Thursday, June 04, 2015


The Harvard Challenge, Revisited

A Harvard University alumnus donated $400 million to endow the institution’s engineering college…

One person donated the equivalent of eight years of HCC’s entire operating budget to one subunit of one university.  The entire gift is tax deductible, of course.

I don’t often do reruns, but a few months ago I did a piece wondering what would happen if one year’s bounty of Harvard fundraising were distributed among community colleges.  I called it The Harvard Challenge.  In light of the latest gift, it seems worth revisiting.


Harvard raised over a billion dollars just last year.

That’s one university, in one year.  All tax-free.

I did some math.  What would a single year of raising that much -- just one -- do for HCC?  I’ll keep things pretty generic, and favor round numbers -- feel free to plug in the name of your favorite community college.  The big picture is the point.

Let’s round down to one billion -- Harvard raised far more than that, but if you go chasing every last million, there’s no end to it -- and assume that we knew that the incredibly good year was a one-time event.  What could we do with it?

Assume that we’d put it in an endowment of one sort or another.  Let’s assume a 3 percent annual drawdown, which I’m told isn’t crazy for endowments.  Three percent of a billion is 30 million dollars a year in operating income, in perpetuity.  What would thirty million a year get us?

Let’s start with faculty.  Between salary, pension contributions, health insurance, and raises over time, and because I like to keep the math nice and simple, let’s assume $100,000 total cost per year for each new position.  If we hired, say, 100 new full-time faculty, that would be ten million.  That would bring our adjunct percentage down to where it should be.   (RIght now, we have 135 full-time faculty positions on the books, several of which are currently empty.)

I’ll assume that the offices for those faculty come out of capital budgets, rather than operating.

That leaves another twenty million.  Let’s throw some scholarships in there.  Let’s say that we decided to make a point about merit, and offer money to students whose study habits are better than their jump shots.  Tuition and fees for a full-time student taking 15 credits per term come out to slightly over $5,000.  Add some money for books and living expenses -- students gotta eat -- and make it an even 10k per student per year.  If we allot ten million for scholarships at $10,000 a pop. we could cover a thousand students per year.  Completely.

Which leaves another ten million.  Let’s say another five million for staff and administration -- we could use more hands in IT, library, advising, admissions, financial aid, institutional research, instructional design, disability services, grants, etc.  Another million for professional development, to ensure that everyone stays current.  Assuming 500 employees, that would mean two thousand dollars per person per year.  Add another million for library acquisitions and subscriptions.  

We’ve still got three million to go.  Maybe a million for increased utilities and overhead from all those new people walking around, another million for marketing, and a final million for mini-grants for innovative new projects.  

All of that would be covered in perpetuity, based on what Harvard raised in one year.

I know that some of my wise and worldly readers are trained economists.  I’m guessing that the social ROI of a billion at HCC would put to shame the social ROI of yet another billion at Harvard.  Go ahead and crunch the numbers.

So I hereby issue the Harvard Challenge.  Donors to Harvard: this year, just to see what can be achieved, redirect your donation to your nearest or favorite community college.  Then drop by to see what they did with it.

You’ll be glad you did.

This seems relevant to the post:

I definitely make a point of sending my college donations to my home-town community college instead of my (rich) undergrad institution. I appreciate the support they gave me for financial aid, but they're definitely fine on cash (and spending it in some silly ways. No, we don't need all those statues) and I'd much rather pay it forward.
Totally agree, because I know what a large and unexpected donation did for my college's endowment and how it vastly benefited students on both the academic (AA) and workforce (AS) side of the college.

Which leads my two criticisms of your post:

You took it as a given that the donor class you were trying to speak to know that those things would benefit students. Poor assumption. For example, they probably think those extra faculty positions would be featherbedding rather than raising your full-time tenured and tenure-track faculty ratio to what it is in elite institution's freshmen classes and better than what it is in football universities while still teaching a 5-5 load with small classes. Fits all of those conservative talking points about teaching more etc etc.

You should not exclude capital expenses from your accounting. You will need more offices for those full-time faculty and may need more classrooms (or specialized classrooms or repurposed classrooms suited to new and proven pedagogy) for those top scholars you expect to bring in on scholarship. Harvard will spend some of that on infrastructure, and so should you. It gives you the chance to have a stable source of capital expense that allows long-term planning for repairs, updates, and new construction should it become needed.
That $400m to Harvard generates a federal tax benefit of about $160m. That is unlegislated federal spending of $160 million to just one school! That suggests two questions:

What social policy is furthered by the income tax deduction for contributions to such an over-endowed institution?

What social policy is furthered by the complete exemption from taxes for the $36 billion Harvard endowment?

Talk about a tax system skewed toward the 1% . . .
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