million | $6.5 billion endowment).

Harvard, Yale, Stanford, Princeton, and Northwestern turned down a collective $406 million in Covid-aid congressional funds.

Frivolous Grants

Woke doesn’t mean broke within our elite institutions.

Here is just a sample of what the American taxpayer funds at the elite schools. For more information, please go to our fact sheet posted online.

• $4.173 million in 2022 for Cornell to “increase the number of minoritized faculty in the biological, biomedical, and health sciences” through a partnership with NIH.
• $2,984,994 from 2018-2021 to Stanford from NIH to study “sex hormone effects on neurodevelopment in transgender adolescents.”
• $2 million in 2018 from the Department of State to University of Pennsylvania to “support the preservation of cultural heritage sites of minority communities in northern Iraq.”
• $1,851,075 from 2018-2020 to Stanford from National Institutes of Health (NIH) to study how college students are impacted by the “retail environment for tobacco and marijuana.”
• $721,177 in 2022 from NIH to University of Pennsylvania to use “disadvantage indices to address structural racism and discrimination in pandemic vaccine allocation.”
• $600,000 in 2022 from USAID to Yale to study the “impacts of mobile technology on work, gender gaps, and norms.”

Historically, the Ivies have been criticized for wasting taxpayer resources: In 2014, Cornell University took from the National Science Foundation a $1 million grant for a study, “where it hurts the most to be stung by a bee.”  In 2012, Columbia University received $5.7 million from the National Science Foundation to create fake voicemails from year 2065 after the world was decimated by climate change.

CONTROVERSY: Many of these schools have received attention for left-wing agitation and advocacy from students and administrators alike in the past five years. Several have come under fire most recently for their responses to the October 7^th attacks on Israel by the Hamas terror group.

The following is a survey of the top three funding recipients, their recent scandals in the past year, and the billions of dollars Americans dole out to them every year.

Stanford University; endowment: $36.3 billion; five-year federal funding: $7 billion

• President Richard Saller and Provost Jenny Martinez failed to condemn Hamas in a letter responding to the surprise attack, which left more than 1,200 civilians dead. Over 1,800 Stanford affiliates signed a letter criticizing the two school leaders.
• Shortly after the attacks a Stanford instructor asked Jewish students to identify themselves, separated them from their belongings, and said they were simulating what Jews do to Palestinians, according to CNN. The instructor was suspended.
• In March of this year, law school students shut down a speaking event by a conservative judge, helped by the dean of diversity, equity, and inclusion, who gave an impassioned speech denouncing the judge before he was to speak. The president of Stanford Law announced a new initiative to promote free speech after the scandal.
• In December 2022, Stanford published a “harmful language” list of words to eliminate from its website and computer code. Among those words was “American.” Stanford removed the list after backlash.

Columbia University; endowment: $13.28 billion; five-year federal funding: $5.8 billion

• The university has been roiled in protests since the October 7^th attack, with 20 student groups signing a letter “holding the Israeli occupation accountable for its actions and putting an end to the untenable status quo of Israel’s apartheid and colonial system.” Two groups responsible for “threatening rhetoric and intimidation” towards Jewish students were suspended for the rest of the fall semester.
• In September, the Columbia Teacher’s College dissolved its 40-year old Reading and Writing Project, which came under fire for not emphasizing phonics in reading instruction. Twenty years of “whole-language” instruction instead—focused on memorizing how words look, rather than sounding them out—have resulted in low literacy rates in New York City’s school children. Therefore, the city moved away from the method altogether. The Teacher’s College at Columbia alone received $58 million in federal grants over the past five years.

University of Pennsylvania; endowment: $21 billion; five-year federal funding: $3.7 billion

• UPenn has come under fire by donors and alumni for not condemning attacks on Israeli citizens and overlooking the concerns of the university’s Jewish community.
• Earlier this year, UPenn incorporated a political litmus test into hiring decisions, asking faculty job applicants to submit a “diversity statement” complete with plans to “advance diversity, equity, and inclusion”
• UPenn has refused virtually all attempts to clarify the role of the Chinese Communist Party in the activities of its Penn Biden Center.

Additionally, this past summer, the U.S. Supreme Court ruled against Harvard — and the University of North Carolina — stating their race-conscious policies violated the equal protection clause guaranteed by the U.S. Constitution.

The ruling has implications for top schools that have practiced discriminatory admissions policies, with many adjusting their policies to fit the letter—if not necessarily the spirit—of the new ruling.

CLAWBACK: The 2017 Tax Cuts and Jobs Act imposed a new tax of 1.4 percent on investment income for university endowments exceeding $500,000 per student, not indexed to inflation. The Treasury Department determined about 40 schools would meet the criteria, including the ten outlined in this article.

This was the most recent successful effort to clawback taxpayer dollars. Many critics across the political spectrum felt that the wealthy colleges gamed the system for vast institutional enrichment.

THE CRITICS: As the universities become more radical, top Republicans are calling for policies to prevent even more taxpayer dollars from flowing into elite universities.

In an interview with Fox News Digital, House GOP conference chair and Harvard alumna Elise Stefanik stated:

“It is abhorrent that Harvard and universities across America are enabling horrific antisemitism to run rampant on their campuses. U.S. taxpayer dollars should be prohibited from funding any institution that promotes antisemitism or anti-Israel bigotry, and House Republicans will hold these extremist institutions accountable for failing their students.”

Within hours of the Hamas attack on civilians in Israel, a coalition of 34 Harvard student organizations said they “hold the Israeli regime entirely responsible for all unfolding violence” following decades of occupation, adding that “the apartheid regime is the only one to blame.” (Emphasis added.)

Harvard’s president issued her own statement, which condemned Hamas and its atrocities, but failed to repudiate the student organizations’ letter blaming Israel.

South Carolina Senator Tim Scott and former South Carolina Governor Nikki Haley have also called to end federal funding for these schools, according to Fox News.

Republican primary frontrunner former president Donald Trump proposed using “billions and billions of dollars that we will collect by taxing, fining, and suing excessively large university endowments” to “endow a new institution called the American Academy.” This Academy will make a “world class education available to every American, free of charge” without adding to the national debt.

SUMMARY: While new policy proposals abound, taxpayers have the right to ask questions: are these wealthy universities operating in the public interest or their own special interest?

Charles Lipson, professor emeritus at the University of Chicago, and former chair of its department of political science, asked the key questions in The Telegraph, U.K. last week:

“Watching these latest instances of anti-Semitic words and violent demonstrations, average Americans want to know why it is happening and what can be done to reverse the damage.

How did our universities become hotbeds for this age-old hatred? Which groups are leading this vile movement? Why have university leaders been so tepid in their response? Is there any hope of turning this around and restoring sanity and tolerance on campus?”

Soon, Congress will revisit university’s preferred tax and funding treatment. Now, they’ll have hard facts and numbers – thanks to our auditors at OpenTheBooks.com.

Originally published by OpentheBooks. Republished with permission.

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